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Kuwait construction sector hoped to gain momentum in 2013

The construction sector in Kuwait is considering a series of projects, with growing demand from private sector, aimed at generating momentum after a brief period of minimal growth margins.

During the recent months, the Kuwait government announced several infrastructure developments, and re-introduced others that were either delayed owing to fiscal constraints, or due to parliamentary hurdles, regarding allegations of poor tender practice.

By the end of January, for instance, the Kuwait Oil Company awarded $486.5mn contract to Turkey-based contractor STFA to construct a port next to the Mina Al Ahmadi refinery, and upgrade the current harbour nearby, apart from building other harbours along the coast. The project forms part of developments to increase shipping capacity for the refinery, which will be able to expand to handle a capacity of 4mn barrels of oil a day by 2020.

Among the other projects in pipeline are, $6bn expansion of Kuwait International Airport, $14.2bn worth of road work to be completed in next five years, and infrastructure to underpin a commercial seaport on the previously uninhabited Boubyan Island.

The Combined group Contracting Company CEO, Sulaiman Al Maarouf said that it is getting highly important for major infrastructure developments to get off their drawing boards. Implementing mega-projects in Kuwait is now vital. Local and international firms have been waiting for too long.

The government has announced plans to launch these mega-projects and they are still waiting take-off. However, there can be unexpected delays in construction of projects, and plans to improve laws pertaining to public tenders, which will increase accountability and reinforce standards that benefit the sector.

Some large-scale projects may be delayed. The review covering contracts for Al Zour North Power plant and Sheikh Jaber Bridge is due for completion in the next three months. Any delay in execution, would pose problems for the economy.

Even if there are delays in some major government projects, there are signs that construction sector would gain a boost from private sector, with the demand for residential, investment and commercial segments likely to be on the rise.

An NBK (National Bank of Kuwait) report in early February indicated that property sale grew 16% in 2012. If this trend continues, along with an active government real estate fund, considerable pick-up in sales is expected in 2013, the report said.

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