Slow sailing for port project

A development aimed to attract foreign investment and to turn an island in the north of the country into a regional transport hub is a year behind schedule and still faces more hurdles.

KUWAIT CITY // The ministry of public works tendered bids for a new port this month that is part of a huge government plan to develop the north of the country and end Kuwait's low profile as a destination for foreign investors. The port, which may eventually have as many as 60 berths for commercial shipping, will be situated on the eastern coast of Boubyan Island in the secluded north-east. The island, which is home to a diverse ecosystem and military outposts, constitutes a sizeable five per cent of the country's land mass at low tide, about 850 square kilometres, and around half that when the tide comes in.

As is common in Kuwait, the project, which began in September 2007, has already faced delays. Ghalib Safouq, the chief engineer of the first stage of the project, which includes three bridges connecting the island to the mainland, a main road and an embankment for a future railway track, estimates the work is one year behind schedule because "there is no harmony, there is no co-ordination between the structure of the three contractors".

He estimated the first stage will now finish in 2012. The first phase of the project is split into three stages. The first stage cost 118 million Kuwaiti dinars (Dh1.5 billion). In about two months, companies will bid for contracts to build the second stage: port facilities, four berths and the quay wall. The ministry of public works estimates this stage will cost about 300m dinars and be completed by March 2013.

The third stage, another five berths, dredging of the shallow approaches to the port and construction of many of its buildings, is expected to cost another 450m dinars and be completed in 2014. In addition to construction challenges, the port will have other obstacles, some of them political, to become the northern Gulf's main transport hub. A recently cleared minefield in the Khawr Abd Allah waterway could still trouble passing ships, and the government will have to overcome an often fraught relationship with Iraq to provide the port with a northern railway link.

Planners want to capitalise on Boubyan Island's natural habitat with the eventual construction of resorts and a man-made lake. The waters surrounding the island are an important breeding ground for fish and the plentiful supply of food make the island an important stop for migrating birds such as the lesser flamingo, the curlew sandpiper and the Eurasian oystercatcher. The current plan's three phases include the construction of much of the island's transport infrastructure and expansion of the port to 24 berths by 2028. A further 36 berths may be added to the port in a fourth phase, depending on future economic conditions, Mr Safouq said.

Adel Abdullah al Torke, the chief of the mega-projects sector at the ministry of public works, said designs for the three bridges are finished and: "They're starting to put in the piles for the temporary bridge and they're moving the soil that's needed for the roads to the island." "The progress, it's picking up," Mr al Torke said. "We can feel the difference in last two months." Kuwait currently has two dry cargo ports with 41 berths in addition to three oil terminals.

Some ports in the southern Gulf have a larger shipping capacity. Jebel Ali and Port Rashid in Dubai, for example, have a total of 102 berths. But Mr al Torke said the new port is not competing with Dubai. "We are trying to serve the region from this side of the Gulf," he said. Even if the port does open up a different market, a minefield to the south of it, suspected of being laid by Iraq, is throwing up challenges.

"At the invitation of the Iraqi and Kuwaiti governments, the Royal Navy and US Navy have been working together with the Kuwaiti and Iraqi navies to ensure sea lanes are clear for mariners operating in the northern Gulf," a press release from the US navy said last year. The ministry of defence said on its website that the mission used mine hunters, diving teams and unmanned underwater vehicles to clear the Khawr Abd Allah waterway of mines. It expects the mined danger areas to be renamed former mined areas, which are much safer.

However, The United Kingdom Hydrographic Office, which provides charts for its navy, said only five of the six dangerous geographic locations on the waterway were downgraded, and it warned of the rest: "In the Northern Gulf in particular, anchoring within former mine danger areas is not recommended ? even in cleared waters and routes, there is a remote risk that mines may still remain." In addition to shipping problems, the construction taking place on the Subiya coast, near the island, with two dozen engineers and about 500 labourers, suggests the ministry will have to speed up building if they are to start meeting the planners' deadlines and entice foreign investment.

Kuwait is the least popular destination for foreign direct investment in the GCC. The UN's 2008 world investment report estimates the country attracted just US$123m (Dh451m) in 2007. Even many Kuwaitis prefer to put their money elsewhere. In the same year, investment outflows from the country totalled more than $14bn. By pouring money into the local projects, the government hopes to lure more foreign investment to Kuwait.

The ministry of public works currently has 110 projects on the books and a budget of 155m dinars for this financial year, Husam al Tahous, an assistant undersecretary of construction sector for the ministry, said at a conference entitled MEED Kuwait Projects 2009 earlier this year. MEED Projects estimated that $168.8bn of "mega" construction projects, each worth more than $1bn, were under way in March.

One of the largest, The City of Silk, a planned city located just 40km from the port, is worth $77bn. It is another local project that has faced delays. Its start date has been postponed for four years to 2012. [e-mail]