Rising up ... the Burgan Bank.
Brighter prospects
01 December 2002
Contractors in Kuwait are more optimistic than they have been over the past few years with better prices, more transparency and an increasing number of projects getting to the tendering stage. The government is looking hopefully at the private sector to propel the country's development plans forward.
The private sector is increasingly taking the driver's seat to steer Kuwait's construction sector ahead as the government presses ahead with prioritised infrastructure projects.
Several commercial high-rises are now dotting Kuwait's skyline against the backdrop of the stunning Liberation Tower - notably the Arraya Centre, the Burgan Bank and the PIFSS headquarters.
The government's decision to move ahead with projects using the build-operate-transfer (BOT) option has created an upsurge in the sector which has been in the doldrums for a number of years.
The public sector is concentrating on infrastructure projects, some of the largest being the water distribution scheme for Subiya and the sewage renovation programme.
Another factor which has brought better times for the contracting sector is the streamlining of the tendering process over the past two years. ''Two years ago, prices quoted were very low with practically no margins. As a result, some construction companies have had to close shop. Now, there is more transparency in the tendering process,'' said one construction company official. ''The companies which have survived that difficult phase are now reaping the benefits of more reasonable prices and more jobs to bid for.''
The looming US-led war against its neighbour Iraq is somewhat dampening development plans of the emirate. According to the National Bank of Kuwait (NBK), Kuwait's economic recovery still has steam, but would be jeopardised by a military campaign against Iraq.
"High oil prices kept budget and export revenues buoyant and UN Compensations Committee payments flowing. Added liquidity has contributed in part to making the Kuwaiti stock market one of the best performing markets worldwide in 2001 and 2002," said a report from the emirate's largest bank.
The bank said it expects the emirate's economic recovery "to stay on track, precluding a prolonged conflagration in Iraq physically impacting Kuwait or derailing the anticipated global economic recovery''.
But NBK warned that factors strengthening oil prices and contributing to Kuwait's fiscal and external surpluses are likely to weaken the prospects for Kuwait's future in the long run. "Easy fiscal conditions make it more difficult for the government to push through its economic reform program on the grounds of economic necessity."
It also said the success of the Organisation of Petroleum Exporting Countries (Opec) in maintaining oil prices in its desired range is likely to be at the expense of market share in the long run.
About 90 per cent of the emirate's total income comes from oil revenues, and the state hopes to energise the private sector, which contributes less than 25 per cent of the gross domestic product.
Power, water & wastewater
Kuwait is seeking an additional 1,000 MW by 2004 and calls for gas turbines of 100-160 MW each, with 500 MW coming online in the summer of 2003 and the remaining 500 MW in the following year.
"The country will face power cuts in the summer of 2003 if this project is not implemented. There will be shortages and the government is working to tackle the problem," a Western diplomat closely following the project said.
The main part of Kuwait's power plan will involve a $1.8 billion dual cycle plant which could adopt the BOT formula as part of government plans to cut capital spending on large ticket items and steps to privatise most basic services including power and water.
Kuwait, which has plans to import gas from Qatar or Iran to fire up some of its power plants, generates around 10,000 MW.
South Korea's Hyundai Engineering and Construction Company has won a $15 million deal to supply two substations following a $23 million contract last April to build three substations for residential areas with a voltage rating of 132/11 kV.
Among the largest public sector projects launched this year is a fourphase scheme, worth some KD115.7 million, to build the Subiya water distribution network. In late June, Kuwait issued the largest portion, C3, worth some KD42.5 million. It involves laying two 55-km fresh water pipelines, a 55-km brackish water pipeline and related work between Subiya and Mutla High water distribution complexes (WDC).
Some of the world's leading firms are competing in the various stages of the major plan to lay fresh and brackish water pipelines and related work to link a proposed water desalination plant at Subiya to a main distribution centre.
Package C1, worth an estimated KD35 million, involves construction of a water treatment and pumping station and related distribution pipelines. The C4 element calls for the installation and maintenance of a 59-km pipeline from Subiya to water storage facilities.
In May, the C2 phase worth KD13.7 million was launched to link the planned desalination plant to a main distribution centre.
The engineering, procurement and construction (EPC) contract, estimated to be worth $350-450 million, involves the addition of a 25-50 million gallons per day plant.
Meanwhile, work on the Sulaibiya wastewater treatment project, a pioneering project of its kind in the region, is proceeding as per schedule, according to the sources close to the project.
German construction giant Philipp Holzmann has recently replaced the US' Bechtel in the joint venture carrying out the EPC package. Bechtel is understood to have withdrawn from the joint venture due to risk management factors. The other members of the EPC joint venture are the local Mohamed Abdulmohsin Kharafi & Sons, Ionics and the UK's United Utilities.
The shareholding in the Utilities Development Company (UDC), which is implementing the estimated $390 million BOT scheme, remains unchanged with the local Kharafi National holding a 75 per cent stake and the US' Ionics the remaining 25 per cent.
The project covers the construction of a sewage treatment plant with a capacity of at least 300,000 cu m a day along with a reverse osmosis unit. The plant is designed to allow for further treatment units to be added at a later date.
Waterfront
The first stage of Phase Five of the waterfront project at Salmiya is drawing to a close with work now under way on the second stage - which involves reclamation and construction of a marina and recreational facilities. United Real Estate Company is developing the KD45 million project on a BOT basis. The main contractor is Ahmadiah Contracting and Trading (see pg 80).
Ahmadiah has also clinched the estimated KD11 million deal for the main package of the Fahaheel waterfront development project.
The project calls for the development of 1.6 km of beachfront at Fahaheel, south of Kuwait City. The project includes the construction of a 17,000 sq m retail area, a food court, vegetable and fruit market and parking facilities for 1,200 cars. It also calls for the construction of a 160-berth marina, an inner harbour and recreational facilities.
The client is Tamdeen Real Estate company which is developing the project on a BOT basis. It is due for completion in late 2004. The consultant is the local Gulf Consult, with Jordan-based Dar Al-Omran. The US' Cambridge Seven Associates is the architect and the marine consultant is the UK's Mouchel.
Airport
Kuwait proposes to build a second terminal at Kuwait International Airport on a BOT basis. The estimated KD50 million terminal is expected to have a capacity to handle 5 million passengers a year and be built by 2006. Meanwhile, work is under way on the Kuwait Airspace System Plan which entails upgrading of systems at the airport.
Subiya causeway
A Danish consultancy group headed by Cowi has the 13-month consultancy contract for the planned Subiya causeway project. The causeway is aimed at linking a proposed new city at Subiya to Kuwait City across Kuwait Bay. It will reduce this distance between the two sites to 22 km from 130 km.
Stadium
Philipp Holzmann with the local Mohammed Abdulmohsin Kharafi and Sons is reported to be the lowest bidder at KD55 million for the construction of the Jaber Al-Ahmed stadium in Kuwait City for the Public Authority for Youth & Sports (PAYS).
The project calls for the construction of a 60,000-seat stadium to be built over 130,000 sq m. The local Project Analysis & Control Systems (Projacs) is the project manager. The consultant is a joint venture of Germany's Weidleplan and the local Seif Engineering.
Commercial & residential projects
Work is in progress on the Oil Sector Complex in Shuwaikh. It will house the Kuwait Petroleum Corporation and the Ministry of Oil.
The towering Arraya Centre, which enfolds a shopping centre, hotel, offices, convention centre and a multi-storey car-park is fast nearing completion in the Sharq area. Boasting the tallest building in Kuwait with an overall height of 155 m, the complex is set to open in March next year and will offer upmarket office and retail facilities (see pg 86).
The finishing touches are being put to the Burgan Bank headquarters, a slim futuristic tower which is fully clad in aluminium and glass. The building which has 33 storeys plus two basement levels incorporates a highly sophisticated finish and includes a helipad on the roof. The consultant on the KD6 million project is Arab Consultant and the contractor is Ahmadiah Contracting and Trading Company.
Another high-rise being built by Ahmadiah is the 32-storey Public Institute for Social Security (PIFSS) headquarters, which is also in its final completion stage.
Hotels
Kuwait is boosting the number of hotels in the country with many projects now under way including the Courtyard at the Marriott at the Arraya Centre.
The Sheraton is expanding its presence in the emirate with the construction of a Four Points Sheraton adjoining its landmark Kuwait Sheraton in the heart of the city.
The striking Hilton Resort, which stretches along an extensive beachfront at Mangaf, had a soft opening recently. The property has 150 rooms and 48 chalets
The Messilah Beach hotel, which opened in 1974, will be demolished early next year to make way for a new six-storey five-star hotel complex which will offer a total of 405 rooms. The consultant on the project is Skidmore Owings & Merrill/Gulf Consult. Prequalification bids are currently being evaluated for the construction of the project which will be awarded in five packages .
Kuwait Hotels Company is planning to build 312 chalets at its Al Dabaiya resort in Ahmadi. A US company specialising in tourism projects is reported to be in talks over the project. The $83 million project will include a mosque, health centre, mail centre, a number of cafeterias, lakes and fountains.
Oil & gas
Kuwait Oil Company (KOC) has invited seven international firms to bid for a major project to expand crude oil export facilities at the southern Al Ahmadi area. Kellogg Brown & Root, Bechtel Group, Fluor Daniel, ABB Lummus Global and Kvaerner E&C, Technip Coflexip and Japan's JGC Corp were invited to tender for the project last month.
Industry officials have said the expansion project, including offshore work, was expected to cost KD115 million. Another KD27 million would go to pipeline work and KD86 million for telecommunications control systems.
Meanwhile, major repair and upgrade works involving a total cost of $310 million are under way at Mina Al Ahmadi refinery. The refinery suffered major damage during a mid-2000 explosion. The new facilities are scheduled to be completed in October next year.
Industry
State-owned Kuwait Petroleum Company is planning to build a calcined coke plant in the Shuaiba industrial area. Prequalification bids for the plant are being invited by financial advisor Global Investment House before the closing date of December 11.
The plant will have a capacity of 300,000 tonnes a year and source its petroleum coke feedstock from the Mina Abdullah refinery.
The winning bidder will acquire the licence and rights to own and operate the proposed plant. Calcined petroleum coke is used in aluminum smelting, graphite electrode manufacturing, chemical processing, and steel production.
Medical facilities
Ahmadiah Contracting & Trading Company had won the contract for the construction of a modern ENT hospital in Sulaibakhat. The KD3 million ($10 million) project is a six-story concrete framed building with a total floor area of 10,500 sq m. The client is the Ministry of Health.
The Securities House won a KD22.5 million state contract in June to build-operate-transfer a new nuclear medicine wing at Adan hospital. The company said one of its subsidiaries, Yako, won the Health Ministry tender to build a wing at the hospital which will also include a new X-Ray department and laboratories. It said the project will take 18 months to complete but gave no further details. The construction is expected to be carried by the company's construction unit, Yousuf Ibrahim Alghanem.
Educational facilities
A number of projects are under way for Kuwait University.
Among the latest projects is a five-storey car-park to accommodate 2,300 cars at the Shuwaikh campus, which is to be built under a design-and-build contract.
The Public Authority for Applied Education and Training (PAAET) has a number of projects both on the drawing boards and in the construction stage.
Work is in progress at the technological campus for the PAAET in Shuwaikh. The complex housing the College of Health Sciences for boys has reached structural completion with completion scheduled for August 2003 (see pg 82).
Work on the extension to College of Technological Studies is in the final stages. The project comprises six two-storeyed buildings, covering a total area 56,000 sq m, including workshops, laboratories, classrooms, administration building, covered car park and central plant. The consultant is Pan Arab Consulting Engineers (Pace) and the contractor is Al Ghanim International.
Pace is also designing at least two other projects for PAAET. These include the Basic Education College campus on a site of 450,000 sq m at Al Ardiya to cater for 12,331 students and 1,341 staff. The project consists of educational buildings,learning resources,administration building, recreational facilities and car-parks. The total built-up area is approximately 90,000 sq m. The completion is slated for 2006.
Pace is finalising designs for a construction training institute which will cover a total area of 143,950 sq m and will accommodate 1,500 students. It will include lecture halls, classrooms, computer rooms, laboratories and workshops, library/microfilm room, administration building among other facilities. The project is earmarked for completion in 2005.
Other projects
- Bonyan busy with major projects
- Brighter prospects
- New mall opens on the waterfront
- Sigma system leads in cladding market
