In-Country Value (ICV) 3.0 with Abu Dhabi National Oil Company and Baker Tilly

28 July 2020 13:56 | Anonymous member (Administrator)

The Canadian Business Council (CBC) Abu Dhabi organized webinar on In-Country Value (ICV) 3.0 in collaboration with Abu Dhabi National Oil Company (ADNOC) and Baker Tilly on 27 July 2020. Mr. Rami AbuLaila, Vice President of Business Development in ADNOC and moderator for the webinar has started with introducing and thanking the participating companies and guest speakers. The guest speaker, Mr. Hamad Saif Belmahaina, ICV Development Manager of ADNOC has started his presentation by introducing the objectives of the ICV certificate.

The three main objectives were Emiratization in the private sector, GDP diversification, and supply chain localization. In order to verify the enhanced program of the ICV, ADNOC has asked for market feedback from suppliers through surveys. Afterward, the participating entities have reviewed the surveys and validated the given suggestions. Next, to align the ICV certificate it required management approval. Lastly, the implementation has occurred which took communication and a specific framework. More importantly, the aim of the updated ICV was structured based on the market and suppliers' concerns. Mr. Belmahaina has also introduced the In-country value parts, which are certification and implementation. He elaborated on the difference between them saying that the certification process is unified between all participating entities where suppliers need to issue one ICV certificate that can be used in ADNOC, Abu Dhabi Ports, Al Dar Properties, and Abu Dhabi Department of Economic Development. In contrast, the implementation process is unique at each entity level hence the achievement of the certificate for the participating entities is in accordance with their policy. There are different names for the implementation program and method of using the certificate, which are ADNOC’s ICV Program, ADP’s ICV Program, ALDAR’s ICV Program, and ADLC Program. Next, the speaker mentioned some key changes in the ICV formula and the certification process.

Mr. Belmahaina discussed changes in the ICV formula saying that it consists of five attributes; Manufacturing cost & third party spend, investment, Emiratization, Expat contribution, and bonus. The first change in the ICV formula is that for both manufacturers and service providers the ICV cost going to be measured against the total cost instead of revenue. The second change is regarding the progressive investment top-up, which is now divided into three slabs; the first slab is from 5 million (M) AED to 50M AED that’s to get from 0% to 5%. The second slab is from 15M AED to 100M AED whereby suppliers get a top-up of 15%. Also, an investment of above 150M AED by suppliers would make them eligible for a 15% top-up. The last enhancement which is regarding bonus; suppliers’ years to year growth net book value as measures against their previous net book value. According to Mr. Belmahaina, there were also eight key changes in the ICV certification process based on the given feedback. Firstly, ICV is now based on the international reporting standards IFRS and must be audited by a licensed auditor of the ministry of economy. Secondly, an entity with its branch in the same Emirate with identical activities and ownership is now eligible for one combines ICV certificates. Thirdly, any payments by suppliers that go for the government through Tasheel or Tadbeer would grant them 100 ICV credit and this applies for free zone entities too. Fourthly, if the UAE mainland suppliers companies purchase from each other they receive 10% ICV certificates without having the certificate itself. Fifthly, instead of employees’ headcount, the focus would be on the employees’ average. Sixthly, for Emiratis who own their firms, they can get the Emiratis credit but they need to be registered with WPS and have a valid contract with the Minister of Human Resources and Emiratisation (MOHRE). Seventhly, the internal cost is now excluded from the calculations except for deprecation cost which will be given 100% ICV credit. Lastly, certificate validity is now 14 months from the issuance of the audited financial statements or the issuance of new financial statements-whichever is earlier.

Afterward, Mr. Belmahaina has mentioned four steps on how to get the ICV certified: first suppliers must issue IFRS based audited financial statements and have it approved by the ministry of the economy auditor, secondly they must fill in ICV submission template as per the guidelines in the website, thirdly, they should approach one of the employers' certification bodies as they are authorized to grant them the ICV certificates. Finally, once the ICV certificate is received, they can submit it in the commercial bids with any of the following four entities; ADNOC, Al DAR, Abu Dhabi Ports or Abu Dhabi Department of Economic Development. More importantly, the only companies that can grant valid ICV certificates are ARDENT Advisory & Accounting, Bakertilly, EY, KPMG, PWC, Protiviti, Deloitte, MAZARS, MB, PKF, Crowe, and TAG-Audit. The guest speaker concluded with expressing his willingness to hear any suggestions or concerns from the audience.

The webinar continued with Q&A on ICV certification toward Mr. Salman Sajid, Executive Director and ICV Practice Leader in Baker Tilly.

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About the Canadian Business Council Abu Dhabi

The Canadian Business Council Abu Dhabi (CBC) promotes business relations, commerce and investment between Canada and the UAE with a particular focus on the Emirate of Abu Dhabi. We provide opportunities for Canadian business executives in the UAE to meet on a regular basis and to exchange information about business opportunities. As a link with organizations in Canada, CBC Abu Dhabi is dedicated to the development of trade and corporate investment between Canada and the UAE and assist Canadian companies and business people who are establishing or contemplating to establish a trading base in this country.

About Abu Dhabi National Oil Company (ADNOC)

Abu Dhabi National Oil Company (ADNOC) is one of the world's leading energy producers, and a primary catalyst for Abu Dhabi’s growth and diversification. ADNOC operate across the entire hydrocarbon value chain, through a network of fully-integrated businesses, with interests that range from exploration, production, storage, refining and distribution, to the development of a wide-range of petrochemical products. For over 46 years, ADNOC have played an integral role in Abu Dhabi’s economic development, managing, producing and preserving the Emirate’s hydrocarbon reserves on behalf of the Abu Dhabi Government. ADNOC are the principle catalyst of growth in the Emirate, and our work has had a positive and lasting impact on the quality of millions of lives. Since 1971, ADNOC have created thousands of jobs, driven the growth of a diverse knowledge-based economy, and played a key role in Abu Dhabi’s global emergence. Today, ADNOC continue to look for new and innovative ways to maximize the value of our resources, pioneering those approaches and technologies that will ensure ADNOC are able to meet the demands of an ever-changing energy market, and continue to have a positive impact on the Abu Dhabi economy for generations to come.


Maryam Almansoori, Intern, CBC Abu Dhabi

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