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Kuwait Mega Projects

Kuwait Mega Projects

Kuwait Plans Overview:

Finally and in a move described as historic, the Kuwaiti national assembly initially approved the development plan up to 2013/14 –the first plan since 1986. This is a move that almost everybody was calling for to revive the Kuwaiti economy facing recessionary pressures since September 2008. The plan, which includes a total of 1,100 projects among them lots of Mega Projects, was approved with estimated KD37bn (US$125bn) of spending focusing on both oil and non oil economic sectors.

Kuwait has announced spending in the 2010/2011 fiscal year about 16 billion Kuwaiti dinars ($55.6 billion), and it will base its 2010/2011 budget on an oil price of $43 a barrel.

The plan aims at decreasing the country’s dependence on oil but also to includes investment on raising oil and natural gas production, it aims as well for turning Kuwait into a regional trade and financial hub through sustaining economic development, economic diversification and GDP growth. Private sector will be involved in such projects mainly through BOT schemes. Consequently, banking sector will have the appetite to provide credit lines for such projects as long as government support is there. This will have its direct positive impact hand in hand with the expansionary monetary policy to increase liquidity. Due to Kuwaiti law regarding property development, all of these projects will follow the build-operate-transfer (BOT) model, thus allowing the private sector to become more involved in the ongoing development of Kuwait. While the BOTs are currently operating in a 20-year timeframe, the government is examining regulations with an eye to making them more flexible.

The Mega Projects Agency (MPA), the executive arm of the Kuwaiti Ministry of Public Works leads the charge to design and implement most of the country’s infrastructure projects.

The plan includes lots of Mega Projects to be implemented in the next five years:

- The new business hub (Silk City) with estimated cost US$77bn

- A major container harbor and a 25km causeway

- Railway and metro system

- Additional spending on new cities, infrastructure and services; particularly health

and education

- Around KD25bn of oil sector investments to raise production capacity and

modernize current facilities.

BOT Contracts

We note that a significant number of the projects detailed above are guided by BOT contracts as defined by the Kuwaiti Law no7/2008, which governs the building, operation and transfer of structures that require granting of rights to state-owned properties. Under a BOT contract, a private company constructs and manages a facility and transfers the project to the government with no obligations after a given timeframe. In Kuwait, the typical term spans 30 years (up to 40 years in the case of special projects, approved on a case-by-case basis and not exceeding KD250 million in value), after which time, the project must be handed over to the government “without any consideration or compensation.” The private company benefits from revenue streams during the period of operation. The government benefits from not having to incur additional spending on its balance sheet, as well as from employing the arguably better honed skills of the private sector in identifying, planning and delivering profitable projects. As a form of private-public cooperation that differs from either full privatization or full nationalization, BOT contracts ensure that the Kuwaiti government retains long-term strategic control of large projects.

Last month, Deputy Prime Minister Sheikh Ahmad Al-Fahd Al-Sabah was quoted as saying that the oil-rich country wants to tender $8.7 billion in new development projects by next April. These projects include three new housing communities, a bridge, a hospital and a port expansion. Sheikh Ahmad had earlier indicated that Kuwait is planning to build 70,000 new homes by 2015 to meet the country’s growing housing needs. He said the housing scheme would help push the country’s real estate sector towards recovery after the effects of the global financial crisis. The ambitious property plan will be carried out by Kuwait’s Public Authority for Housing Care (PAHC).

Leading Mega Projects :

I. Project name : Shadadiyah University Campus

Client: Kuwait University Works

Estimated Value KD: 1,597 B (25 yrs project)

Project Description: The Kuwait University plans to develop the Kuwait University City (KU City), a educational complex in Shadadiyah, 20 km west of Kuwait City. KU City will spread over a 4.9 million m² area. It will consist of three campuses including 16 colleges and support faculties, a hospital, a hotel, a housing complex, sports facilities, auditoriums and so forth. Upon its completion in 2015, the city will have the capacity to accommodate up to 40,000 students.

Infrastructure contractor: on 28 January 2010 Kuwait University has signed a contract with GULF DREDGING & GENERAL CONTRACTING CO. for an infrastructural construction and maintenance of the project worth KD 5.227 million. The project is to be executed in 24 months as of next February and will be followed with construction of the buildings of the basic faculties of the university, along with affiliate facilities.

II. Project name : Silk City- known as Madinat Al Hareer

Client: Ministry of Public Work Estimated Value KD: 25 B (in 25 years)

Project Description: In July 2008, Kuwaiti Government had approved the biggest real estate project that will be located in Subiya, northern Kuwait. The city will span 250 km² and will include 30 communities grouped into four main districts: Finance City, Leisure City, Ecological City, and Educational and Culture City, it will include as well Olympic Stadium, residences, hotels and retail facilities. Around 450,000 new jobs will be created. The most iconic development within Finance city will be the 250-storey Burj Mubarak Al Kabeer, which is intended to become the tallest structure on earth. Once completed in 2023, Silk City will be transformed into a new urban centre for 750,000 residents in over 175,000 residential units.

Project is under design. Civic Arts / Eric R. Kuhne and Associates is the urban and landscape designer. The city needs more than 10 years to be completed. Completion duration for the first phase is between 5 – 7 years. Construction in first phase is expected to be in 2012. Estimated duration of the project 2012-2023.

Project website::www.madinat-al-hareer.com

The whole project design was created as a voluntary initiative by TAMDEEN REAL ESTATE Company in collaboration with Ajiyal Real Estate & Entertainment Co. www.tamdeenrealestate.com

TAMDEEN REAL ESTATE CO.

P.O.Box 21816 Safat 13079, Kuwait Tel: 00965 1882233

00965 25362330

Fax: 00965 25362360

Mohammed Jassim Al Marzouq

Chairman & CEO Mmarzouk@tamdeen.com

III. Residential Projects :

New city developments are included in the plan to meet the demands of its fast growing population. Kuwait has plans to create satellite cities and towns in the outlying regions mainly in Subiya, Khairan (potentially for 500,000 people) Jaber Al Ahmed City (100,000), Arifjan (up to 100,000) and other smaller city developments such as Al Mutlaa, Saad Al Abdullah, Sabah Al Ahmad city which are currently witnessing a surge in activity mostly related to large scale public housing projects. According to the Public Authority for Housing Welfare (PAHW) almost 50,000 residential units will be distributed at the end of the five-year development plan. The new cities will be executed also through a BOT basis, since the institution lacks professional expertise in the construction of such huge projects. All cities among residential units, comprise commercial complexes, ministerial complex, universities, schools, mosques, hospitals, sport and entertainment areas and amenities. These urban projects are divided into three contracts; the first of which covers the development and maintenance works of the public utilities including the horticultural works, the waste recycling plant, the drinking water plant, and the main power station.

Public Authority Housing Welfare

Al Surra Street, Ministries Area,

P.O. Box 23385, Safat 13094, 13094, Kuwait Tel: +965 2530-1000 | Fax: +965 2538-7464 | Email: webmaster@housing.gov.kw | Website: http://www.housing.gov.kw

Name: Ahmad Atwa

Position: Civil Engineer, Contracts Department

Tel:+9652- 530-1000 (ext: 1364)

Some of the most significant urban are listed below:

III.1. Project name: Khairan Residential City

Estimated value KD: 1.828.863,- (7 yrs projects)

Project description: Main roads+ 35,844 residential units`

Khairan development will span 40 million m² in Al Zour Area. The city will be built in five stages, each adding between 4500 to 8500 units. The project is currently under study and the last official completion date announced was the last quarter of 2015. However, the project has already suffered delays in its planning stages.

Consultant: First Investment Company is the project consultant

Souk Al Safat Building, 1st Floor, Abdullah Al Mubarak Street, Mirqab Area, P.O. Box 20230, Kuwait Safat 13063, Safat 13063, Kuwait Tel: +965 2243-5857,+965 180-4050 | Fax: +965 2243-5856 | Email: info@fic.com.kw | Website: http://www.fic.com.kw

III.2. Project name: Sabah Al Ahmad Future City

Estimated value KD: 435 M

Project Description: Main roads+9574 housing units

This real estate community will be located 50 km south of Kuwait City. The city will be developed over an area of 35 million m². Once completed in 2015, the city will house up to 110,000 residents.

Infrastructure contractor as of February 8, 2010: Combined Group Contracting Co. —– http://cgccompany.com/eng/overview.asp

III.3. Project name: Mutlaa residential areas

Estimated value KD: 890 M

Project Description: Main roads+18,000 residential units

III.4. Project name: Jaber Al-Ahmad Residential City

Estimated Value KD: 408 M

Project Description: Main roads+5020 residential unitsThe second contract covers the road building works and the telecommunication services, while the third contract deals with the infrastructure works at the public facilities in the areas.

III.5. Project name: North South Sulaibikhat Residential City

Estimated value KD: 115M

Project Description: 1736 residential units

Soil Improvement, Road & Infrastructure works Contractor September 2009: Mushrif Trading and Contracting Company K.S.C.C.— www.mushrif.com

III.6. Project name :Saad Al Abdullah Residential City

Estimated value KD :199 M

Project Description: 3576 residential units .

This city is currently under construction with an expected of 33% of completion by 2011/2012.

IV. Infrastructure Improvements

Air access:

The most significant infrastructural development consists of the ongoing expansion of the Kuwait International Airport. The expansion project involves the construction of a new terminal building the two existing runways will be extended up to 600 meters and a third runway will be constructed. The airport capacity will be increased to 20 million passengers upon the project’s completion. These projects are carried by the Kuwait Directorate-General of Civil Aviation (DGCA)

IV.1. Project name: Kuwait International Airport Expansion Plan – New Passenger

Terminal Two

Estimated value KD: 212 M

Project description: Construction on the project is in progress. The expansion project involves the construction of a new terminal building that will be connected to the existing terminal building via a tunnel, the two existing runways will be extended up to 600 meters and a third runway will be constructed, airplanes hangars, roads, substations and other airport related facilities.

The electrical infrastructure contract that has been awarded to Siemens is expected to be completed in January 2011.Tender for the main contract is expected to be issued in May 2012. Completion is expected in 2016.

IV.2. Project name: Kuwait International Airport Expansion – Infrastructure

Estimated value KD: 150 M

Project description: The project calls for design and construction of infrastructure work for the Kuwait International Airport, including approach roads leading to the airport, runway and aircraft hangars.

The main contract was warded in 2009 to Alghanim International General Trading and Contracting Company – Email: fasg1@falghanim.com- www. falghanim.com

Ground access:

Another key infrastructure development is the expansion of highways and road networks (including the ring roads), the implementation of a mass transport system, and the implementation of a smart parking system. An underground network and a railway system will link Kuwait to the other members of the GCC, Central Asia, Europe, India Subcontinent and the Middle East. The railway project is planned to be 265 km long and will cover almost all parts of Kuwait. Also, the Jaber Al-Ahmad expressway will link the Silk City and the satellite cities to be built in the northern area of Kuwait city.

IV. 3. Project name: National Rail Network and a Metro system

Client: Ministry of communications

Estimated value KD: 4 M

Project description: The Kuwait Metropolitan Rapid Transit calls for construction of a 171 Km Kuwait Metro. The Metro will be built across the inner city of Kuwait and will include 4 lines. 60 kilometer of the metro will be built underground network, and will cover the country.

Invitation to Bid for the main construction contract is expected to be in 2011. The metro is expected to be completed in 2016.

The National Railway System will be 518 kilometers (324 miles) long and is planned to link a proposed 2,000-kilometre (1,250-mile) Gulf railway line with Iraq, Iran and beyond. It will link the Saudi border in the south with the Iraqi border in the north, besides linking the east and west points in the country. The project is estimated to cost around 1.8 billion dinars and will be implemented by the private sector.

The railway project is to be implemented through a newly established shareholding company, of which 50% of the shares will be offered for sale to Kuwaitis, while the government and Kuwait Overland Transport Union will retain 40 percent and 10 percent respectively.

The studies prepared by the below mentioned consortium on the planned subway and railway systems have been concluded and submitted to the major projects committee for consideration.

Consortium led by Eng. Saeed Dashti, Chairman of Overland Transport Union along with members of Spain’s Ingenieria & Consultoria de Transporte (Ineco), and the local Kuwait United Development group together carried out the feasibility study. Parsons Brinckerhoff conducted a feasibly study of roadway design and the transportation networks in Kuwait.

IV.4. Project name: Jaber Al-Ahmad Al-Sabah Bridge-

Client: Ministry of Public Work Estimated value KD: 750 M

Project description: the Jaber Al-Ahmad expressway will link the Silk City and the satellite cities to be built in the northern area of Kuwait city.

The bidding on the project was open on 4 Jan 2010 and closing date is remain open for a six-month period (Jun 8, 2010) to settle on the qualifiers, while the design and the execution of the project is due to complete in five months.

The Ministry of Public Work has qualified eight groups, each comprising three to four contractors. The scope of work includes construction of Jaber Ahmed Al-Jaber Al-Sabah Bridge in Kuwait city.

Contact: Central Tenders Committee CTC & Ministry of Public Works.

The government’s ambitious plan included the development of Kuwait’s islands – Bubiyan and Failaka.

IV.6. Project name: Bubiyan Island Development

Estimated value KD : 345 M (Infrastructure Cost : 305 Million KD, Port Superstructure : 40 Million KD)

Client: Kuwait Ports Authority the port’s project manager Ghaleb Al-Shimmari from the Ministry f Public Work

Project description: Yet another key infrastructure development was on top of the agenda of the five-year plan. Bubiyan Island and Bubiyan Harbor are crucial to the Kuwait’s pursuit of becoming a regional financial and economic hub. Bubiyan, Kuwait’s largest island- 530 km² island on the Gulf- close to the southern Iraq port of Umm Qaser, and is separated from the mainland by the Subbiya Channel. Long undeveloped due to its poor soil conditions, the Kuwaiti government approved a plan to develop Bubiyan in 2004 and to turn it into commercial seaport. The first phase of work is estimated to cost KD118m and includes the construction of three bridges. Work to design and build the port was set to start in 2009 and complete in 2014. A further KD45m has been allocated by the ministry for a railway linking the island with Kuwait City, KD19m for design works, and KD35m for roads. The project is expected to be carried out in five phases. The government of Kuwait will finance the entire required infrastructure for the island and the port: dredging & reclamation, ground improvement, road & bridge, port infrastructure & buildings

IV.6. a. The Bubiyan Harbor development project

: The project aims to turn Bubiyan island into a naval facade of the country, a centre of shipping activities and a multi-media transport network. The MPA plans to build Bubiyan Island Port to serve the export and import requirements for the reconstruction of Iraq for 20 years. Upon its completion, the port will have a total handling capacity of 2.5 million containers per year.

It is being implements over four stages, the first of which is divided into three chapters. The first chapter (2007-2011) envisaged building the new railway and the new road and treating the soil there. The second (2009-2013) aims to deepen the draught of the harbor to 30 meters in order to be able to receive larger ships in line with the world’s latest standards. The third chapter (2009-2014) aims to launch nine docks at the harbor in order to expand the harbor’s handling capacity to 2.5 million containers a year. The second stage of the project (2016-2021) envisages adding seven docks while the third stage (2023-2028) will add eight docks and the fourth stage will add 36 docks by 2033, thus pushing the total number of docks to 60.

Port Contractor: HYUNDAI Engineering & Construction Co and Kuwait’s Kharafi Group have won the contract to design and build a container port on Bubiyan island.

IV.6. b. The Bubiyan Island development project

envisages initiating nature reserves and tourist resorts and the residential area along the coastline, building a modern road network, between Al-Sibiyah and Al-Jahra cities and Sheikh Jaber Al-Ahmad Bridge, with a total length of 36 km, to link the island and the harbor on one hand to Kuwait City and Al-Sibiyah City on the other.

To keep pace with demand, a number of hotel projects have been initiated while existing ones are being upgraded, expanded or refurbished. Among the major hotel upgrade projects under way is the Messilah Beach hotel and the Regency Palace.

Urban contractor: The US’ Hill International (main consultant of MPA) has been selected as project manager on the scheme, which will include the construction of hotels, chalets and recreational facilities on the island and a causeway to the main island.

IV.7. Project name: Failaka Island Development

Estimated Value KD : : 120 M

Project Description: The MPA of the Ministry is also developing the Failaka Island one of the country’s major islands located some 20 km off the coast of Kuwait City in the Persian Gulf. The island has a historical significance as it dates beck to thousands of years and is known of many Greek antiquities.

Its development project aims to launch a world-class tourist resort, 20 hotels, chalets, a golf course, housing units, a marine park, four marinas, and entertainment facilities in an environment-friendly atmosphere. No private cars will be allowed in the area.

After being put on hold in 2008 because of changes in legislature, the bidding for the project was initiated recently with around 42 companies having participated in the process. It is to be developed on a build-operate- transfer (BOT) basis and calls for the construction of tourism infrastructure on the 43 sq km island.

The government-owned Touristic Enterprises Company (TEC), meanwhile, is spearheading development of a section of the island. A BOT contract was signed in mid-September between TEC and a consortium led by Al-Mal Real Estate Company for the development of a tourist resort on the southern portion of the island. The resort will include a 100-room five-star hotel, 502 chalets, a sports and entertainment centre with a pier, a health spa, a water park and golf and mini-golf courses. Project costs are estimated at KD 40 million and the area to be developed covers about 1.7 million sq m. Detailed designs are due to take about a year, construction a further two years. The initial completion deadline set for 2015 is unlikely to be met.

IV.7. Project name : Jaber Al Ahmed Al Sabah Hospital (South Surra Hospital)

Client: Ministry of Health

Estimated value KD: 304 M

Project description: The project involves the construction and maintenance of Jaber Ahmed Al Jaber Al Sabah Hospital in Surra, comprising five buildings varying in size from two to eight stores, consisting of (1,268) beds, including a car parking area with capacity of (4,000) vehicles and other a comprehensive range of medical services comprising diagnostic and treatment services, a trauma center and casualty services, outpatient services, dental services, obstetrics and gynecology services, inpatient care services, VIP suites for the visiting heads of states and another wing for VIP suites. When completed, it will be the largest hospital in the state. The Construction works have commenced on this development and expected to be completed by end of 2012.

In August 2009 A joint venture of local Kuwait Arab Contractors Company and Egypt’s Arab Contractors (Osman Ahmed Osman & Company) has been appointed as the main contractor www.karabcont.com

IV.8. Project name: Renovation and beautification of downtown Kuwait

Client : Kuwait Municipality Estimated Value KD : 20 M

IV.9. Project name : Develop and beautification of Sulaibikhat Beach

Estimated value KD : 35 M

V. The five-year plan includes as well investment on raising oil and natural gas production.

Kuwait’s Electricity and Water Ministry (MEW) announced 9 mega projects to strengthen the electricity and water transmission network in the country, and to meet the increasing demand in consumer consumption. These are in addition to a further 99 projects, with a total cost of KD 253 million, providing services for consumers and new residential areas.

Among the MEW’s major projects is a plan to establish new power plants in Al-Zour, Al-Subiya, Al-Jalai’ah, and Al-Shuaiba, as well as establishing new water desalination plants and developing the current facilities.

The plan is to assign some power and water projects to private companies, while also transferring the ownership of general power and water services to the private sector, in order to reduce government spending on power plants.

There are plans to establish a 2,000-megawatt ‘gas turbine’ power plants at the site of the Subahiya power plant at a projected cost of around KD 654 million. In addition, a similar project is set to be built at the northern Zour power plant site, at a total cost of KD 400 million, while the existing gas turbine plants located at the southern section of the same plant is set to be developed to increase its efficiency by 560 megawatts without increasing the amount of fuel required. The latter project is projected to cost around KD 224 million.

V.1. Project name: Al-Zour south gas turbine power plant conversion

Estimated value KD: 211 M

Project description: convert the gas turbine at the Al-Zour South power plant to combined cycle

V.2. Project name: Establishing combined cycle gas turbine power plant at Subiya

Estimated value KD: 684 M

V.3. Project name: Shuaiba NorthPower & Desalination Plant

Estimated value KD: 366 M

Project description: The project calls for construction of Shuaiba North Power & Desalination Plant in Kuwait. The capacity of plant is 270,000 cubic metres of water and 800-MW of electricity.

V.4. Project name: North Al Zour Desalination Plant in Kuwait

Estimated value KD: 1.430 M

Project description: This project is split into two phases. Both phases will consist of 1,500 MW of power capacity, with a combined water capacity of 125 million gallons per day

V.5. Project name: Al-Zour south power plant conversion

Estimated value KD: 170 M

Project description:: convert the Al-Zour South power station to combined cycle