The billion-dollar Umm al-Hayman project is another test run for Kuwait’s new PPP framework and cutting-edge financing.
Since 2009, Kuwaiti authorities have been contemplating the construction of a state-of-the-art wastewater treatment facility near the existing Umm al-Hayman plant in southern Kuwait to combat environmental hazards.
Although the project was put on hold for a while, the 2014 reforms in the country’s public private partnership (PPP) laws and the launch of the Kuwait Authority for Partnership Projects (KAPP) paved the way for the project’s revival and swift progress.
Once the new PPP laws were in place and the KAPP at the helm, it reopened the prequalification process to find the right developers and financiers, working alongside the Ministry of Public Works (MPW).
By December 2019, the news was out that financing agreements will soon be signed with banks and that a consortium composed of Kuwait’s IFA and Germany’s WTE Group will execute the USD1.26 billion project.
Al Ahli Bank of Kuwait (ABK), which has been active in the country since 1967, ended up as a main finance provider for the project. Working closely with the KAPP, the bank has made a name for itself within the industry as a solution provider for infrastructure megaprojects in recent years.
The Umm al-Hayman wastewater treatment project perfectly matches the niche that ABK is interested in, but the bank has nevertheless teamed up with other investors to form a group of lead arrangers and joint bookrunners, providing a smoother financing arrangement.
Al-Tijari—or the Commercial Bank of Kuwait—will be another member of the trio of joint bookrunners, which also includes the Frankfurt-based KfW IPEX-Bank.
Umm al-Hayman should be regarded not merely as an infrastructure megaproject in Kuwait but also as an experiment in cutting-edge financing arrangements and the PPP framework itself. The project’s success will set a blueprint for future megaprojects in Kuwait using the PPP model.