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New multi-billion airport project placed on hold

Kuwait has placed on hold a new USD multi-billion airport project, as majority of firms quit bidding due to three tough conditions.


The contracting firms found that the conditions were discouraging and incapacitating. Therefore, the Ministry of Public Works had to place the project indefinitely on hold.


The cost of second airport terminal project has grown to more than USD3.6bn from its earlier cost of USD 3.2bn. The contractor is required to invest at least 35 percent of contractís value against this cost in civilian projects under an offset program.


As per the second condition, only one company should execute the project, while the third condition revealed that contractor should pay 5 percent guarantee as income tax on the project, 10 percent as offset guarantee and two other contracting fees, including project implementation guarantee and a 10 percent advance payment fee.


Only six international firms bought the tender documents out of the pre-qualified firms. The project which was first floated in 2004 was postponed until April 2014 due to three conditions and other reasons, the Ministry of Public Works said.


The projectís postponement will be a big loss for Kuwait, as this would hurt its regional and global reputation and contradicts plans to turn Kuwait into regional financial and commercial centre.


As per the report, the new terminal will boost the airportís capacity from eight million passengers annually at present to 13 million in the first stage, to be raised to 25 million and 50 million passengers at later stages.

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