Kuwait: Laying track for growth

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Plans are moving ahead for Kuwait’s country-wide metro system, which is hoped to address the growing issue of congestion and create a better environment for growth in commercial, business, industrial and residential markets.

In late March, the Partnerships Technical Bureau (PTB) invited contractors to express interest in a variety of contracts to develop rolling stock and systems for the Metropolitan Rapid Transit System Project (KMRT). A month earlier, the PTB signed off on a feasibility study for the $7bn metro. The project should be completed in five phases, with construction beginning in 2013, and once finished will span more than 160 km and be serviced by 69 stations.

The PTB plans to give winning bidders 40-50% of shares in “design-build-finance-maintain” infrastructure packages. The PTB has said it expects the metro to begin operating by 2020 and that the first phase of the development will extend more than 54 km and be serviced by 28 stations, nine of which will be underground.

“As the first public transport public-private partnerships (PPPs) in the country, the various procurements for the KMRT System are expected to contribute extensively to the realisation of the philosophy of a multimodal and integrated public transport network,” wrote the PTB.

The metro is the first of a number of PPPs planned by the government as part of a KD37bn ($132.65bn) infrastructure overhaul plan. Other transport initiatives include the 22.5-km Al Ahmed Bridge, which will cost KD733m ($2.63bn) and connect the mixed-use Silk City project with Kuwait City. Also in the works is the construction of 550 km of railway as part of a planned $25bn Gulf network, which aims to link GCC member states.

Supporters say the metro will be crucial to the nation’s development, particularly in light of its expected population increase – from 3.6m in 2010 to 5.3m by 2030, according to a recent report from market research firm Euromonitor International – and high levels of traffic congestion within the Metropolitan Area.

Speaking at the Kuwait Infrastructure Investment summit in late March, Abraham Akkawi, the head of infrastructure and PPP advisory services at UK-based accounting firm Ernst & Young, said the building of a metro was a long-term commitment and that this was the right time to launch the plan.

“Kuwait is going through a major transformation in its infrastructure. Therefore, it makes sense to anchor it with one of the most elaborate projects,” he said.

Adding further to the growing support of transport infrastructure development, the Ministry of Works (MoW) revealed that Kuwait will soon launch a KD700m-800m ($2.51bn-$2.87bn) initial tender for construction of a second terminal at its international airport. Hossam Al Tahous, the undersecretary for the MoW, told Reuters that the project should be finished by late 2016, with solar panels expected to provide approximately 10% of the terminal’s energy supply.

In a related development, local media reported that a parliamentary committee has recommended Kuwait amend its laws regarding public tenders to allow foreign companies to participate in biddings directly without the need for a local agent. Previously, troubled negotiations between the cabinet and parliament over policy have been blamed for delays in large-scale infrastructure projects.

Under the proposed changes, Kuwait’s Central Bank would be given the authority to deal with investment decisions and to supervise tenders, reported The Arab Times.

In another nod to the government’s commitment to ensuring the smooth progress of its KD3.5bn ($12.55bn) 2012-13 Development Plan, which includes 324 infrastructure projects such as roads, bridges and government buildings, on March 26, Fadhel Safar, the minister of public works, said he would like to expand the private sector contribution to the development plan.

Kuwait’s transparent bidding process for its transport development process and willingness to involve the private sector will likely earn it plaudits from economic observers, as will steps to ease foreign companies’ involvement.

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