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The value of contracts in Kuwait in 2018 is expected to remain at the 2017 level.

The value of contracts in Kuwait in 2018 is expected to remain at the 2017 level.

Kuwait sees 28pc drop in contract awards

April 2018

The total value of awarded projects in Kuwait fell by 28 per cent to KD4 billion ($13.3 billion) in 2017 as compared to the prior-year and below the five-year average of KD5 billion, said the National Bank of Kuwait (NBK) in its latest Economic Update.

The surge in contracts in the power and water sectors —  compared to prior years — was more than offset by the slowdown in projects in other sectors, mainly transport and construction, the update added, citing a Meed Projects report.

For 2018, the value of contracts is expected to remain at about the 2017 level with the largest contribution coming from the construction sector. Due to delays in the bidding phase in 2017, many construction projects (KD2 billion) have been pushed out to 2018. Also, there are expected to be some delays this year in awarding of transport projects, valued at up to KD700 million.

Power & Water: Projects in the water sector reached a record KD900 million in 2017. The Umm Al Hayman wastewater treatment plant expansion, one of five projects awarded for the sector, accounted for most of the sector’s contract value.

Although the cancellation of the Al Zour North IWPP was a setback for the power and water sector — and the public-private endeavour as a whole — the second phase is planned to be integrated with the third phase of Al Zour North. There are still no further developments on the Khairan IWPP, which was awaiting the progress on Al-Zour North 2, the report said.

Contracts in the power sector amounted to KD502 million, but there was a delay of the Kabd waste-to-energy PPP project. For 2018, up to KD650 million in power sector contracts are expected to be awarded. Among them is the Al-Dibdibah solar photovoltaic (PV) power plant in the upcoming Shagaya renewable energy complex.

Oil & Gas: Activity in the oil sector picked up to KD1.1 billion worth of projects in 2017. Of the 15 contracts awarded in 2017, three major projects are noteworthy: Kuwait Oil Company’s (KOC) KD390-million contract for a gathering centre at Burgan Field, a new refinery feed pipeline project, and a crude transit pipeline from North Kuwait to Al Ahmadi’s central mixing manifold.

Transport: Activity in the transport sector declined in 2017 following a strong performance in 2016, mainly on account of delays. A total of 15 transport sector deals (KD800 million) were awarded in 2017. The largest deal was an infrastructure works contract for the South Al Mutlaa City, valued at KD212 million. Another significant project was the runway and taxiway project for the first phase of the Kuwait Airport Expansion project at KD147 million.

Looking ahead, up to KD700 million in transport contracts are expected over the next few quarters.

Construction: Despite a higher number of contracts, the total value of construction awards eased in 2017 to KD500 million. Over 30 contracts were awarded in the construction sector, but given the small size of these contracts (only three are worth over KD30 million), their value fell short of the 21 contracts awarded in 2016 (total value of KD1.2 billion).

The construction sector is expected to dominate projects in 2018 and could reach up to KD2 billion. There are 26 anticipated deals under consideration, of which the Jahra Ministries Complex valued at KD260 million could be awarded in the first half of 2018. The other noteworthy project expected this year is the Kuwait National Guard’s Kazema Camp project estimated at KD300 million. n


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