Kuwait is currently the fourth largest projects market in the GCC after the UAE, Saudi Arabia and Qatar. Historically, the local market has underperformed its potential, weighed back by politics and a lack of central authority to help push through projects. This has meant that despite its vast oil wealth and healthy fiscal position, the state rarely exceeds $15bn of contract awards each year.
The pandemic and falling oil prices during the first half of 2020 hit Kuwait hard. The central tenders committee effectively closed during the lockdown and no new public tenders were released or submitted. As of August, tendering was still far from normal.
The other big impact was lower oil prices. With the state forecasting another budget deficit and national assembly members unwilling to countenance additional borrowing, the government has had no choice but to rein back capital expenditure. As most schemes in Kuwait are directly government-funded this will naturally lead to fewer projects.
That said, there was some good news in early 2020 when financial closed was announced on the Umm al-Hayman wastewater treatment plant PPP project. The long-awaited deal was the first under the PPP law and bodes well for the success of other PPP schemes in the pipeline.
However, much more will need to be done if Kuwait is to live up to its projects market potential. The state needs to find a way of getting greater private sector participation in the market and attract greater foreign investment. Without either, it is difficult to see how the market can reach its potential.
Kuwait Projects H2 2020 is the update to this year’s popular H1 report. Focused on data, it is aimed at helping companies create strategies for targeting and growing the market.
All the MEED Insight reports are delivered via email in digital version.