iktva

The In-Kingdom Total Value Add (iktva) program is designed to drive domestic value creation and maximize long-term economic growth and diversification to support a rapidly changing economic environment.

iktva recognizes prioritization of domestic value creation. It is designed to drive increased investment, economic diversification, job creation, and workforce development within the Kingdom. At Saudi Aramco we aim to achieve 70% localization of all spending, creating a business environment that will provide thousands of new jobs, and increase international business attraction.

As well as enabling a sustainable Saudi energy sector, iktva provides a level playing field for suppliers through consistency and transparency in application and process. Uniform evaluations for both service and material suppliers will be consistent across the company, creating supplier-focused partnerships, and investment stability and assurance achieved through annual assessments.

The program will first establish an iktva baseline score for each supplier measured against key metrics for local value creation. Secondly, select suppliers to develop 5-year action plans that explain, at the category level, their in-Kingdom (investments, local hiring, supplier development, research & development, and procurement) and Out of Kingdom (Exports) activities to increase the iktva score. Thirdly, we will measure performance and track progress to ensure the relationship results in continued local value creation.

The benefits of a strong and sustainable economy are widespread and long-term – quality jobs for a growing Saudi population, innovation and diversification of industry, and improved global competitiveness through increased exports.
In addition to the direct benefits of our investment in their goods and services, suppliers will gain access to a growing, higher skilled Saudi workforce and will be recognized as prioritizing value creation which can lead to increased opportunity for expansion into markets across the Kingdom, the GCC region, and the world.

We understand that achieving our objective of 70% localization of all spending requires collaboration, commitment and trust. An extensive consultation program was conducted which included representatives of the major supplier sectors to develop and refine iktva.
Additionally, a successful pilot phase engaged more than 100 companies across sectors in-Kingdom and internationally to ensure we created a level playing field for all our existing and future suppliers.

The iktva program was launched on an event on December 1, 2015

A bedrock of our strategy at Saudi Aramco is to drive domestic value creation in every aspect of our business. iktva reorients the dynamics of our business partnerships with more than 1,000 existing suppliers to this effect, and we will work collaboratively with all suppliers that chose to participate, and ensure our relationships are mutually beneficial and focused on domestic value creation.

The dynamic has necessarily changed with a value proposition focused on the future. We have historically awarded contracts on the basis of technical compliance and lowest cost. Participation in iktva is currently one of the components used to evaluate most supplier proposals.

All suppliers, manufacturers, service providers and contractors engaged with Saudi Aramco are expected to participate in the iktva program.

In general, trading companies and distributors are assigned an iktva of zero because of the minimal value they create in-Kingdom. However, if you feel your company adds value beyond what is typical for a trader or distributor (for example product finishing, installation, maintenance) then you may go through the iktva survey process.

iktva will be a component in the evaluation for all awarded contracts and agreements – local and international. It does not discriminate in any way between in-Kingdom and out-of-Kingdom suppliers.

iktva recognizes prioritization of value creation. Increasing the iktva score has the potential to increase business with Saudi Aramco and others in Saudi Arabia, It drives toward developing a local cost-effective workforce, making goods and services more competitive locally, regionally and globally.
This program has the potential to help companies develop new products, services and technologies through partnerships in and outside of the Kingdom, all of which will lead to greater business performance and a more diversified economy.