Public Private Partnership (PPP) Projects in Kuwait

Public Private Partnership (PPP) Projects in Kuwait

As part of a national strategic vision, the Government of Kuwait seeks to encourage the role of the private sector in infrastructure and service development. The Government has established a clear framework for PPP project implementation to easily engage the private sector in Kuwait’s development plans.

Partnerships Technical Bureau (PTB) seeks partnerships with investors in a fair and ethical manner, while achieving value for money, in order to reach the ultimate objective of the partnership system, which seeks primarily to provide excellent services to the State and to achieve the highest return for the investor.

Electric Power Generation Companies

One of first successful projects which is Az-Zour North IWPP (Phase 1). A pubic shareholding company has been established with a capital of KD 110 million (One Hundred Ten Million Kuwaiti Dinars). The Project involves the development, design, engineering, construction, operation, maintenance and transfer of a power and desalination plant with a capacity of at least 1,500 MW and 102 MIGD. The Project also includes the sale and purchase of associated power and water by the Ministry of Electricity and Water pursuant to an Energy Conversion and Water Purchase Agreement (ECWPA).

And on 22 April 2013, PTB invited investors to submit an Expression of Interest (EOI) in investment in Az-Zour North IWPP (Phase 1I) at the same size of (Phase 1). There is also Al-Khairan IWPP which will be procured under the PPP program and will have double the size of Al-Zour North IWPP (approximately 2,500 MW).

These investment opportunities are available to local and foreign investors at ROIs of not less than 12%, where the Kuwaiti government guarantees the purchase of production, which means that these companies have one guaranteed customer, especially that Kuwait is rated AA by international rating agencies.

Kuwait Health Assurance Company

Yesterday was the deadline for purchasing the Terms of Reference (TOR) document relating to the bid of the Health Insurance Hospitals Project. Al-Qabas Newspaper knew that 7 Groups applied to purchase the TOR document; and these groups reviewed the internal information and business model of the new project. These Groups are: Kuwait Projects Company Holding (KIPCO), Agility Company, National Real Estate Company, Arabi Holding Company, Yiaco Medical Company (Kuwait Finance House Group), Jiblah Holding Company (Al-Sayer Group), and Alessa for Medical and Scientific Equipment Company.

According to the announcement of the Founding Committee for the Project, these companies will compete with each other in a special bid on Monday, July 8, 2013. It is likely that alliances will be formed between some of them. It is expected that one company is going to withdraw, and other company is going to form an alliance with companies from outside the seven Groups.

The Hospitals Company is one of mega projects in the Development Plan, whose capital exceeds KD 100 million. The project has been tendered for strategic investors, but only one investor applied to participate in the bid for a share of 26%, while 3 Groups have withdrawn at the last minute, forcing the Government, represented by the Public Authority for Investment, to re-tender the project with new specifications. The new specifications include, but not limited to, “reducing the hospital capacity”, so that the investor is now required to build 3 hospitals accommodate 700 beds, which was previously 1,600 beds. The Share of citizens in the company will be 50%, and the government will be 24%.

The investors’ high interest in the project gives optimistic indicators of how the Private Sector reads the current and future situations. It is noteworthy that the company’s capital was KD 318 million before reducing it to KD 230 million. Participation in the bid was allowed for local and foreign companies, after it was previously restricted to the local companies. However, all the groups currently interested in the bid are local.

Source: Al Qabas News Paper – 11 June, 2013