The Economist Intelligence Unit reported that the increasing demand for electricity in Kuwait in early June due to an early summer heat wave coincided with a new warning of repeated delays in major projects to increase electricity production capacity.
A local Arabic daily has learned that the EIU believes that these developments highlight the chronic deficiencies in the implementation of government projects in Kuwait, which are currently exacerbated by the political paralysis that has led to the failure to modernize the infrastructure to deal with the growth of natural demand and the effects of climate change.
The sources pointed out that delays have always been a feature of government projects in Kuwait, and that their main cause is due to shortcomings (bureaucracy and politicization), adding that “all improvements to transportation, facilities, social infrastructure and major development projects fell victim to this, leaving Kuwait further behind than ever before.” It is ahead of its peers in the Gulf in the quality of infrastructure and economic diversification.”
The sources went on to say the current unexpected financial gains resulting from the record rise in global oil prices should stimulate increased capital spending to make some improvements to the infrastructure, but this opportunity may be squandered by the prolonged political paralysis, which further slows down the decision-making process.
The unit noted that the electric power sector summarizes these problems, as the demand for electricity is increasing rapidly, and the impact of population growth is exacerbated by increased consumer demand, as climate change leads to the creation of longer and hotter summers and the associated need for air conditioners, while temperatures exceeded The temperature is 50 degrees Celsius in early June, among the highest recorded globally this year.
According to the unit, consumption is still wasteful, due to the opposition of the National Assembly to any meaningful reform of electricity consumption fees, indicating that the daily consumption exceeded 15 gigawatts in early June (the barrier was breached for the first time ever in 2021), while the amount of spare capacity is shrinking (it was determined The installed capacity is at 18.6 GW, but the operational output is about 1 GW lower).
However, capacity increases have been planned for years across the North Az-Zour 2 and 3 and Al-Khairan projects, while developers are still awaiting a new invitation to bid. The country’s first independent solar project (originally put up for bids in 2018) appears to be stalled, following changes in contracting strategy.”
The unit stated that while the 3.6 GW Nuwaiseeb project is assumed to reflect both improved revenues and a simpler and less controversial project award process, the government is reverting to direct purchase of its latest project, which is also awaiting selection of a consultant. The latest delay was due to bidding to expand production capacity at the Sabiya complex by 1.2 gigawatts.
The Economist noted that large government projects should gain momentum from increased capital spending during the period between 2022 and 2024 against the backdrop of high oil prices, but its coincidence with a period of severe political disputes and exacerbation of chronic problems in implementation, will limit progress. The unit believes that the resulting deficiencies in infrastructure, especially in comparison with other Gulf countries, will hinder investment and undermine economic growth.