Gulf Construction Online - Eyeing the private sector

Kuwait

Kuwait International Airport’s Terminal 2 ... work in progress

Eyeing the private sector

Kuwait, which has an active project pipeline worth $91.6 billion, continues to face challenges which have been compounded over the past year with the Covid-19 outbreak and lower oil prices. The construction sector is hoping for an increase in activity after the pandemic restrictions ease and crude prices move up.

01 June 2021

Despite the Covid-19 pandemic and the lower oil prices, Kuwait is determined to press ahead with its ambitious New Kuwait 2035 National Development Plan, with the country’s Supreme Council for Planning and Development alone spearheading 38 mega infrastructure projects estimated to be worth KD26.5 billion ($87.9 billion).

Kuwait’s construction sector has been stymied by the bureaucratic red tapism that has hampered the progress of many mega infrastructure projects. In addition, the past year has been a tougher one due to the coronavirus outbreak – which has set new financial priorities for the government while requiring a temporary suspension of work on sites – and the lower oil prices, which have dealt a severe blow to this heavily oil-revenue-reliant economy. However, with the rising oil prices and Kuwait’s concerted efforts to attract private sector investment, the future looks more promising.

The projects market in Kuwait has witnessed very gradual growth over the last several years. The total value of projects planned and under execution, which stood at $86.1 billion at the end of 2015, increased to $91.6 billion at the start of May 2021, according to Kamco Invest, a regional non-banking financial powerhouse based in Kuwait.

The progress on implementing the country’s New Kuwait 2035 National Development Plan has been slow but the government remains determined to diversify its economy while upgrading its oil infrastructure and downstream industries. The nation is expected to invest more than $87 billion in the oil sector, especially on revamping its oil infrastructure and creating new oil refineries. Key developments in this area are the Clean Fuels Project, the Al-Zour refinery and Shagaya Renewable Energy Park project – which are close to completion – and the Al Zour petrochemicals complex.

The Palace of Justice ... a striking ongoing project.

Given the fall in oil revenues in recent yeas, Kuwait has been turning to private sector investment to spearhead the country’s long-term development strategies envisaged in the New Kuwait plan, especially in the non-oil sectors. Among the most prominent of the projects on the anvil is the 160-km Kuwait Metropolitan Rapid Transit System (KMRT), a greenfield development that is expected to be implemented in five phases to increase public transport mobility to the metropolitan area of Kuwait.

Among the major projects under way are the new 708,000-sq-m Terminal 2 at Kuwait International Airport which will have the capacity to handle 25 million passengers per year; the Amiri Diwan’s 26-storey Palace of Justice in the heart of Kuwait City, which will be the largest judicial building in the Middle East upon completion covering over 350,000 sq m; Boubyan (Mubarak Al Kabeer Port) project, which has crossed the halfway mark; Sabah Al Salem University City; the South Mutlaa waste water treatment project; and a number of hospitals including the Al Sabah Hospital.

With social housing having been a pressing issue over several years, the Public Authority for Housing Welfare (PAHW) is spearheading mega housing projects such as the KD2-billion Al Mutlaa Residential City, Jaber Al Ahmad City, South Abdullah Al Mubarak project, South Sabah Al Ahmad City and South Saad Al Abdullah City project. Here, Kuwait has entered into partnership with Chinese firms as part of the China-proposed Belt and Road Initiative (BRI).

Another key area of development which has attracted private sector investment is wastewater treatment. The largest project in this sector is the $1.6-billion Umm Al Hayman (UAH) Waste Water Project, work on which was awarded early last year and is being developed on a public-private partnership (PPP) basis. Other projects on the cards include the Az Zour North IWPP Phases Two and Three and Al Khairan Phase One and KABD Municipal Solid Waste Project.

Meanwhile, Kuwait Oil Company (KOC) has awarded its largest environmental project for cleaning polluted soil at a total cost of more than KD1 billion ($3.31 billion) to various local and international companies, according to Arab Times. The project, which is considered to be one of the largest in the world, will be implemented in five phases and the contracts are likely to be signed this month, stated the report citing sources in Kuwait’s Central Agency for Public Tenders (see Contractors, Page 77 of the digital edition).

A pillar of the New Kuwait Vision 2035 is the plan to enhance inbound tourism where the private sector is playing an active part in developing hotels, tourist facilities, mixed-use developments and entertainment and leisure options. The new airport terminal will be a key enabler in these plans to boost tourism, and the country has been focusing on developing its cultural and heritage landscape. Having recently completed major cultural landmarks such as Jaber Al Ahmad Cultural Centre and Abdullah Al Salem Cultural Centre, the government is pursuing projects such as Kuwait National Museum, Al-Mubarakiyah Heritage Markets and Entertainment City.

Work is also in progress on a number of mixed-use projects and malls such as the landmark devlelopments in Hessah AlMubarak District (Page 38), Al Andalus mixed-use development (Page 43), Assima Mall and Tower project (Page 42). Other prominent projects include the new 75,000-sq-m Boubyan Bank headquarters, work on which started in December 2020.

Kuwait Airport

Work is moving at a steady pace on the new terminal building (T2) at Kuwait International Airport despite the Covid situation with nearly 40 per cent of the project already completed.

Limak Construction, a part of leading Turkish conglomerate Limak Group, is the main contractor on the terminal project, which was designed by Foster + Partners. On completion, the T2 project will be one of the most advanced and environment-friendly airports in the world and an iconic gateway to Kuwait.

Earlier this year, Kuwait’s Central Agency for Public Tenders had floated tenders for the construction and maintenance of the parking lots and aircraft runways and service buildings at the new passenger terminal within Phase Three of the project.

Covering a 1.3-million-sq-m area, the project is located between the eastern and western runways and extends from the new passenger Terminal 2 and consists of aircraft parking and a runway linked to the existing runways of Terminal 2, air services and service tunnels associated with the main building, in addition to a power plant.

Work began in August on Phase Two of the car-parking building as part of the ministry’s Terminal 2 project. The three phases of the project are expected to be completed simultaneously.

Housing

Kuwait is set to float tenders for South Sabah Al Ahmad City, a major residential project, later this year after getting all the necessary approvals, reported Arab Times, citing Minister of State for Municipal Affairs and Minister of State for Housing and Urban Development Shaya Abdurrahman Ahmed Al Shaya.

Located 80 km south of the country’s capital, South Sabah Al Ahmad City is set to be the urban core for the southern sub-region. The 61.5-sq-km city boasts 10 neighbourhood clusters arranged around its central business district, and bordered by a ring of light industrial buildings.

Meanwhile, China Gezhouba Group Corporation (CGGC) has completed the main infrastructure work for the Al Mutlaa Residential City Project and handed it over to the Kuwaiti authorities.

CGGC is a subsidiary of China Energy Engineering Group Company, a state-owned energy conglomerate with its headquarters in Beijing.

Once completed, the Al Mutlaa Residential City, a vital project under the BRI, will accommodate 400,000 people.

CGGC’s scope of work includes completion of infrastructure network for a 30-sq-km area out of the 120-sq-km residential city development. The Chinese group had started the construction work in April 2017. CGGC had handed over the first batch of its housing infrastructure project to the authorities last October.