A report issued by the National Bank of Kuwait attributed the acceleration of project activities 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 (about 770 million dollars), which is equivalent to 45 percent of the total value of all awarded projects in the first quarter of 2023.
The report indicated that the activity of the energy sector was remarkably strong, as it reached its highest levels recorded in about 6 years, after the Ministry of Electricity and Water awarded projects worth 150 million dinars, about 490 million dollars, in addition to the awarding of projects by the Electricity Interconnection Authority for the Gulf States to projects worth 60 million dinars.
The report pointed out that the transportation sector continued its strong performance, and the total value of the awarded projects amounted to 127 million dinars, the bulk of which relates to road and infrastructure works for the city of Sabah Al-Ahmad by the Public Authority for Housing Welfare (110 million dinars).
Building and construction activity was strong despite declining from the previous quarter. The total value of projects awarded within the sector declined by 33 percent on a quarterly basis, to KD 104 million.
The most prominent of the awarded projects is the second package of the Kuwait Oil Company project for soil treatment in the southern region of Kuwait (45 million dinars) and the construction of multiple headquarters for the Capital Markets Authority and the Institute of Banking Studies.
On the other hand, the National Bank of Kuwait confirmed the decline in the value of contracts awarded within the oil and gas sector on a quarterly basis, but it is still strong. The value of projects awarded within the sector declined by 44 percent on a quarterly basis, to KD 60 million 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 2021 levels.
For the remainder of 2023, NBK indicated that the positive momentum may continue. The partial recovery of expatriate workers in 2022 may indicate the beginning of preparations 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, for the time being, 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 in Earlier, this coupled with higher borrowing costs due to tightening monetary policies.
The National Bank of Kuwait concluded its report by noting that the chemical and industrial sectors did not witness the awarding of any projects. The chemicals sector may witness some activity this year if the Al-Zour petrochemical project of the Kuwait Integrated Petroleum Industries Company (KIPIC) is awarded at a value of 2.9 billion dinars in the fourth quarter of 2023.
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