Differences between private sector, govt said reach dead end
KUWAIT CITY, June 26: In the context of the government’s economic confusion in many files, informed sources said the Public-Private Partnership Authority put the hurdles in the wheel of the first North Zour power plant project, the first PPP model in Kuwait which was supposed to be listed on the Kuwait Stock Exchange months ago, reports Al-Qabas daily.
The daily added, after months of silence on the reasons for delaying the listing, the correspondence of the partnership body revealed that the differences between the private sector and the government on the project reached a dead end, which may threaten plans to include the company and put at risk the future of the partnership project as a whole.
It was discovered the most recent differences are currently in the form of about 10 million dinars which are added to the capital of the company under the financing agreement with local and foreign banks in dollars, which is equivalent to 400 million dinars, in respect of a fall in the dinar against the dollar during the period of implementation of the project.
The cost of completion of the first phase of the project of the first power station in North Zour was about 500 million dinars, equivalent to 1.8 billion dollars, was funded by 20% of the capital and 80% of bank financing. The company is funded under the Project Finance, which means that the company’s funding is guaranteed by the 40-year long-term energy and water purchase agreement.
After the completion of the project in record time and at a lower than expected cost, the company requested a reduction of KD 10 million as a capital surplus, especially since the currency was not subjected to any significant shake-up throughout the implementation period of the project.
The regulations of the partnership law between the two sectors stipulate that “the Commission shall, once the project is fully operational, ensure that the authorized capital of the company is fully completed and evaluated in accordance with the actual construction costs.
The capital of the authorized public shareholding company may not be amended unless the approval of the Supreme Committee and the signing of the partnership agreement between the partners and government agencies with the winning investor, which obliges all partners to do the necessary after the end of the project to ensure that the ratio of debt to capital does not exceed 80 percent to 20 percent.
The correspondence explained that the position of the partnership to date is to refuse to reduce the capital by 10 million dinars, on the pretext of increasing the solvency of the company, and the calculation of this amount within the capital and distribution of shares in the company to the shareholders and the IPO, forgetting that this amount was not part of the basic capital, but came as a requirement and a bank guarantee in exchange for changes in the exchange market! Informed sources pointed out intense pressures are currently being exerted in the form of markets, to pass the file of listing and approval of the prospectus for subscription, without the approval of the board of directors of North Zour.