Energy Central Professional


Kuwait Power Competitive Landscape

Fitch Solutions Sector Intelligence  


    THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data are solely derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

    Kuwait Power Competitive Landscape

    • 11 Aug 2022
    • Kuwait
    • Power

    Kuwait's power industry remains almost wholly state owned, state controlled and state regulated; it was originally under the Ministry of Electricity and Water, which is now part of the Ministry of Energy. The government directly owns all existing power stations, transmission networks and distribution systems. It sets prices and is responsible for all power project developments. Kuwait has five major thermal power stations currently operating (Doha East, Doha West, Al-Subiya, Shuaiba South and Az-Zour South) and a total installed capacity of around 19.0GW, according to our estimate for 2021.

    In an effort to move away from the heavy state involvement in the power sector, a law was passed in 2010 stating that all new power plants larger than 500MW must be developed privately. However, the first major development planned since this bill was passed - the Az-Zour North project - was beset by delays as a result of significant bureaucratic wrangling. Kuwait's political institutions are notoriously slow, with investments often held up in parliament, and accusations of corruption are common. This state of affairs is likely to act as an impediment to new investments, in particular to private sector investments, for some time to come.

    Despite significant delays, the first phase of the Az-Zour project was completed in 2016, and the country is once again progressing with plans to launch a tender for the second phase, the Az-Zour North IWPP Phase-II & III (a singular construction project combining what were originally tendered separately as phases two and three). This could be a sign that the government is turning a corner. This was followed by news in September 2017 that the government has announced plans to sell shares in Shamal Azzour Al-Oula, the company set up to own the Az-Zour project upon completion, to Kuwaiti residents in 2018. Such initiatives could, therefore, see private sector involvement in the industry begin to pick up in the years ahead.

    The passing of the new public-private partnership law should allow progress to be made on a series of power plants, desalination facilities and other infrastructure projects totalling about KWD3bn (USD9.9bn), which the government has been planning since 2015. The planned projects will boost capacity by nearly 3,580MW besides waste treatment and developments for the education ministry. The projects include the aforementioned construction of a second phase (phase II & III) of the gas-fired Az-Zour North power and desalinated water plant with an initial capacity of 2,700MW and the first phase of the Al-Khiran power plant with 1,800MW of capacity. Kuwaiti officials announced in mid-to-late 2019 that the government utility intended to sell off 26% to 44% stakes in the projects.

    The Kuwait Authority for Partnership Projects (KAPP) is working with the Central Agency for Public Tenders to appoint a consultant to assist the sale, which reports indicate will likely be undertaken via initial public offerings.

    In October 2019, the KAPP launched its first official public offering for shares in Shamal Azzour Al-Oula, the corporation operating the Az-Zour North One gas power plant. The KAPP announced in late 2019 that the offering yielded a subscription rate of 127%, selling 50% equity in the asset to outperform expectations. However, in late 2019 the KAPP delayed its tender for transaction advisory services, halting plans to sell off part of the Az-Zour North 2&3 and Al-Khiran projects. No new tender date has been announced.

    In July 2022, the Kuwait Authority for Partnership Projects (KAPP) called a request for qualifications (RFQ) for the Az-Zour North Phase 2 & 3 IWPP project, with a planned 2.7GW gas-fired combine cycle power plant and desalination plant with a capacity of 165mn imperial gallons per day. Also in July 2022, KAPP called another RFQ for the Al Khairan Phase 1 IWPP project, with the project planned to have a power plant (capacity of 1,800MW) and a water desalination plant (capacity of 33 MIGD of desalinated water). Both will be gas-based, with gasoil as a back-up fuel.

    This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 ('FSG'). FSG is an affiliate of Fitch Ratings Inc. ('Fitch Ratings'). FSG is solely responsible for the content of this report, without any input from Fitch Ratings.


Copyright © 1996-2022 by CyberTech, Inc. All rights reserved.
Energy Central® and Energy Central Professional® are registered trademarks of CyberTech, Incorporated. Data and information is provided for informational purposes only, and is not intended for trading purposes. CyberTech does not warrant that the information or services of Energy Central will meet any specific requirements; nor will it be error free or uninterrupted; nor shall CyberTech be liable for any indirect, incidental or consequential damages (including lost data, information or profits) sustained or incurred in connection with the use of, operation of, or inability to use Energy Central. Other terms of use may apply. Membership information is confidential and subject to our privacy agreement.