Kuwait probes 'secret deals' in $5bn of contracts

Kuwait will investigate allegations of secret deals in relation to two government contracts worth US$5bn awarded to foreign-led consortia.

A number of MPs claim political bargaining and irregularities were involved in the awarding of contracts to build the Subbiya Causeway and Al-Zour North Power Plant to South Korean, French and Japanese contractors last year, according to AFP.

On Wednesday the Kuwaiti parliament approved the establishment of a panel to investigate the allegations.

The government opposed the plan.

Minister of Electricity, Water and Public Works Abdulaziz al-Ibraheem claimed the probe would send the "wrong message to investors" and potentially discourage future foreign contractors.

One of the contracts under review is to build a power and water desalination plant in Al-Zour, south of Kuwait City, worth US$2.5bn. It was awarded to Japanese company Sumitomo Corp, France's International Power-GDF SUEZ and Kuwait’s Abdullah Hamad Al-Sager and Brothers last year.

The new plant would produce 1,500 megawatts of electricity and more than 100m gallons of drinking water daily.

But al-Ibraheem said if the investigation delayed the project, the country would be forced to announce power cuts next year.

Kuwait’s power capacity of 13,000 MW could be reached within a year, with its consumption already at 12,000 MW last year and growing by 800-900 MW annually.

"By next year, we will have zero reserve capacity without the project and we will be forced to adopt programmed cuts," the minister said.

The second contract – worth US$2.6bn - to be investigated was awarded to South Korea's Hyundai Engineering and Construction and Kuwaiti company Combined Group Contracting to build a 37.5km causeway linking Kuwait City and Subbiya, in north Kuwait.

The five-MP panel has three months to complete its investigation.