A report issued by the National Bank of Kuwait said that the pace of project activities improved in the first quarter of 2023, following the weak performance during 2022, as the value of awarded projects increased by 78.3% on a quarterly basis, to reach KD 527 million, achieving an annual jump of 332%.
The levels achieved during only the first three months of 2023 constitute more than 70% of the value of projects awarded in 2022. The report pointed out that MEED magazine expects to award projects worth 8.4 billion dinars in the remainder of the current year, more than 4 times as much the recorded value in 2022, reports Al-Anba daily.
Although about half of this figure relates to the Al-Zour Petrochemical Complex of KIPIC with 2.9 billion dinars, and the awarding of the Partnership Authority to the Az-Zour North Independent Water and Energy Project with 1.2 billion dinars, even if only 30% of the other projects were actually awarded during the remainder of the year. year, this would represent a significant improvement compared to the results achieved in 2022.
As for the remaining period of 2023, the NBK report indicated that the positive momentum may continue, and the partial recovery of expatriate workers in 2022 may indicate the beginning of preparation for the implementation of some projects, and the government may give priority to accelerating the pace of implementation of the development plan after the end of the upcoming National Assembly elections.
However, at the present time, the domestic environment remains challenging with the expected decline in capital expenditures of the government, as shown in the draft budget for the fiscal year 2023/2024, the slowdown in consumer spending boom, and the relatively high costs of labor and building materials, which affected project activities at a time Previously, this is in addition to the rise in borrowing costs due to the tightening of monetary policies.
Returning to the projects awarded during the first quarter of this year, the NBK report stated that the acceleration of project activities is due to the recovery of the energy and water sectors on the back of a number of projects awarded by the Ministry of Electricity and Water, as the total value of the awarded projects amounted to 236 million dinars, equivalent to 45% of the total value of all awarded projects in the first quarter of 2023.
The activity of the energy sector was remarkably strong, reaching its highest levels recorded in about six years after the Ministry of Electricity and Water awarded projects worth 150 million dinars, in addition to awarding projects worth 60 million dinars to the Electricity Interconnection Authority of the Gulf Cooperation Council.
The transportation sector continued its strong performance, and the total value of awarded projects amounted to 127 million dinars, the bulk of which relates to road and infrastructure works for Sabah Al-Ahmad Residential City by the Public Authority for Housing Welfare (110 million dinars).
On the other hand, the National Bank of Kuwait report said that the value of contracts awarded within the oil and gas sector declined on a quarterly basis, but it is still strong, as the value of projects awarded within the sector decreased by 44% on a quarterly basis, to 60 million dinars in the first quarter of 2023.
The sector is expected to witness limited activity this year, although the project to dismantle a number of assembly centers in eastern Kuwait (210 million dinars) may push the total value of awarded projects beyond the levels of 2021.
The chemical and industrial sectors did not witness the awarding of any projects, and the chemical sector may witness some activity this year if the Al-Zour petrochemical project of the Kuwait Integrated Petroleum Industries Company (KIPIC) (2.9 billion dinars) is awarded in the fourth quarter of 2023.