A report issued by KFH-Research noted that the projects’ market in Kuwait witnesses a new dawn through the launch of numerous infrastructure and construction projects, such as environmental fuel projects worth USD 12 billion, in addition to other mega projects in the fields of roads and bridges, including Al-Sebbeyya and Kuwait Metro projects. The following are the details:
For much of the past decade, international companies operating in the major projects sector have found Kuwait a challenging market in which to do business. However, there are good reasons to believe this year will be different with the new parliament. The significance of this change in Kuwait’s political landscape for the projects market was confirmed on 10 February 2014, when the Central Tenders Committee confirmed the award of three engineering, procurement and construction (EPC) deals worth a combined USD12bln for the long delayed CFP. As well as including the single biggest oil and gas EPC contract awarded in the GCC, the CFP awards is a sign that Kuwait is back in business.
Under development since 2007, the CFP has suffered several delays before finally being tendered in May 2013. The entire project will increase the capacity of Kuwait’s refineries to 800,000 barrels a day from 736,000 barrels a day currently, and also raise the standard of its products. Quick progress to construction will demonstrate that things have changed in Kuwait’s projects market.
There are signs of progress in other sectors too. Work started on the USD2.6bln Subiya Causeway scheme in October 2013, more than seven years after its launch in 2006. The 37.5KM bridge will cross Kuwait Bay, linking Kuwait City with the Subiya promontory and Bubiyan Island, where a major port is being built and a number of tourism projects are planned.
Furthermore, the plans to launch a USD20.5mln infrastructure investment package, announced in early 2013, bode well for the country; particularly given the advantage this will give Kuwait over regional peers. In the 2013/14 fiscal year alone, the government is planning to invest USD15.8-17.5bln to support development projects. Across the full investment period infrastructure investment will involve more than 320 projects, including the construction of bridges, government buildings and roads. A USD1.8bln water and power project is being developed at Al-Zour North, which will have an overall capacity of 1,500MW and be capable of producing up to 107 gallons of potable water daily. It is believed that Kuwait will require an additional 9,000MW of production capacity by 2020.
Key to development of infrastructure is the Partnerships Technical Bureau (PTB), which is mandated to promote build-own-operate-transfer (BT) and public-private partnership (PPP) schemes. The PTB will identify priority projects and boost private sector involvement in infrastructure projects. The private sector is primed to play the lead role in developing the USD7bln Kuwait urban metro, a slate of electricity generation projects, the USD3bln tourism development at Failaka Island and the redevelopment of Kuwait Airport. There is also set to be heightened investment in infrastructure to support public education. Kuwait has at least USD5bln of university building projects either in the planning stage or under construction. The largest is the USD3bln Sabah al-Salem New University at Shadadiyah, which is located 20km west of Kuwait City.
Kuwait's transport sector growth is driven by strong government stimulus, aimed at tighter regional integration with GCC members. The transport system is modern and efficient, with a road system that is well developed by regional standards. Of the 5,749km of roads in the country, 85% are paved, and most people travel by car. Transport infrastructure in Kuwait is largely state-controlled and the decision-making process is rather lengthy and non-transparent. These factors impact upon the country's internal transport needs, with no rail system, a limited road network and few domestic flight requirements. The country's import and export sector has helped to shape the country's transport infrastructure layout. South Korea is currently one of the Gulf state's largest trading partners and due to the distance that imported and exported goods must travel; Kuwait has concentrated on developing complementary road networks, airports and port facilities. The Kuwaiti import and export sector is estimated to be worth USD93.46bln. The build-operate-transfer (BOT) model has also been increasingly important in developing private sector participation in recent years.
The bulk of transport development in GCC countries, including Kuwait, has traditionally centred on roads rather than rail. This has put considerable pressure on Kuwait's roads. Of the 5,749km of roads in the country, 85% are paved and most people travel by car.
The government in Kuwait is to invest approximately USD6.2bln in a series of motorway construction projects stretching approximately 550 kilometres. The Ministry of Public Works has confirmed that it will issue tenders for the projects between 2012 and mid-2015. One of the country's biggest roads projects is the Subiya causeway, which is estimated to cost around USD2.6bln. The Subiya causeway, officially known as the Sheikh Jaber al-Ahmed al-Sabah bridge, is a 37.5km bridge that will cross Kuwait Bay, linking Kuwait City, the Subiya peninsula and Boubyan Island. Boubyan Island is the location of a number of major development projects, including a USD3.5bln commercial seaport, which is still in the planning stages after repeated delays.
Kuwait's Combined Group Contracting and Hyundai Engineering & Construction signed a contract for a major bridge across Kuwait Bay, connecting Shuwaikh Port with Subiyah. Hyundai will design, construct and maintain the Sheikh Jaber al-Ahmad al-Sabah project, in which Combined Group will own a 21.5% stake. It is hoped it will decrease congestion around the port. KUNA has reported that the project will involve a USD2.6bln investment, with work due to take five years from 2013.
Although Kuwait City's USD7bln metro project has been subject to delays - partly due to the government's review of transport needs - there are signs of progress, with the independently planned project expected to be completed by 2020. The network is intended to reduce transport congestion in the country.
Despite the region's historical neglect of rail transport, 2010-2020 could be a decade that will see a host of rail developments in the Gulf. Kuwait has agreed - along with Oman, Saudi Arabia, the UAE, Qatar and Bahrain - to develop a 2,117km Gulf railway network. The USD25bln rail network is expected to be completed by 2017. Plans are also in place for the construction of a 518km railway in Kuwait, which will stretch from the east to the west of the country and will link into the railway networks of neighbouring Saudi Arabia and Iraq.