How is ICV Score calculated in Dubai, UAE?

ICV August 10, 2020

In-Country Value (ICV) program was introduced by ADNOC for its suppliers. The program aims to boost ADNOC’s ICV contribution in Dubai, UAE by focusing on local supplier selection, development of UAE Nationals, and the localisation of critical functionalities in the oil and gas industry.

From 1 April 2018, all suppliers of goods or services for ADNOC are to calculate and declare their certified ICV score for the previous financial year, to demonstrate how they are helping to deliver ICV. Certification of the ICV score in Abu Dhabi, UAE needs to be completed by an ADNOC approved certifying body, on an annual basis, and submitted by the supplier to ADNOC with each proposal they make.

Calculation of ICV scores in Dubai, Abu Dhabi, Sharjah, UAE

ICV scores in Dubai, UAE calculated by assessing the economic value added within the UAE for the goods or services offered by the company, according to a pre-defined methodology. The following areas to be considered:

Third-party spending

Contribution: 50% contribution for calculating ICV Score for services

Formula: ∑ Value of good & services procured per vendor & subcontractor x ICV of the vendor & subcontractor + Emirati Cost + 0.6* Expat cost divided by Total Revenue

Goods manufactured

Contribution: 50% contribution for calculating ICV Score for goods

Formula: Manufacturing cost incurred with in UAE+ Emirati Cost + 0.6∗ Expat cost divided by Total Revenue

Investment

Contribution: 25% contribution for calculating ICV Score for goods and services

Formula: Net Book Value of Assets in UAE divided by Net Book Value of Total Assets (10%) and Top up 15% on progressive basis (USD 5M – USD 50M) (15%)

Emiratisation

Contribution: 15% contribution for calculating ICV Score for goods and services

Formula: Up to AED 200K Salary & benefits – 2%, Above AED 200K till AED 20M –progressive, and Above AED 20M – 15%

Expatriate contribution

Contribution: 10% contribution for calculating ICV Score for goods and services

Formula: In terms of head counts, progressive increase as follows: a) 1 to 5– 1 to 3%, b) 6 to 50 – 4 to 6%, c) 51 to 200 – 7 to 9% and d) Above 200 – 10%

Bonus

Contribution: Maximum upto 5% contribution for calculating ICV Score for goods and services

Formula: [Total Annual revenue from outside UAE (Export Revenue) divided by Total Annual revenue from UAE (revenue from inside + outside customers) excluding Re – Exports] plus [No. of Emiratis/100]

What is the usage of ICV Score in Dubai, Abu Dhabi, Sharjah, UAE?

The ICV program in Dubai, UAE is a distinct way for the selection of suppliers. It practices the bidding process that causes no interruptions. When applying for bids with participating entities, ICV certificates aren’t a compulsory necessity. Suppliers can nevertheless take part in the bidding without them. However, they will be at a loss when opposed to suppliers who have ICV certificates.

Suppliers without a certificate will be awarded a zero in the ICV score segment of the selection process. If a supplier is tendering a bid through an agent, then both have to offer their ICV certificates in Abu Dhabi, UAE. The evaluation uses an average of their ICV scores.

Suppliers tendering a bid for consortia or a joint venture, their ICV score will be calculated based on their percentage of ownership in the joint venture. In all situations, having a higher ICV score will put companies at an advantage.