Construction

Contractors quit bidding on Kuwait airport project due to ‘tough’ requirements

Only six out 19 prequalified firms buy tender documents

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Tendering for construction on a second terminal for Kuwait’s airport mega-project has been put on hold following complaints and withdrawal by bidders regarding ‘three tough conditions’, local reports have suggested.

“The contracting companies found the conditions as discouraging and incapacitating…this pushed the Ministry of Public Works to put the project indefinitely on hold,” said  a local Arabic-language newspaper.

The first of the three “tough” conditions requires contractors to invest at least 35% of the contract’s value – which amounts to $1.26 billion – in civilian projects under an offset program. The next condition requires that only one company executes the project.

The contractor is also required to pay a 5% guarantee as income tax on the project; 10% as offset guarantee; and other contracting fees, such as project execution guarantee and a 10% advance payment fee under the third condition.

Construction cost of the second airport terminal project was initially estimated at $3.2 billion; the figure later jumped to as much as $3.6 billion, said Al Rai, a Kuwaiti publication.

Out of the 19 pre-qualified firms, only six international companies bought tender documents, added the Zawya report. Though it was floated in 2004, the project was postponed until April 2014 due to various factors, including these three conditions, the Ministry of Public Works had announced.

“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,” a source close to the project reportedly said.

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