Kuwait issued a new PPP law (Law No. 116 of 2014) in August 2014 (the New Kuwait PPP Law), replacing the old PPP law (Law No. 7 of 2008), which has generally been seen as adding significant value to PPP procurement in Kuwait. The New Kuwait PPP Law enshrines in statute many of the practices and techniques used on Kuwait’s first IWPP project, Al Zour North 1 project.
Article 2 of the New Kuwait PPP Law provides for the establishment of a new Higher Committee for Public Private Partnership Projects and replaces the old Higher Committee for projects. The new law also establishes the Kuwait Authority for Partnership Projects (or KAPP) which replaced the previous Partnerships Technical Bureau (PTB). Unlike the Dubai PPP Law which requires a partnership committee to be set up by the relevant government entity for each project, KAPP will administer all PPP projects being procured under the law.
Also unlike the Dubai PPP Law, the New Kuwait PPP Law clearly sets out the responsibility of the party involved in the establishment of the project company. Articles 12 and 13 provide that, for projects with a value of KWD60 million or less (around USD$200, million), the investor must establish the project company and for those projects with a value of over KWD60 million, KAPP must establish the project company after awarding the project to the successful bidder.
Pursuant to Article 13 of the New Kuwait PPP Law, the project company (with a value of over KWD60 million) will be owned according to the following percentages:
- 6-24 per cent by Kuwait public entities;
- no less than 26 per cent by the successful investor; and
- 50 per cent by the Kuwaiti public by way of initial public offering.
During the initial stages of the PPP project, the shares allocated to the Kuwaiti public entities and general public will be warehoused by KAPP pursuant to Article 14.
Other improvements in the New Kuwait PPP Law include allowing investors to assign government assets to lenders and to pledge shares to provide security to lenders and Article 34 allows foreign ownership of the project company.
Another difference between the Kuwait and Dubai PPP laws is the duration of the concession granted to the project company. In Dubai, this is 30 years from the signing of the agreement (Article 27); in Kuwait however, this can be up to 50 years from the date stated in the PPP agreement (Article 18).
Both the Dubai and Kuwait regulations allow for the procurement of the projects to be cancelled at no cost to the government.
The New Kuwait PPP Law is generally much more investor-friendly than the law it replaces. Kuwait is clearly keen to shake off its reputation for delayed and, in some cases, difficult procurement. It has done well to adopt progressive legislative reform in order to provide an improved platform for future PPP projects in Kuwait.