H2 2017 could see KD 3.5bn in new con­tracts in Kuwait

Kuwait Times - - BUSINESS -

The pace of project im­ple­men­ta­tion cooled some­what in 2Q17 as bid­ding on ma­jor pro­jects faced some de­lays. Con­tracts worth KD 0.6 bil­lion were awarded in 2Q17, ac­cord­ing to MEED Pro­jects. This is half the 2016 quar­terly av­er­age. Award ac­tiv­ity in the quar­ter was dom­i­nated by the power and trans­port sec­tors. We ex­pect im­ple­men­ta­tion to im­prove in the re­main­der of the year as more de­layed pro­jects move ahead. The sec­ond half of 2017 could see KD 3.5 bil­lion in new con­tracts.

Award ac­tiv­ity in 2Q17 was dom­i­nated by the power and trans­port sec­tors. Ac­cord­ing to MEED, the Min­istry of Elec­tric­ity and Water (MEW) awarded the largest con­tract in the GCC in June 2017, a project worth KD 176 mil­lion for the third phase of the Su­biya com­bined-cy­cle gas tur­bine project. It was awarded to Al­ghanim In­ter­na­tional. Other ma­jor awards dur­ing the quar­ter in­cluded three road pro­jects by the Min­istry of Pub­lic Works (MPW). These were the North­ern Re­gional Road (KD 92.8 mil­lion), the South Surra Road up­grade (KD85.2 mil­lion), and the road link­ing Mina Ab­dulla and Wafra (KD 84.9 mil­lion).

Some de­lays in the bid­ding process have af­fected the con­struc­tion, trans­port, power, and oil sec­tors. Close to KD 2.4 bil­lion worth of con­tracts that were ex­pected to be awarded in 2Q17 were post­poned. This in­cluded 14 con­tracts worth a to­tal of KD 808 mil­lion in the con­struc­tion sec­tor, eight con­tracts for KD850 mil­lion in the trans­port sec­tor, nine con­tracts val­ued at KD 456 mil­lion in the power sec­tor, and four con­tracts for KD 230 mil­lion in the oil sec­tor.

The trans­port sec­tor dom­i­nated project awards in 2Q17 sum­ming up to KD 280 mil­lion. An­other KD 1.1 bil­lion worth of awards are ex­pected in the rest of 2017. MPW is ex­pected to open bid­ding on nine sep­a­rate con­tracts this year re­lated to the north­ern sec­tion of the Re­gional Road, roads at South Al-Mut­laa, the south­ern sec­tion of the Re­gional Road, and other road works. Seven road pro­jects were sup­posed to be awarded by the end of 2Q17 but were de­layed.

Four con­tracts re­lated to the north­ern Re­gional Road are ex­pected to be awarded this year at a value of KD 448 mil­lion. Ac­cord­ing to MEED Pro­jects, Com­bined Group Con­tract­ing is ex­pected to be the low­est bidder the cen­tral part of the south­ern Re­gional Road, sub­mit­ting a bid of KD 197 mil­lion; the project is due to be awarded soon. Com­bined Group was also awarded the South Surra Road up­grade, which is ex­pected to be com­pleted in three years.

The power sec­tor saw KD 226 mil­lion in awards in 2Q17, with an­other KD 1.1 bil­lion in the bid­ding process and ex­pected to be awarded later in 2017. Five con­tracts were awarded in 2Q17 in the power sec­tor, three of which by MEW, in­clud­ing the Su­biya Gas Tur­bine, which alone made up 78 per­cent of the 2Q17 awards in the sec­tor.

The sec­tor awaits two large power pro­jects which could be awarded be­fore the end of the year. The much an­tic­i­pated phase 2 of the AlZour North IWPP power plant had been ex­pected in 2Q17, but now could hap­pen later in the year. Still, ac­cord­ing to MEED Pro­jects, the Kuwait Au­thor­ity for Part­ner­ship Pro­jects (KAPP) has yet to de­cide on whether to pro­ceed with this project or with the Khairan IWPP. The AlZour North plant con­tract is ex­pected to be worth close to KD 530 mil­lion. An­other sig­nif­i­cant pub­lic-pri­vate part­ner­ship (PPP) project in the sec­tor is the Kabd Mu­nic­i­pal Solid Waste. Sim­i­lar to Al-Zour, no date for the com­mer­cial bid­ding has been set; the project is ex­pected to cost KD 267 mil­lion.

Only one con­tract was awarded in the con­struc­tion sec­tor in 2Q17, though KD 1.7 bil­lion in con­tracts are in the bid­ding process. In 2Q17, Ma­ba­nee awarded Phase 4B of The Av­enues at KD 63.7 mil­lion to the Ah­ma­diah Con­tract­ing & Trad­ing Com­pany. Mean­while, the KD 363 mil­lion con­tract for the Jahra Min­istries Com­plex was de­layed but could hap­pen later in the year; the project would be the largest award in the sec­tor in 2017. Ac­cord­ing to MEED Pro­jects, MPW may change the lo­ca­tion of the project to South Al-Mut­laa, but there hasn’t been any of­fi­cial con­fir­ma­tion of this yet. The Amiri Di­wan ten­dered the new Palace of Jus­tice build­ing for bid­ding at an ex­pected cost of KD 303 mil­lion; the project, to be ex­e­cuted on be­half of the Min­istry of Jus­tice, is ex­pected to be the world’s tallest and largest ju­di­cial build­ing. Mo­hammed Ab­dul­mohsin AlKharafi & Sons is the low­est bidder at KD 288 mil­lion, and bids are un­der eval­u­a­tion.

There was hardly any ac­tiv­ity in the oil sec­tor in 2Q17, but a to­tal of KD 935 mil­lion worth of con­tracts is ex­pected in 2H17. Kuwait Oil Com­pany (KOC) awarded one con­tract in 2Q17 worth KD 7.3 mil­lion. KOC has opened bid­ding on eight sep­a­rate con­tracts that are ex­pected to be awarded in 2017. They in­clude the feed pipe­line for the new re­fin­ery in Al-Zour. Bids have been sub­mit­ted and are cur­rently un­der eval­u­a­tion. Ac­cord­ing to MEED Pro­jects, the low­est bidder is Saipem with KD 255 mil­lion ($842 mil­lion).

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