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Kuwait: Cabinet decision on refinery crucial to cooperation

KUWAIT: The Cabinet is expected to decide during its weekly session tomorrow whether or not to refer the fourth refinery project to the Audit Bureau as demanded by several MPs and future cooperation between the National Assembly and the government hangs on the decision. MPs who strongly criticized the oil minister's handling of the project and even threatened to grill him if he signs contracts with foreign companies, welcomed the minister's announcement that he would recommend to the Cabinet to refer the project to the Audit Bureau for review.

Islamist-tribal MP Dhaifallah Buramia said yesterday that referring the project to the Bureau will ease tension between the Assembly and the government. The controversy began last month when several MP met with Oil Minister Mohammad Al-Olaim to discuss allegations that the bidding process for the refinery at Al-Zour and awarding of the contracts were flawed and raised suspicions.

The minister denied the allegations and repeatedly insisted that Kuwait National Petroleum Company (KNPC), which owns all refineries, has strictly followed the country's laws. Four South Korean firms and a Japanese company had been declared winners of four major contracts valued at $8.2 billion while US Engineering firm Fluor was awarded a fifth contract, besides consultancy works, without any bidding.

Several MPs, led by the Popular Action Bloc, strongly criticized the minister, saying the awarding of the contracts was not made under the country's Tenders Law which governs all major public contracts. The minister responded by saying that oil companies and their projects are exempted from applying the Tenders Law, adding that the Audit Bureau will review the process after the signing ceremony.

But lawmakers threatened that the minister will be grilled if he signed the contracts and demanded that the project must be scrutinized by the Audit Bureau to make sure that it did not involve squandering of public funds. After initially rejecting the calls, the minister later bowed to pressure and agreed to ask the Cabinet to refer the project to the Bureau.

Olaim was a leading member of the Islamic Constitutional Movement (ICM), the political arm of the Muslim Brotherhood, whose MPs came to his defense. Leading ICM lawmaker Nasser Al-Sane strongly defended Olaim and alleged that vested interests were behind the attacks on the minister. Reports have suggested that the whole uproar over the refinery project was actually triggered by agents of foreign oil majors who lost the contracts. KNPC has categorically denied any wrongdoing.

The refinery, to be built in Al-Zour near the Saudi border, will have a capacity of 615,000 barrels per day. It is estimated to cost about KD 4 billion, but critics have said that the cost will be much higher.

By B Izzak

© Kuwait Times 2008