IKTVA and ICV: How Gulf Localisation Programs Shape Who Wins Energy Contracts

These programmes have created a two-tier supplier market in the Gulf: companies with high localisation scores receive preferential treatment and access to a broader range of contracts, while those without adequate scores face significant disadvantages or outright exclusion. This guide explains how both programmes work, what they require, and how international suppliers can position themselves to compete.

Saudi Arabia's IKTVA Programme

What IKTVA Is

IKTVA stands for In-Kingdom Total Value Add, Saudi Aramco's flagship programme to increase the proportion of goods and services sourced from within Saudi Arabia. Launched in 2015 as part of Saudi Vision 2030, IKTVA is the most ambitious industrial localisation programme in the Gulf.

IKTVA by the Numbers

How IKTVA Scoring Works

Every Aramco supplier above the SAR 375,000 threshold must submit an annual IKTVA scorecard. The score is calculated based on several weighted components:

1. Goods localisation (weighted heavily)
The percentage of physical goods (equipment, materials, components) manufactured or assembled within Saudi Arabia. Simply importing goods and warehousing them in Saudi Arabia does not count, genuine manufacturing or value-adding transformation is required.

2. Services localisation
The percentage of services (engineering, construction, maintenance, consulting) performed by Saudi-based entities with Saudi employees.

3. Saudisation (workforce nationalisation)
The percentage of the supplier's workforce that is Saudi nationals. Higher Saudisation rates improve the IKTVA score. This aligns with the broader Nitaqat programme that mandates minimum Saudi employment ratios across all sectors.

4. Training and development
Investment in training Saudi nationals, particularly in technical and engineering disciplines. Apprenticeship programmes, scholarships, and vocational training all contribute.

5. Technology transfer
Establishing research and development capabilities, technology licensing, and intellectual property development within Saudi Arabia.

6. Supply chain development
Using Saudi-based sub-suppliers and developing local supply chains rather than importing from established overseas supply networks.

IKTVA's Impact on Procurement Decisions

IKTVA scores directly affect Aramco procurement in several ways:

• Bid evaluation weighting: IKTVA scores are factored into the commercial evaluation of bids. A supplier with a higher IKTVA score may win a contract even if their price is somewhat higher than a competitor with a lower score.
• Prequalification requirements: Certain contract categories now require minimum IKTVA scores for prequalification. Suppliers below the threshold cannot bid.
• Preferred supplier status: High-IKTVA suppliers are prioritised for framework agreements and long-term contracts.
• Contract renewal criteria: IKTVA performance is evaluated at contract renewal, and suppliers whose scores decline may not be renewed.

What IKTVA Means for International Companies

International companies face a strategic choice:

Option 1: Establish a Saudi entity

• Obtain a MISA licence (Ministry of Investment of Saudi Arabia) to establish a wholly owned subsidiary, branch, or joint venture
• Set up genuine operations in Saudi Arabia (office, workshop, manufacturing facility as appropriate)
• Hire Saudi nationals and invest in their development
• Source from Saudi sub-suppliers where possible
• Build your IKTVA score over time

Option 2: Partner with a Saudi company

• Joint ventures with established Saudi companies that already have high IKTVA scores
• Licensing or technology transfer arrangements where the Saudi partner manufactures locally
• Agency agreements where a Saudi company acts as your in-kingdom representative

Option 3: Focus on specialised niches

• Some highly specialised products and services have exemptions or reduced IKTVA requirements because local alternatives do not exist
• These niches are narrowing as Saudi Arabia develops its industrial base, but they still exist in areas like advanced subsea equipment, specialised catalysts, and niche engineering services

Beyond Aramco: Saudi Local Content Across All Sectors

IKTVA is Aramco-specific, but Saudi Arabia has established the Local Content and Government Procurement Authority (LCGPA) to apply local content requirements across all government procurement. Key developments include:

• Mandatory local content in government tenders: The LCGPA sets minimum local content percentages for different procurement categories
• Local Content Certificate: Suppliers must obtain certification from the LCGPA demonstrating their local content contribution
• Preference for local manufacturers: Saudi-manufactured products receive price preferences in government procurement evaluations
• Localisation lists: The LCGPA publishes lists of products that must be sourced locally, with the list expanding annually

UAE's In-Country Value (ICV) Programme

What ICV Is

The UAE's In-Country Value (ICV) programme measures the economic value that a supplier contributes to the UAE economy. Unlike IKTVA, which is specific to one company (Aramco), the UAE's ICV programme applies across multiple government entities and state-owned enterprises.

ICV by the Numbers

How ICV Scoring Works

ICV scores are calculated by certified auditors based on a standardised methodology. The key components are:

1. UAE national workforce
The percentage of Emiratis in the supplier's UAE workforce, weighted by their salary levels and seniority. Senior Emirati employees contribute more to the score than junior ones.

2. Emirati spend (procurement from UAE-based suppliers)
The percentage of procurement spend directed to other UAE-based companies, particularly those with their own high ICV scores. This creates a cascading effect throughout the supply chain.

3. UAE-based manufacturing and services
The proportion of goods manufactured or services delivered within the UAE. Similar to IKTVA, simply importing and distributing does not generate significant ICV.

4. Investments in the UAE
Capital investments in UAE-based facilities, equipment, and infrastructure. Research and development spending in the UAE is also counted.

5. Contribution to Emirati development
Training programmes, internships, and scholarships for UAE nationals. Investment in STEM education and vocational training contributes to the score.

ICV in Procurement Evaluation

ADNOC and other UAE government entities use ICV scores in procurement evaluation through specific mechanisms:

• ICV score as a mandatory requirement: Many tenders require a minimum ICV score for participation
• Price adjustment mechanism: In ADNOC procurement, a supplier's ICV score can provide a virtual price reduction in commercial evaluation. For example, a supplier with an 80% ICV score might receive a more favourable price adjustment than one with 40%, effectively making the higher-ICV supplier more price competitive
• ICV certification as a prequalification document: You cannot participate in many UAE government tenders without a valid ICV certificate
• Tiered ICV categories: Different procurement categories may have different minimum ICV thresholds

Getting ICV Certified

The ICV certification process follows these steps:

1. Select an approved certifying body: The UAE Ministry of Industry and Advanced Technology (MoIAT) maintains a list of approved ICV certifying bodies
2. Prepare documentation: Financial statements, payroll records, procurement records, investment documentation, and training programme details
3. Undergo audit: The certifying body audits your submitted data against the ICV methodology
4. Receive ICV certificate: The certificate states your ICV score, valid for one year
5. Upload to procurement portals: Your ICV certificate is uploaded to relevant procurement platforms (ADNOC's supplier portal, for example)
6. Annual recertification: ICV certificates must be renewed annually, requiring a fresh audit each year

Comparing IKTVA and ICV

Strategic Implications for International Suppliers

The Two-Tier Market Reality

Gulf localisation programmes have created a clear divide:

Tier 1: High-localisation suppliers enjoy:

• Access to the full range of contract opportunities
• Competitive advantages in bid evaluations
• Preferred status for framework agreements
• Better relationships with procuring entities
• Ability to compete on both technical merit and localisation

Tier 2: Low-localisation suppliers face:

• Exclusion from contracts with minimum localisation thresholds
• Competitive disadvantage in scored evaluations
• Limited to niche or exempted categories
• Pressure to improve scores or lose market position
• Difficulty winning renewals of existing contracts

Building a Localisation Strategy

For international companies serious about Gulf energy markets, a localisation strategy is essential:

Short-term (0-12 months):

• Register with MISA (Saudi) or establish a UAE entity
• Obtain initial ICV certification
• Register on Aramco's supplier portal and other relevant platforms
• Begin recruiting local nationals for key positions
• Identify local sub-suppliers and manufacturing partners

Medium-term (1-3 years):

• Establish meaningful local operations (office, workshop, or manufacturing)
• Build workforce localisation towards programme targets
• Develop local supply chain relationships
• Invest in training and development programmes
• Increase IKTVA/ICV scores through operational improvements

Long-term (3-5 years):

• Consider local manufacturing or assembly operations
• Technology transfer and R&D investment in the Gulf
• Position as a Tier 1 localised supplier
• Leverage high localisation scores for competitive advantage
• Mentor and develop local sub-suppliers

Common Mistakes to Avoid

1. Treating localisation as a checkbox exercise
Companies that set up a brass-plate office with minimal local staff and no real operations will not generate meaningful IKTVA or ICV scores. Both programmes are designed to detect and penalise superficial localisation.

2. Underestimating the investment required
Building genuine local content requires significant capital investment, management attention, and time. Budget for multi-year development, not quick fixes.

3. Ignoring workforce nationalisation
Saudisation and Emiratisation are non-negotiable components of both programmes. Companies that resist hiring and developing local nationals will see their scores stagnate.

4. Failing to cascade localisation through the supply chain
Your localisation score depends partly on your sub-suppliers' localisation. If your supply chain is entirely imported, your score will be limited regardless of your own local operations.

5. Not planning for annual recertification
ICV certificates expire annually. IKTVA scores are assessed annually. Lapsing on recertification can immediately disqualify you from ongoing procurement processes.

Other Gulf Localisation Programmes

Oman's ICV Programme

Oman has implemented its own In-Country Value programme, modelled partly on the UAE's approach but tailored to Oman's economic priorities. Oman's ICV programme focuses on:

• Omani workforce participation
• Local manufacturing and services
• SME development
• Technology transfer to Omani entities

Kuwait's Local Content Requirements

Kuwait's offset programme requires foreign contractors on major government contracts to reinvest a portion of contract value in the Kuwaiti economy. While less structured than IKTVA or ICV, Kuwait is developing more formalised local content requirements.

Qatar's Tawteen Programme

Qatar's Tawteen initiative focuses on building a local supply chain for QatarEnergy and the broader energy sector. While newer than Saudi and UAE programmes, Tawteen is expected to become increasingly influential in Qatari energy procurement.

Frequently Asked Questions

Can a foreign company achieve a high IKTVA or ICV score without a local manufacturing facility?

It is possible to achieve a moderate score without manufacturing, but achieving a high score typically requires some form of local production or value-adding activity. Services companies can build scores through workforce localisation, local procurement, and training investments. However, for goods suppliers, local manufacturing, assembly, or significant local fabrication is usually necessary to reach competitive score levels. The specific threshold depends on your product category and the scoring methodology.

How long does it take to get ICV certified in the UAE?

The certification process itself typically takes 4-8 weeks once you have all documentation prepared. However, the underlying preparation, establishing a UAE entity, building operations, hiring staff, and generating the financial and operational data needed for the audit, can take 6-12 months. Plan for the full timeline, not just the certification audit.

Do IKTVA and ICV scores affect subcontracting opportunities as well as prime contracts?

Yes. Prime contractors on major projects are evaluated partly on their own localisation scores, which incentivises them to use subcontractors with high scores. A subcontractor with a strong IKTVA or ICV score is more attractive to prime contractors because it improves the overall project localisation performance. In practice, high-localisation subcontractors often have a competitive advantage in the subcontracting market.

What happens if my IKTVA or ICV score declines from one year to the next?

A declining score can trigger several consequences. For IKTVA, Aramco may issue performance improvement requirements, reduce your bidding opportunities, or decline to renew framework agreements. For ICV, a lower score means you receive less favourable treatment in bid evaluations and may fall below minimum thresholds for certain tenders. In both cases, a declining trajectory is a serious concern that should be addressed immediately.

Are there exemptions from localisation requirements for highly specialised products or services?

Both programmes recognise that certain highly specialised items cannot currently be sourced locally. IKTVA maintains a categorisation system that accounts for product availability in Saudi Arabia, and some categories have reduced localisation expectations. Similarly, ICV scoring methodology considers the practical availability of local alternatives. However, these exemptions are narrowing as Gulf states develop their industrial capabilities, and products that were exempted three years ago may no longer be today.

Gulf localisation programmes are reshaping who wins energy contracts across the GCC. Ignoring IKTVA and ICV is no longer viable for any company serious about competing in these markets. Bidovate helps you identify Gulf procurement opportunities early, giving you the lead time to prepare compliant, competitive bids that account for localisation requirements. Track tenders across Saudi Arabia, the UAE, and the wider Gulf region from a single platform, start your free trial with Bidovate today.