"The countdown has started for the largest development project," since February 1991, Jasim al-Aun, head of Kuwait Islands and Mega Projects Development Agency, said.

Nine consortia have already been chosen to bid for the project to develop Failaka Island, which lies 20km east of Kuwait City and which became a heavily mined military base during the Iraqi occupation of Kuwait.

On 29 and 30 December the agency will distribute documents containing the terms of reference to the consortia, which consists of more than 120 companies most of them Kuwaiti, Aun said.

The consortia must submit their bids within three months and the winner will be picked between April and June, said Aun who expected the deal to be signed in September 2005.

BoT deal

The 26sq km project calls for the construction of a holiday resort complete with hotels, chalets and entertainment facilities on the basis of build-operate-transfer (BoT) agreements.

Several Gulf countries are
planning tourism projects

BoT agreements will last for 30 years and can be renewed for a fresh term.

Construction is expected to take up to 10 years and investments required range from $2 billion to $3 billion, Aun said.

Failaka, the scene of an attack in October 2002 when two Kuwaiti assailants killed a US marine during war games, is home to Kuwait's most important archaeological site.

It is 43sq km (16.6 square miles) in size, boasts 38km of coastline and is almost completely flat.

Historical site

During the Iraqi occupation, Kuwaitis on the island moved back to the mainland, although some families have since begun renovating their properties.

After the Iraqi occupation, the Kuwait government bought up many of the residences on the island, and the Kuwaiti armed forces today maintain a major presence.

A new harbour with a capacity for 300 boats will be built on the island to link it with the mainland, Aun said.

Between 2300 BCE and 1100 BCE, a Bahrain-based maritime trading civilisation called the Dilmun dominated the Gulf and had a settlement on Failaka, remains of which can still be seen today.

As part of a drive to bring more tourists to the region, another Gulf emirate is currently building the world's largest two man-made islands, the Palm Jumaira and the Palm Jabal Ali, with a third due for construction.