Prelude
For past many years, the GCC countries have been initiating localization drives, particularly in the oil and gas industry. The major localization initiatives in the region started with Oman Oils In-Country Value (ICV) program followed by Saudi ARAMCO’s IKtVa and Abu Dhabi National Oil Company (ADNOC) ICV program. Beyond oil and gas, the Gulf countries have committed themselves to emphasize local content in their procurement chains in state-controlled enterprises. The primary objective of ICV program introduced by ADNOC is to strengthen the UAE’s economy, catalyze socio-economic development, improve knowledge transfer, generate jobs for UAE nationals and encourage private sector partnerships and opportunities resulting from the 2030 smart growth strategy.
Journey of the ICV Program
In the year 2018, ADNOC introduced a procurement led In-Country Value (ICV) program to encourage Emiratisation, GDP diversification and Supply Chain Localization. Since the launch, ADNOC has driven AED 76 billion back into the UAE’s economy and has created more than 2000 private-sector jobs for Emiratis. The program symbolizes ADNOC’s unwavering commitment to support local businesses and reaffirm its role as the primary driver of the UAE’s socio-economic development. Over the next 5 years, ADNOC aims to redirect an additional AED 160 billion ($43.6 billion) into UAE’s economy. Following the success of the initiative and in line with the accelerator program introduced by ADNOC, Aldar Properties and Abu Dhabi Ports joined the program. Moreover, in line with Ghadan 21, Abu Dhabi Department of Economic Development (ADDED) also decided to collaborate with ADNOC to launch the concept of a unified ICV certification process for suppliers in the UAE.
In September 2020, Mubadala Investment Company and Emirates Nuclear Energy Corporation (ENEC) joined the ICV program. The unified ICV program consolidates the ICV certification process in a single ICV certificate that can be used by any supplier who intends to be part of the procurement process of the Participating Entities.
How can you Profit From the Unified ICV Program
The unified ICV in Abu Dhabi introduces a unified certification process and a unified formula. one certification process will be applied for one ICV-Score applicable at all Institutions (ADNOC, Abu Dhabi DED, Aldar Properties, Abu Dhabi Ports, ENEC and Mubadala). This simplified certification process brings down the time, effort and cost for the suppliers. The unified certification is based on a unified formula differentiating between manufacturers and service providers. This unified formula offers considerable advantages where number of factors have influence on the ICV-Score. The score follows the same factors regardless of if applied with ADNOC or the other ICV participants and it allows the suppliers to pursue a unified localization strategy in the UAE.
Other structural considerations in the unified ICV Program
• If a Company has different branches in the same Emirate with identical activities and ownership listed on the licenses, then one combined ICV certificate can be issued for the Company in that Emirate.
• The companies must ensure that their financials are audited in accordance with IFRS and by an auditor licensed by the Ministry of Economy.
• Payments to government licensed entities and Free-Zone Authorities are considered as 100% ICV.
• For ICV calculations, vendors based in UAE mainland will be automatically granted 10% ICV-Score.
• Headcount of employees will be on an average basis every year (not as per end of the year).
• Salary of Emirati owners who are part of the WPS can be included and is capped to AED 200,000 monthly per owner; Bonuses and other benefits will be excluded.
• The Validity of the certificate is for a period of 14 months from the date of issuance of Audited Financial Statements.
• All internal costs are excluded from the calculations except for depreciation cost.
How can Kreston Menon Help you with ICV Certification?
Kreston Menon being an approved Certifying Body for the ICV program, can certify the ICV of the companies . The certificate can be used with the ICV participating entities (ADNOC, ADDED, Aldar, Abu Dhabi Ports, Mubadala or ENEC) as well as the suppliers’ clients. Our specialized ICV related services team offers the following services:
ICV CERTIFICATION: based on the Agreed Upon Procedures
ICV CONSULTING SERVICES:
ICV Improvement Plan: is focused on areas to improve your ICV score over the period of time.
ICV focused Policy and Procedures: Assist you to revise and update your organization’s governance structure, and policy and procedures to improve your ICV score on an ongoing basis as well as maintain the required documentation for ICV submission.
ICV Advisory: Familiarize you with the dynamics of ICV Certification process and consideration of ICV in Tender Evaluation of the ICV participating entities.
If you are considering applying for the ICV UAE certificate or want to know more on how you can benefit from the certification, please contact us on [email protected]
