DELAYED MEGA PROJECT NOW UNDER CONSTRUCTION:

UNCLAS SECTION 01 OF 02 KUWAIT 000894

SIPDIS

NEA/ARP

E.O. 12958: N/A
TAGS: EINV ENGR EWWT ELTN ECON KU
SUBJECT: DELAYED MEGA PROJECT NOW UNDER CONSTRUCTION:
BUBIYAN PORT

REF: A. 08 KUWAIT 655

B. 07 KUWAIT 852


1. (SBU) Summary and Key Points. On September 3, Econoff
met with Engineer Adel Abdullah Al-Torke, Chief of Mega
Projects Sector, Ministry of Public Works (MoPW)to discuss
the status of the Bubiyan port project. Key points discussed:

- Status of the Bubiyan port project: project delayed by one
year, costs estimated to be in excess of 720 million KD;
- Unexpected environmental challenges caused considerable
delay;
- Phase one: transportation corridor infrastructure currently
under construction: new road, new bridges, and new railway;
- Phase two: port construction and phase three: dredging
still in tender stage; and
- Port location within border demarcated by UN. End Summary.

Background
--------------


2. (U) A project to build a new state of the art port on
Kuwait's Bubiyan Island, conceived in 2003 and slated to
begin construction in 2006, is finally underway. The port is
in close proximity to Iraq and Kuwait international
boundaries. The planned port will include a free trade zone
area, a light industries area, and is expected to relieve
traffic to existing ports (Shuwaikh and Shuaiba) by providing
a container station of 2.5 million TEU (equal to 20'
containers) (ref a & b). Al-Torke reported that the project
is currently in phase one: building the transportation
infrastructure corridor from Bubiyan to the Sabbiya area, a
currently undeveloped area located on mainland North of
Kuwait City center. This area is also slated for future
development.

2013 Targeted Completion Date
--------------


3. (SBU) Al-Torke told Econoff that the original project plan
has not changed but the timeline has shifted by one year. He
projected a new target completion date of 2013. Al-Torke
reported that the environment was to blame for some of the
delay and specifically mentioned loose soil which was found
unsuitable for construction. He went on to say that the soil
has been compacted and construction of the new 37 km long
transportation corridor from the port to Subiya, which
includes a new road, a new railway, and corresponding
bridges, is currently underway. At an estimated cost of 120
million KD, this infrastructure will accommodate an over all
increase in traffic to the port including construction
materials needed to begin phases two and three of the
project. He opined that delays were not unusual for a
project, of this ambitious scale, and that it was to be
expected that plans, timeline, and budget would change
throughout the project cycle.

Port Construction and Dredging in Tender Stage
-------------- --


4. (U) Al-Torke stated that the remaining project phase's
port construction and dredging of the Kuwaiti waterway are in
the tender stage. He told Econoff that the MPW was using
foreign advisors to assist with company pre-qualification
during the tender process and that the projects would be
awarded to joint ventures between foreign firms and Kuwaiti
companies. He cited Louis Berger as well as China Harbor as
companies currently involved in the construction. When asked
about the maritime border with Iraq, Al-Torke stated that
Kuwait is following the UN designated demarcation in the plan
for the port, adding, however, that demarcation of the
maritime borders with Iraq are under consideration with the
GOK Minister of Foreign Affairs. He estimated the cost for
port construction at 300 million KD and an additional 300
million KD for dredging (deepening the draught by 20 meters
to accommodate container ships). (Note: MFA sources have
alluded to discussions with the Government of Iraq in which
the Kuwait side
has agreed to place the landfill resulting from the dredging
on Bubiyan. End Note)

Comment
--------------


5. (SBU) Comment. This "mega project" is designed to help
the Kuwait's economy diversify from its current reliance on
oil exports, and when completed, will significantly increase
Kuwait's cargo handling capacity. The location is also an
excellent one for reaching the Iraqi or the Iranian market.

KUWAIT 00000894 002 OF 002


Absent significant improvements in Kuwait's business climate,
however, it is unlikely that the port alone will markedly
improve Kuwait's diversification, though it will facilitate
Kuwaiti imports. Post believes the current timeline to be
ambitious given the scale of the project and the fact that
awards have not yet been made for phases two and three. We
believe the project is likely to slip and may require
additional sounding approvals from the GOK as costs are
re-evaluated. A map of the project can be accessed on
Embassy Kuwait's intellipedia Econ portal. End Comment.

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For more reporting from Embassy Kuwait, visit:
visit Kuwait's Classified Website at:

http://www.intelink.sgov.gov/wiki/Portal:Kuwa it
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JONES