KUWAIT OFFSET PROGRAM
PROCEDURES & OPPORTUNITIES
Presented by: Mr. Mazen Madooh
General Manager, National Offset Company (NOC)
24 September, 2009, London
I. General Overview of NOC and KOP
Overview of NOC role in Managing Kuwait Offset Program (KOP).
Highlights of NOC first 3-year strategic Business plan.
Profile of overall KOP record:
Number and Value of Military & Civil contracts;
Number of projects completed & sector distribution;
examples of Military & civil contract obligors.
NOC Future Services and Success formula
II. KOP Guidelines:
Summary of current offset procedures according to KOP Guidelines No. 9-2007.
III. Success Stories.
KUWAIT OFFSET PROGRAM: Evolution Journey
1992 – 2004 2006- 2008
Ministry of Finance National Offset Company
► Established in 1992. ► Established as a state owned enterprise K.S.C.C.
► Started as a unit then a department within ►Signed Management Contract with MOF to
the Ministry of Finance. manage the Offset Program.
► Offset Program evaluated by World Bank in 2000. ► Established organizational structure, selected
Board of Directors, management and employees.
►Temporary suspension of the program in 2004.
► Adopted new Offset Program Guidelines No.9-
► World Bank conducted a thorough assessment
2007 as of 9 September 2007.
of the suspended program in 2005 and confirmed ► Co-developed three year business plan and
feasibility and need to become a privately run operating policies with E&Y finalized in April 2008.
►Council of Ministers Decision No. 863 of 2005 to ► Entered into internal capability development
reinstate offset program and establish a program in offset with BCS for 15 months (Jan 2009
company to manage it. – April 2010).
NOC OBJECTIVES & TASKS
► Transfer & settlement of appropriate modern ► Manages optimally the Full Cycle of the Offset
technology. Program dealing with both the foreign obligors
and relevant government entities.
► Identifies and assesses potential offset
► Creation of high-skill jobs for Kuwaiti nationals. investment opportunities.
► facilitates the establishment of Offset business
► Advancement of education & training ventures (OBVs).
opportunities for Kuwaitis.
► Raises awareness of the Offset Program among
NOC STRATEGY: BP 2008-2010
• Stronger corporate
Present SERVICES New brand image &
Market Product/service • Stronger working
MARKETS Penetration development relations with
& Concentration GOK, FCs, and CSI.
• Active Matchmaking.
• Facilitation of OBV
development implementation (Fast
IMPACT OF NOC BUSINESS PLAN STRATEGY
Consolidating core business through:
Defining Key Performance Indicators (KPIs)
Upgrading staff internal capabilities
Improving contract & Project management
Enhanced capabilities through the Evolved Organizational Structure:
Introducing Lead Generation (CR, business opportunities development, Fast
Establishing Planning Department (strategic planning, market intelligence, Media
& Marketing activities).
Forming Obligor committee (ongoing) & Transition committees (temporary)
Introducing Government Relations section (Fast Track)
NOC EVOLVED ORGANIZATIONAL STRUCTURE 2008
NOC Board of Directors
Managing Director Office
Obligor Transition & Change
Committee Management Committee
Legal Unit Consultants Unit
Business Support Division Projects Division
Finance & Leads Projects
HR & Admin. Planning Project
Accounting Generation Appraisal
Department Department Management
Department Department Department
HR Finance & Marketing & Civil Sector * Contracts &
Accounting Planning & Fund Mgt.
Administration IT Non-Civil Project Mgt.
Relations * Note: Non-Civil Sector refers to contracts relating to the defense and security sectors while Civil Sector refers to the
contracts relating to sectors other than defense and security sectors (i.e. education, healthcare, water & electricity
NOC SERVICES MODEL
GOK Economy Citizen
Generators of Offset Obligations
Offset Business Ventures
Value Chain: Professionalism, Accessibility, Flexibility
KUWAIT OFFSET PROGRAM RECORD (1992 – 2008)
Total Value of Offset Obligations by Total Number of Contracts by
Government Entity Government Entity
Value MOD # of MOD
3.46 Bn 126
Defense Contracts accounted for 50% of total value of Offset Obligations
and 62% of total number of contracts.
SECTOR DISTRBUTION OF COMPLETED OFFSET PROJECTS
Other, 3 Healthcare, 3
OBVs Industrial , 11
OFFSET INVESTMENT OPPORTUNITIES (Jan. – Aug. 2009)
No. of Received concept papers for projects
Private Sector Obligors
23 31 8
Approved Concept Papers 7
Pending Projects 21
Rejected Projects 3
KUWAIT OFFSET PROGRAM RECORD (1992 – 2008)
Offset Obligors by Nationality
A Total of Japan
126 foreign China
* Other include: Australia, Spain, Yugoslavia, Canada
KOP CLIENTS: Examples of Military Contract OBLIGORS
KOP CLIENTS: Examples of Civil Contract OBLIGORS
NOC FUTURE SERVICES
Providing Matchmaking services between obligors and Kuwaiti private sector
Accelerating process of issuing licenses and government approvals for offset
projects (Fast Track).
Providing Market Intelligence.
Assisting offset obligors in identifying Third Party offset performers.
Assisting obligors in identifying potential Financing sources to partially
participate in financing the offset project.
NOC CREATING A WIN-WIN FORMULA!
Foreign Contractors Local Entities
Establishing and developing Diversifying the economic base
new business relations. Strengthening local productive
capacity and export potential
Benefiting from various for goods and services.
opportunity prospects in the Enhancing R&D capability
State of Kuwait.
technical, administrative &
Developing a better position in
managerial local skills.
& understanding of domestic
business market. Encouraging the development
of local SMEs.
Strengthening and integrating Increasing private sector
international production chains competitiveness.
in a new and promising market.
OVERVIEW OF KUWAIT OFFSET PROGRAM
NEW OFFSET GUIDELINES
GENERAL PRINCIPAL: 1 GL (9) - 2007
≥KD 3 Million ≥KD 10 Million
CONTRACT CASES WHERE OFFSET IS NOT APPLICABLE
Contracts for non-industry related
All Public-Private-Partnerships (PPP)
contracts signed with any Kuwaiti
Foreign Suppliers of goods on F.O.B.
basis, directly or through a local
GENERAL PRINCIPAL: 2 GL (9) - 2007
35% of Monetary Value
of the Supply Contract
GENERAL PRINCIPAL: 3 GL (9) - 2007
Contract stage Implementation stage
Pre-tender - short listed Concept Paper
Signing of MOA Tentative multiplier
Signing of Supply Contract Business Plan Final Multiplier
OBV starts within one year of Signing supply
Offset obligation starts contract
Bank Guarantee 30 days from date of Signing
Offset Credits OFC
GENERAL PRINCIPAL: 4 GL (9) - 2007
Deductions from Supply Contract
GENERAL PRINCIPAL: 5 GL (9) - 2007
Deductions from Offset
Total Value of Offset Obligation
•Expenses incurred by obligor in attaining Bank
•Expenses incurred in assessing the value of
Technology Transferred to OBV.
•Off-contract purchases of goods & services of
GENERAL PRINCIPAL: 6 GL (9) - 2007
1.Submitting the Project Concept Paper prior to
Signing the Supply Contract by short-listed
foreign contractors participating in GOK
2.Signing an MOA with NOC prior to signing the
3.Providing a Bank Guarantee: 6% of the value
of the Supply Contract.
GENERAL PRINCIPAL: 7 GL (9) - 2007
OFFSET INVESTMENT OPTIONS
Direct or Indirect Offset
Own-Proposed Direct or
Indirect Offset Projects
with NOC Post-approval.
Participation in Offset
Funds developed or
approved by NOC.
GENERAL PRINCIPAL: 8 GL (9) - 2007
Schedule of Offset Multiplier Values
Offset Type of Objective Achieved
Category Technology Job Education
Transfer Creation and Training
Direct Offset 2 1.75 1.75 1.75 to 5.5
1.5 to 1.8 1.0 to 1.6 1.0 to 1.6 1.0 to 5.0
Funds 3.5 to 5.5
GENERAL PRINCIPAL: 9 GL (9) - 2007
TYPES of Offset Projects
Joint Greenfield FDI Brownfield
Ventures projects investments
Direct Acquisition of
National Goods &
Contribution existing OBV
GENERAL PRINCIPAL: 10 GL (9) - 2007
Potential Earning of
Offset Credits Offset Credits
Transfer & Sale of Offset Credits
GENERAL PRINCIPAL: 11 GL (9) - 2007
Granting of Offset Fulfillment Certificate
Submitting First Year financial statement of the OBV.
Bank statement confirming transfer of obligor’s investment funds.
Proof of offset obligor equity ownership in the OBV.
Copy of OBV registration at Kuwait Ministry of Commerce & Industry.
Statement of members of the Board of Directors for shareholding companies.
GENERAL PRINCIPAL: 12 GL (9) - 2007
Special Offset Fulfillment Mechanism
NOC Board of Directors has the authority to provide offset facilities to
limited number of special government Contracts, subject to the
approval of the Minister of Finance.
NOC SUCCESS STORIES
VESSEL OPERATIONS SIMULATOR “MAIN BRIDGE”
AVIATION MAINTENANCE & TRAINING FACILITY
AMERICAN ACADEMIES & INTERNATIONAL
INSTITUTES OF MANAGEMENT (AAIM)
PROJECT: EXPANSION OF TRAINING & EDUCATIONAL FACILITIES AT
INFORMATION TECHNOLOGY INSTITUTE
NATIONAL OFFSET COMPANY – KUWAIT
Mr. Mazen M. Madooh, General Manager
TEL : + (965) 2 247-1777
FAX : + (965) 2 244-5178
P.O.BOX : P.O.BOX 26363 Safat 13124
ADDRESS : Al Salam Tower, 4.5th floor, Fahed Al Salem St., Kuwait City, Kuwait.
E-MAIL : email@example.com
WEBSITE : www.kuwaitnoc.com