May 05 2011 |
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Economic policy: Government plans large infrastructure investments
The Ministry of Electricity and Water will invest KD7.5bn (US$26bn) up to 2014 to expand the country's water and power production capacity, Suhaila Marafi, the director of studies and research at the ministry announced at a business conference in Abu Dhabi in late March. The country needs to add 10,000 mw to its existing power generation capacity of 11,300 mw by 2020 and to raise water capacity to 800m gallons/day (gal/d) from 470m gal/d, she said. However, based on the ministry's previous track record—utilities projects have traditionally faced long delays—these goals are likely to prove ambitious.
Separately, Kuwait Petroleum Corporation ( KPC ) has said that it could relaunch tenders for the KD5bn Al Zour refinery and the KD4bn Clean Fuels Project before the end of the year if it receives approval from the Supreme Petroleum Council. Speaking at a conference in early April, KPC 's managing director for planning, Hashim al-Refaai, said that the company will invest US$90bn in the oil and gas sector up to 2015 and US$340bn by 2030. KPC has said that it aims to raise oil production from its current level of 2.4m barrels/day (b/d) to 3.5m b/d by 2015 and 4m b/d by 2020.
However, the political stalemate in the country continues to hamper investment projects. Prior to the most recent resignation of the government, the deputy prime minister for economic affairs, Sheikh Ahmed Fahad, was facing an interpellation motion in parliament over the handling of the US$104bn Kuwait Development Plan launched last year. Some MPs argued that the government delayed the approval of draft bills for the plan. It is unclear, therefore, whether projects under the development plan will suffer the same fate as Project Kuwait, a scheme launched in 1997 to increase oil and gas output that has made very little headway thanks to political opposition.
In late April Kuwait Financial Centre (Markaz), a private asset management firm, issued a report analysing the five-year Kuwait Development Plan. The plan for fiscal year 2010/11 includes 884 projects worth KD5bn. Half of these were in the financial/design approval or implementation phase as of the first half of the year, the report said. In addition, 259 projects were in the final-approval stage and 141 were "in the pipeline or have not yet been started". Of the KD5bn budgeted for the year, KD735m (US$2.6bn) was spent in the first half.
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