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Kuwait parliament to probe two mega projects

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(Globalpost/GlobalPost)

Kuwait's parliament on Wednesday voted to form a special panel to probe allegations of irregularities in two contracts worth $5.0 billion awarded to two foreign-led consortia.

Twenty-three MPs voted for the proposal, which was rejected by the government, against 20 members who opposed it. The five-MP panel must conclude its probe within three months.

A number of MPs claimed that political bargaining and secret deals were involved in the awarding of the Subbiya Causeway and Al-Zour North Power Plant a few months ago to South Korean, French and Japanese contractors.

The first contract, awarded to South Korea's Hyundai Engineering and Construction Co. and the local Combined Group Contracting Co., calls for building a 37.5-km (23-mile) causeway to link Kuwait City with Subbiya area in north Kuwait at a cost of $2.6 billion.

The second is for building a power and water desalination plant in Al-Zour area, south of Kuwait City for $2.5 billion to produce 1,500 megawatt of electricity and over 100 million gallons of drinking water daily.

The contract was awarded to Japan's Sumitomo Corp, France's International Power-GDF SUEZ and Abdullah Hamad Al-Sager and Brothers.

Minister of Electricity, Water and Public Works Abdulaziz al-Ibraheem warned MPs that the probe panel will send a "wrong message to investors" especially to foreign contractors.

He said if the power plant project is not implemented on time, Kuwait will be forced to resort to scheduled power cuts next year.

Kuwait has a production capacity of 13,000 MW now while its consumption, which grows 800-900 MW annually, was around 12,000 MW last year.

"By next year, we will have zero reserve capacity without the project and we will be forced to adopt programmed cuts," the minister said.

Projects and development have been stalled for many years in this oil-rich country because of political bickering between government and previous parliaments which had a strong opposition presence.

But the current parliament is pro-government after the opposition boycotted elections last year due to a controversy over the amendment of the electoral law.

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http://www.globalpost.com/dispatch/news/afp/130206/kuwait-parliament-probe-two-mega-projects