Kuwaiti citizens eligible to take part in offering of 50 percent of shares

KUWAIT: The Kuwait Authority for Partnership Projects (KAPP) announced in a press statement yesterday that it will launch on October 1, 2019 the public offering of its 50 percent equity stake in Shamal Azzour Al-Oula KSCP, the owner and operator of the Az-Zour North One Power and Water Plant.

Shamal Azzour Al-Oula KSCP is the first company to be established as a Public-Private Partnership project and the first PPP to be offered for public subscription. The public subscription period will open for 60-days and ends on November 29, 2019.

Once the transaction concludes, and depending on the final level of demand, up to 50 percent of Shamal Azzour Al-Oula's shares will be owned by Kuwaiti citizens. The remaining 50 percent will continue to be owned by current shareholders (40 percent by a private investor represented by Azour North One Holding Company KSCC owned by a consortium comprising ENGIE (formerly GDF SUEZ), Sumitomo Corporation, AH Al-Sagar and Brothers, five percent by Kuwait Investment Authority, and five percent by the Public Institution for Social Security).

The public offering is mandated by the IWPP and PPP Laws, which form an integral part of an overarching governmental effort to include citizens in the ownership of megaprojects that are offered to private-sector institutional investors. In addition to providing attractive investment opportunities to citizens, PPP projects empower the private sector to take the lead in growing the national non-oil economy.

Shamal Azzour Al-Oula is Kuwait's first company established under the IWPP Law. The company is the owner and operator of Az-Zour North One Power and Water Plant, which is the first privately-owned gas-fired combined cycle power and water desalination plant. The facility commenced commercial operations in November 2016 and currently supplies about 10 percent of Kuwait's installed power generation capacity and about 20 percent of the country's installed water desalination capacity.

Power and water produced by the company are entirely supplied to the national power and water grid operated by the Kuwait Ministry of Electricity and Water (MEW) under a 40-year long-term Energy Conversion and Water Purchase Agreement (ECWPA). Shamal Azzour Al-Oula KSCP is the first phase of Kuwait's Independent Water and Power Project (IWPP), which is a part of MEW's strategy to increase the country's capacity to meet electrical and water demand over the coming years.

Faisal Al- Hamad, CEO of NBK Capital, expressed the pride of NBK for being part of this huge economic development project, in addition to acting as the main consultant to arrange and execute the process of distributing shares to citizens for the first company established under Law No 39 of 2010 to establish Kuwaiti shareholding companies to build and implement electric power and water plants.

He pointed out that Shamal Azzour Al-Oula is a real-life success story, and an opportunity for citizens to invest in infrastructure projects in Kuwait, adding that the future revenues are linked to the long-term agreement to buy energy and water diversion term that signed between Shamal Azzour Al-Oula and the Ministry of Electricity and Water for 40 years of fixed revenues. Hamad added that there is a major shift in Kuwait's approach towards large infrastructure projects and its orientation towards providing the private sector with the opportunity to own and operate large projects and services, also endeavor to enable the private sector to take the initiative, considering consumer to be the biggest beneficiary.

By Faten Omar