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Firms quit Kuwait airport project; second terminal put on hold

15 June 2014
Kuwait has put its USD multi-billion new airport project on hold after most firms quit bidding due to three tough conditions, according to a media report on Sunday.

"The contracting companies found the conditions as discouraging and incapacitating...this pushed the Ministry of Public Works to put the project indefinitely on hold," reliable sources told the Arabic daily Al Rai.

The costs of the second airport terminal project have risen to more than USD 3.6 billion (KWD 1 billion) from its earlier estimated costs of USD 3.2 billion (KWD 900 million), said the daily.

Against this cost, as the first condition, the contractor is required to invest at least 35 percent of the contract's value [USD 1.26 billion (KWD 350 million] in civilian projects under the offset program, added the paper.

Under the second condition, only one company must execute the project while the third condition stated that the contractor must pay a 5 percent guarantee as income tax on the project. , 10 percent as offset guarantee and two other contracting fees, including project execution guarantee and a 10 percent advance payment fee.

Only six international companies had bought the tender documents out of the 19 pre-qualified firms, said the sources.

London-based architectural practice Foster + Partners had designed the new airport, which was due to be launched in 2012.

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But the project, which was first floated in 2004, was postponed until April 2014 because of the three conditions and other reasons, said the Ministry of Public Works.

"Kuwait will be the biggest loser of the project's postponement as this hurts its regional and global reputation and contradicts with plans to turn Kuwait into a regional financial and commercial centre," said a source close to the project.

According to the report, the new terminal will boost the airport's capacity from around eight million passengers per year at present to 13 million in the first stage, to be raised to 25 million and 50 million passengers at later stages.

© Zawya 2014

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