Kuwait to revise BOT Law

With confusion reigning supreme over some aspects of the build operate transfer law in Kuwait, the government has made a few changes.

The build operate transfer (BOT) process in Kuwait is a process by which companies can recoup some of their expense in property development through the construction of shopping centres which can then be run by the company for 20 years after being built as a way for that company to increase revenues and break even on projects sooner.

However, the situation is a bit complex and interpretation of the law can often leave one confused, not to mention that 20 years is sometimes not enough for the company to make money from the construction.

In fact, some analysts argue that the reason for the Future City projects in Kuwait being pushed back to a 2015 completion date from the original 2011 completion date was because of delays caused by a BOT law that is difficult to interpret.

Evidently, the Kuwait government agrees with this particular assessment of the situation as they are set to issue some clarifications to the law. A draft version of the law has been released to the public in Arabic, although the translation to English has not taken place yet.

According to the AME Info news service, the law will increase the number of years that the development could be run by the building company from 20 years to 25 to 40 years depending on the type of project that was constructed, amongst other things. While this is certainly helpful to the companies as it gives them a wider window of time to make money from their work, at the same time many believe that it is not enough to assure companies of profits from building projects.

Jeff de Lange is part of the management team of Gulf Consult and he says that some parts of the law still are open to interpretation. He also believes that the government needs to find alternate ways of letting businesses make money from their BOT operations in addition to increasing the timeframe for the ways that already exist.

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