Meed | Kuwait navigates unchartered political territory

Kuwait navigates unchartered political territory

29 August 2024

Kuwait’s political situation and its near-term prospects for governance continue to hinge on the dramatic suspension of the nation’s parliament by Emir Sheikh Meshal Al-Ahmad Al-Sabah.

This drastic measure by the country’s leader came in response to a deepening political stagnation in Kuwaiti politics that has seen successive formations of parliament and government deadlocked over the most fundamental of fiscal legislation: approving the budget and raising the debt ceiling.

Underlying these stumbling blocks are allegations of fiscal and budgetary malfeasance levelled by the elected lawmakers in parliament at the ruler-appointed and ruling family-led cabinet.

In recent years, the proceedings in parliament have become increasingly acrimonious, with lawmakers frequently demanding the right to question cabinet members – a demand that has instead often simply resulted in the dissolution of the government.

Kuwait’s political system has often been described as a “democratic experiment”, as it was a first in the GCC to devolve significant legislative authority to a chamber of fairly freely elected representatives.

On 10 May, however, after the fourth election in four years in pursuit of a functioning government resulted in the same rigmarole, the emir triggered the system’s inbuilt circuit breaker for the first time since its establishment and effectively placed the experiment on hold.

Two days later, the emir announced the formation of a new cabinet headed by Sheikh Ahmad Abdullah Al-Sabah as the returning prime minister. The country’s oil, finance and foreign ministers all retained their posts as well, making it a continuity cabinet, but in the absence of parliament.

Officially, the rules allow for the suspension of parliament for up to four years, enabling direct rule by the emir and his cabinet in the interim. Kuwait has thus returned, temporarily, to something of a default setting for the GCC. But it is a dramatic turn of events for Kuwait given the country’s well-worn electoral legacy – even as its other positively regarded attributes, such as a relatively free press, remain intact.

Project revitalisation

The emir’s decision is nevertheless being viewed in many quarters as a potentially positive development, not least in the projects sector. The political deadlock plaguing the country has been a salient problem for contractors in recent years due to the way parliamentary objections have impeded project spending.

Indeed, political disputes over capital expenditure have come close to scuttling Kuwait’s projects sector, which has seen its activity plummet over the past decade, with the country’s $16.5bn in contract awards in 2016 plunging to just $2.6bn in 2019 and averaging less than $4bn in the past five years. Given the parallel $100bn in project completions over the past 10 years, this fall in awards has resulted in a $50bn net decline in the value of projects under execution.

This loss of value from the projects sector has been detrimental to Kuwaiti contractors, who have been looking abroad in increasing numbers for alternative avenues of work. The drop-off in value in the project market has also been even more dramatic in certain industries, including the oil sector, where the total value of active projects fell from $65bn in early 2019 to just over $5bn by early 2023.

The reduction in oil sector projects, where constant work is required to maintain the performance of the infrastructure, is a threat to the main driver of the Kuwaiti economy and government revenues.

Given the country’s limited diversification and the accounting of the oil sector for 60% of Kuwait’s GDP and 90% of government revenue, the potential long-term consequences of the nation’s political dysfunction metastasising into dysfunction in the oil sector are considerable.

It is not surprising then that one of the first things on the agenda since the suspension of parliament has been the revival of oil sector projects – with the country’s Central Agency for Public Tenders now meeting three days a week since July to advance the tendering of major schemes.

Political correction

Political reform is also on the table. In his televised address to the nation on 10 May, the emir stated: “The recent turmoil in the Kuwaiti political scene has reached a stage where we cannot remain silent, so we must take all necessary measures to achieve the best interest of the country and its people.”

The presentation of the challenges facing the country in existential terms underlined the heightened perception that Kuwait was careening towards disaster amid political paralysis, falling oil infrastructure investment and snowballing expenses.

However, regardless of the “unimaginable, unbearable difficulties and impediments”, facing the country, the retaking of direct control by the emir and cabinet is no assurance that the trouble is over. The country still faces stark policy choices, including how to tackle its burgeoning public wage bill, which currently stands at about 30% of the country’s GDP and is only set to grow with rising pay and pensions.

These are costs that Kuwait cannot bear without robust oil sector development, and even that might not be enough. Economic projections have suggested public salaries could make up as much as 75% of the budget within five years, which could rapidly shrink the fiscal space for any other spending.

This is a burgeoning dilemma for the country that cannot be tackled overnight, but with four years of determined and unencumbered course correction, Kuwait could at least develop some more options.

Constitutional amendments could also be unveiled to prevent a return to political paralysis when a parliament re-forms. The ability of the house to override the emir’s veto with a simple majority, as well as to hold votes of no confidence for ministers, are two areas where changes could be made to smooth the political process – for example by requiring a super majority to overturn the emir’s veto or by making the conditions necessary to challenge the confidence in a minister more stringent.

Regardless, what is abundantly clear is that the existing system was not functioning as required – at the most fundamental level – in making basic legislative progress. Everything could now get back on track, but there are ample more “difficulties and impediments” to address, and Kuwait needs fresh solutions.

This month's special report on Kuwait includes:

> GOVERNMENT: Kuwait navigates unchartered political territory
> ECONOMY: Fiscal deficit pushes Kuwait towards reforms
> BANKING: Kuwaiti banks hunt for growth
> OIL & GAS: Kuwait oil project activity doubles
> POWER & WATER: Kuwait utilities battle uncertainty
> CONSTRUCTION: Kuwait construction sector turns corner

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John Bambridge

Exclusive from Meed

Consortiums submit bids for Sadara cogeneration plant
11 September 2026
UAE plans 150km Boring Company tunnel network
11 September 2026
Heisco wins $359m oil contract in Kuwait
11 September 2026
Abu Dhabi eyes digital requirements for utility projects
11 September 2026
Saudi Arabia tenders next phase of King Saud Air Base
10 September 2026

Consortiums submit bids for Sadara cogeneration plant
11 September 2026
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At least three consortiums have submitted bids for the contract to develop and operate a cogeneration steam and power plant catering to the Sadara petrochemicals complex in Saudi Arabia.

The planned independent steam and power plant (ISPP) project will have a capacity for 400MW-450MW of combined-cycle electricity generation and 550-700 tonnes an hour of steam.

According to sources, bids were submitted for the contract at the end of August.

The consortium bidders include:
- Abu Dhabi National Energy Company (Taqa) / Samsung C&T (South Korea)
- Al-Jomaih Energy & Water (Saudi Arabia) / Albawani (Saudi Arabia) / Sepco 3 (China)
- Acwa (Saudi Arabia), Korea Electric Power Corporation (Kepco) / Doosan Enerbility (South Korea)
Sadara Chemical Company (Sadara) is the project client. It is the downstream joint venture of Saudi Aramco and US-headquartered Dow Chemical.

The estimated $500m project includes construction of a power plant, substations, a seawater intake system and associated switchyards and switchgear.

The project will also include gas turbines and a back-pressure steam turbine, as well as facilities for steam production.

In 2024, MEED exclusively reported that Sadara had prequalified potential bidders for the project. It is understood that the request for proposals was issued towards the end of last year.

The first units at the $20bn Sadara petrochemicals complex in Jubail began production in 2016, and the complex became operational in 2017.

The Sadara complex is designed to produce more than 3 million tonnes a year (t/y) of chemicals and performance plastics, including polyurethanes, propylene oxide, propylene glycol, elastomers, polyethylene, glycol ethers and amines.

Construction is also continuing on the Najim cogeneration facility, which will supply the Amiral petrochemicals complex with up to 475MW of power and approximately 452 tonnes an hour of steam.

Previously known as the Amiral cogeneration independent steam and power plant, the project is being developed by a team comprising Abu Dhabi National Energy Company (Taqa) and Japanese power generation company Jera.

South Korean contractor Samsung C&T is the engineering, procurement and construction contractor for the project.
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Mark Dowdall
UAE plans 150km Boring Company tunnel network
11 September 2026

The UAE plans to build more than 150 kilometres of underground tunnel with US tunnelling firm The Boring Company, in a programme backed by a $3bn funding round the UAE led.

The Series D round values the Boring Company at $23bn, about four times the $5.7bn it was worth after a 2022 funding round. The UAE and affiliated investment entities led the round, which will accelerate a partnership to deploy underground infrastructure across the UAE, the firm said.

The 150km target marks a substantial expansion of the company’s footprint in the country, extending work already committed through the Dubai Loop project. It contrasts sharply with what has been contracted so far. The Boring Company has signed a construction contract with Dubai’s Roads & Transport Authority (RTA) for the pilot phase of Dubai Loop, covering a 6.4km route and four stations linking Dubai International Financial Centre (DIFC) and Dubai Mall. The pilot is expected to cost about AED565m ($154m), with tunnelling due to begin in the second half of this year.

The 150km figure therefore represents an ambition for the wider partnership rather than a contracted volume, with the bulk of the network yet to be tendered, designed or awarded. No timeframe has been attached to the target.

A second Dubai Loop phase will connect Dubai World Trade Centre and DIFC with Business Bay, extending the tunnels to 22km across 19 stations. The total cost across both phases is expected to be about AED2bn ($545m), with completion scheduled within three years. The pilot route is projected to carry about 13,000 passengers a day, rising to about 30,000 a day across the full route.

Other investors in the round include Human Capital, Vy Capital, Valor Equity Partners, Sequoia Capital, Andreessen Horowitz, Temasek, Shamal Holding and Baron Capital. The proceeds will also fund hiring, the scaling of the company’s Loop transit systems in the US cities of Las Vegas and Nashville, and further development of its Prufrock tunnel-boring machines, which it says can operate in both soft ground and hard rock.

The RTA and the Boring Company signed a memorandum of understanding in February last year to explore developing the Dubai Loop, and the construction contract followed in February this year. In May, US engineering firm Parsons was appointed as programme manager for the pilot phase, with a scope covering independent design verification, permitting and multidisciplinary design reviews.

The appointment comes amid a broader shift towards underground construction across the Gulf, as metro, sewerage and highway works in the UAE, Saudi Arabia and Qatar increasingly default to tunnelling.

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Yasir Iqbal
Heisco wins $359m oil contract in Kuwait
11 September 2026
Kuwait-based Heavy Engineering Industries & Shipbuilding Company (Heisco) has been awarded a contract worth KD111.05m ($359m) to develop storage tanks for Kuwait’s Jurassic Light Oil (JLO) export facilities, according to a stock market filing.

The scope of the contract includes civil, mechanical, electrical and instrumentation works, as well as engineering, procurement and construction (EPC) services for the tanks.

The contract was awarded by India’s Larsen & Toubro (L&T), the main contractor for a broader project to develop JLO storage and export facilities in Kuwait, as well as upgrade Kuwait Oil Company’s (KOC’s) existing export network.

The $979.2m main contract for this broader project was awarded to L&T on 15 July.

The contract for Heisco’s scope of work has a time period of 42 months, according to its stock market filing.

Oil crisis

Kuwait’s oil and gas sector is currently in crisis due to the regional war that started after the US and Israel attacked Iran on 28 February.

The war has severely disrupted exports through the Strait of Hormuz, which Kuwait relies on in order to ship crude exports.

It has also disrupted imports of equipment and materials for projects, raising project costs.

Sheikh Nawaf Saud Al-Sabah, deputy chairman and CEO of Kuwait Petroleum Corporation (KPC), the country’s national oil company, has described the current conflict as the biggest oil crisis the country has faced since Iraq’s 1990 invasion.

Despite the significant reduction in crude exports, Kuwait’s state-owned oil companies have continued to tender some projects.

Export facilities

The scope of work under the contract awarded to L&T in July includes the EPC of six new crude oil storage tanks, each with an operating capacity of 618,000 barrels, along with associated facilities, the Mumbai-headquartered company said on 29 July.

The project also involves “the installation of new pipelines and comprehensive upgrades to Kuwait’s existing crude loading and export network, to seamlessly accommodate increased production and enhance the country’s crude handling capabilities”, the Bombay Stock Exchange-listed company said.

L&T also said that the contract will be executed on a lump-sum turnkey basis.

Only two companies submitted bids for the contract in October last year:
- L&T (India): KD303.5m ($988m)
- Petrofac (UK): KD310.6m ($1.01bn)
Following bid submission, KPC discussed the potential cancellation of the tender due to bids coming in significantly over budget and Petrofac becoming ineligible to win contracts in Kuwait.

The contractor was temporarily barred from participating in tenders in Kuwait’s oil and gas sector in December last year.

Petrofac received the ban after the company announced it had applied to appoint administrators, a move that potentially put thousands of jobs at risk and increased uncertainty for projects worth billions of dollars in the Middle East and North Africa region.

Despite discussions about cancelling the tender, KPC ultimately decided to proceed with the award process because it considered the project a high priority.

One source previously told MEED: “Around the same time, projects worth around $8bn were cancelled because of bids coming in over budget, but this one has gone ahead because KPC sees it as an essential project.”

The project was originally tendered in November 2024, with a bid deadline of 1 December the same year. The bid deadline was extended several times before bids were ultimately submitted.
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Wil Crisp
Abu Dhabi eyes digital requirements for utility projects
11 September 2026

Abu Dhabi is set to place greater emphasis on digital and data capabilities in the procurement of future energy and water projects as the emirate prepares for the next expansion phase of its infrastructure network.

Speaking to MEED, Ahmed Mohammed Al-Rumaithi, undersecretary of the Department of Energy, said: “Future utility projects in Abu Dhabi are expected to increasingly include clear digital and data requirements as a core part of the procurement process, alongside the delivery of physical infrastructure.”

The move comes as Abu Dhabi plans to invest more than AED300bn ($81.7bn) in energy and water infrastructure over the next decade under the Department of Energy’s Strategic Framework for the Energy and Water Sector through to 2050.

“Projects will be expected not only to construct assets, but also to demonstrate how operational data is generated, cleansed, governed and exchanged across the full asset lifecycle,” Al-Rumaithi said.

Procurement frameworks are also expected to “prioritise digital readiness, interoperability, cybersecurity and adherence to common data standards” so that new assets can operate as part of an integrated and connected energy and water ecosystem.

AD.WE roadmap

The approach builds on the Department of Energy’s experience with AD.WE, an artificial intelligence (AI)-powered platform that brings together live and historical data from across Abu Dhabi’s energy and water systems.

The department unveiled AD.WE’s development roadmap in October last year, including the full rollout and expansion of the platform beyond electricity and water to district cooling and petroleum products.

The roadmap initially targeted the rollout of phase three of the platform’s development by the fourth quarter of this year, identifying applications including farm irrigation optimisation, intelligent leak detection, consumption intelligence and network planning.

Al-Rumaithi said AD.WE provides a shared operational view of the system and supports operational and regulatory decision-making through agentic AI-driven optimisation and planning.

The platform enables 20% to 30% efficiency gains across capital expenditure (Capex) and operating expenditure (Opex) in targeted parts of the network, according to Al-Rumaithi.

AI planning

AI is also being used to improve long-term infrastructure planning as electricity demand grows, including demand associated with digital infrastructure.

Abu Dhabi’s power demand is expected to double by 2050, with total installed capacity projected to rise from about 25GW to 50GW, according to the Department of Energy.

“AI is reshaping infrastructure planning in two ways. It is driving new electricity demand through digital infrastructure, while also providing more sophisticated tools to understand how demand for energy and water will evolve over time,” Al-Rumaithi said.

AI enables more accurate forecasting, scenario modelling and network analysis, allowing planners to assess future requirements across electricity generation, transmission, water production, cooling and supporting infrastructure.

The strategic framework is supported by an investment of approximately AED35bn a year in “sector development and operations”, Al-Rumaithi said.

He said the increasing use of digital systems will require greater focus on data governance, cybersecurity, transparency and accountability to ensure innovation strengthens the resilience and reliability of essential services.

For utilities, developers and technology providers, Al-Rumaithi said preparation should focus on “high-quality data, robust governance, cybersecurity and workforce capabilities needed to manage increasingly connected infrastructure”.

“Equally important,” he said, “is designing systems that can exchange information securely and operate within a wider digital ecosystem. This enables better coordination between utilities, technology providers and regulators, improving both operational performance and long-term planning.”

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Mark Dowdall

Saudi Arabia tenders next phase of King Saud Air Base

10 September 2026

Saudi Arabia’s Ministry of Defence & Aviation has started the tendering process for the next phase of the King Saud Air Base in the kingdom.

Contractors have been given until 20 October to submit their bids.

The scope of works covers the construction of the headquarters building, administrative buildings, operations and maintenance area, police camp facilities, weapons and ammunition area, residential facilities, airfield facilities and other associated facilities.

The project duration is three years.

The air base spans an area of 383 square kilometres (sq km) in the Hafr Al-Batin area of the kingdom’s Eastern Region.

Contracts worth about SR6.6bn ($1.8bn) for the project’s first phase were awarded early last year.

The joint venture of local firms Isam Khairi Kabbani Group and Alfanar Projects was appointed as the main contractor for the first package, which was worth about SR2.9bn ($783m).

The consortium comprising Riyadh-based Albawani, Shibh Al-Jazira Contracting and Kuwait’s Alghanim International won the second package, worth about $1bn.

According to GlobalData, Saudi Arabia’s defence budget is projected to grow from $68bn in 2027 to $86.3bn by 2031, representing a compound annual growth rate (CAGR) of 6.1%.

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