"Regional governments, including Kuwait, are turning to
new financing strategies to fund crucial infrastructure projects with PPPs
being an increasingly popular model in the region," said KIPCO Asset
Management Co. (KAMCO) in its latest report issued on Sunday.
"After a challenging year in 2009 investors are more
optimistic about the prospects of the coming couple of years," it added.
"This optimism springs from the list of large projects expected to be
executed during the period. The lending power of some of the major banks may
have been affected by the global financial crisis, but the infrastructure needs
of Kuwait and the region are still present," the report said.
"During February of this year, the new economic
development plan received its final approval from the Kuwaiti Parliament. This
bill has great significance to the Kuwaiti economy since it is the first
development plan to be approved since 1986. This new plan includes developments
on some new projects such as the Kuwait City metro and railway and some long
awaited projects such as the multi-billion dollars Silk City business hub
project, Boubyan port, the Subiya causeway, as well as improving education,
healthcare, power and transportation systems. The final cost estimate of the
bill was reduced to $110 billion, with the government and the private sector
contributing roughly equal portions," it added.
"Creation of durable and high quality infrastructure is
a prerequisite for rapid economic development and requires sustained
investments supported by technological innovation, a skilled work force and
excellent project management. The task of pooling together all these resources
often proves to be a burden far too heavy for the government to carry alone.
This realization has brought together the public and the private sector in a
mutually beneficial relationship in the form of PPPs to execute not only
infrastructure projects but also engender innovative strategies for social
development," it said.
According to the report, the basic intent of a PPP is to
encourage the private sector to capitalize on its capacity to raise capital and
its ability to complete projects on time and to budget, for the welfare of the
community, without having to compromise on its profit-seeking motive. At the
same time, it added, the public sector would retain its responsibility to
provide goods and services to the public at affordable rates.
