Construction and transportation sectors contract 40% in 2022

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KUWAIT CITY, Aug 30: MEED magazine reported a significant shift in Kuwait’s contract award activity in the construction and transportation sectors, reports Al-Rai daily. Between 2014 and 2016, these sectors experienced a surge, totaling around $27 billion in contract awards. However, the landscape has changed due to prolonged political disagreements between legislative and executive branches, leading to decision-making disruptions. Following two years of positive growth in 2020 and 2021, overall project activity has seen a notable decline. Presently, Kuwait has ambitious transportation projects on the docket, valued at approximately $28 billion. These include contracts worth $22.9 billion in preliminary stages, $2.3 billion in the design phase, and $2.8 billion in the bidding phase.

Contingent
Within both the construction and transportation domains, projects worth $4.7 billion have progressed beyond pre-qualification and are either in the bid submission or evaluation phase. If even half of these contracts are awarded, 2023 could potentially become the most fruitful year for contractors since 2018. However, the majority of this potential value is tied to substantial projects, contingent on the approval of major plans, which in turn require National Assembly support. In 2022, the construction and transportation project market experienced a sharp 40% contraction, settling at just under $1.7 billion, attributed to a decrease in awarded projects.

From the beginning of the current year until now, contracts totaling $1.2 billion have been granted within these sectors. While construction ranked as the second-largest project sector in Kuwait last year, with approximately $627 million in awarded contracts, the trend has continued into 2023, with contracts totaling around $440 million. However, these figures remain well below the average annual awards of $1.8 billion seen from 2018 to 2022, or the average of $4 billion spent in the preceding five years.

As with other project sectors in Kuwait, the construction domain has suffered from a considerable reduction in public spending, a consequence of internal political conflicts over expenditures and debt. Concurrently, pending construction projects slated for award encompass a total value of about $22.9 billion. Among these, $8.7 billion is under study, $6.6 billion is in the design phase, and $7.6 billion is in the bidding phase. The standout performer in 2022 was the transportation sector, displaying robust project activity in Kuwait, with contract awards surpassing $1 billion. This figure outstripped the average annual total of $800 million recorded between 2018 and 2022.

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