Live Wire

In what ways can PPPs increase the attractiveness of Kuwait and spur higher levels of FDI?

By tendering strategic and significant infrastructure and service-related projects, the state of Kuwait is encouraging strategic local and global investors to finance these kinds of projects on exclusive bilateral agreements, while also sharing the risks associated with such projects. All of this reflects the state’s interest in supporting FDI, as well as its efforts to encourage the private sector to import the necessary technology and know-how, reduce operating costs, and improve service efficiency.

In which sectors could PPPs have the most significant impact on Kuwait’s economy?

Infrastructure and service-delivery projects related to public services have the most significant potential, since they can establish joint stock companies with ownership of 50% for public shareholders. Projects of that magnitude increase imports, labor, and job creation, as well as opportunities for local and international financing and B2B opportunities. That said, every sector is important to Kuwait’s economy, especially the ones that provide social services.

How is Kuwait shaping up its PPP regulations to enhance this model?

PPPs were first regulated in 2008 by Law No. 7. Before that, simpler forms of BOTs were regulated under Law 105 of 1980. However, due to the shortcomings of Law No. 7 of 2008, Kuwait enacted the current PPP Law No. 116 of 2014. This and its executive regulation enacted by decree No. 78 of 2015 set out the legal framework of PPPs in Kuwait. A special law regulating PPP projects for power plants and water desalination, Law No. 39 of 2010, also exists. KAPP is the governmental entity responsible for the tender of PPP projects pursuant to said regulations.

What should be done to reduce the time between announcing a project and assigning to the winning bidder?

KAPP strives to enhance the tender process and expedite procedures. Currently, a detailed study is being carried out to mitigate the obstacles that delay tendering projects or their procurement. Within this study, KAPP is proposing amendments in the PPP legal framework to ensure a smooth and fast tendering process.

In light of the Az-Zour North IPO, how can Kuwaitis directly benefit from PPPs?

On the investment side, Kuwaitis can add steady payments to their income portfolio in the form of dividends. At the same time, a company such as Shamal Az-Zour is under stringent employment requirements, in which the employment of Kuwaiti nationals should be no less than 70% of the total workforce. In addition, Kuwaiti salaries must represent 70% of total salaries.

How can can PPPs help Kuwait lead the region in terms of FDI?

Vision 2035 is not truly in direct competition with national development plans in neighboring countries. Its purpose has been to stimulate the local economy, improve living standards, and ensure a means of revenue aside from oil. Kuwait’s PPP program is set to improve its current public services, attract foreign investment, and help make the local economy more progressive by creating new investment opportunities.

What are your expectations for the year ahead?

In 2019, the IPO for Shamal Az-Zour Al-Oula Company will be completed, aside from the planned signing of the PPP agreement for the Um Al Hayman WWTP project. These achievements will boost confidence in the ability of the state to stay true to its mandate regarding PPPs and give investors good indicators for upcoming tenders.