New Construction market report from Business Monitor International: "Kuwait Infrastructure Report Q3 2013"

Boston, MA -- (SBWire) -- 09/09/2013 --Increased oil income has bolstered the Kuwait Construction and Infrastructure sector as the government continues to stand behind growth despite political uncertainties. State stimulus has ensured a steady pipeline of projects but delays are starting to threaten investor confidence. Growth estimates have slipped slightly this quarter as a result, with growth of 3.3% year-on-year (y-o-y) forecast for 2013. This will take the industry value to US$3.5bn this year, rising to US$6.6bn by 2022.

Key developments in Kuwait's infrastructure sector include:

- Kuwait's Ministry of Electricity and Water awarded Honeywell a US$11.8mn contract to upgrade the country's water distribution network. The company will install its PKS or Experion Process Knowledge System in the Azzour Water Distribution Scheme, enabling operators at a central location to control the network of six different treatment plants. The network supplies more than 280mn gallons per day of fresh water, and the plants are situated in Ardiya, Hawally, Salmiya, Failaka Island, Adailiya and the water towers of Kuwait.
- The government of Kuwait plans to invest KWD4.5-5bn (US$15.8-17.5bn) to support development projects in the 2013/14 fiscal year, according to Finance Minister Mustapha al-Shamali. Meanwhile, portions of an infrastructure building and economic development plan worth KWD30bn (US$105bn) have been witnessing delays as a result of domestic political tension. The country recorded a budget surplus of KWD17.2bn (US$60.2bn) in the first 10 months of its fiscal year as a result of an increase in oil income and lower-than-expected public spending, according to preliminary budget data.
- Kuwaiti lawmakers demanded that the government cancel a contract to construct a gas-fired power and seawater treatment plant. The government signed a deal in January with a consortium led by France's GDF-Suez to construct the 1,500MW Az Zour plant. The deal was part of the government's plan to broaden the country's oil-reliant economy. Meanwhile, some lawmakers have alleged that the tender process was not transparent enough.

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Kuwait has seen a flurry of populist legislation over the last few weeks, including several measures specifically targeting expatriate workers. This runs the risk of increasing uncertainty within the private sector, as well as cementing perceptions of the country as a hub of policy instability. We note that while pro-government MPs hold a majority of seats in the new parliament, tensions remain between the government and the legislative branch.

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