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KUWAIT OFFSET PROGRAM
New Strategy For the Implementation of Outstanding
Offset Obligations
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Principles and Objectives of the Offset Program and its Evolution
Journey
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OFFSET CONCEPT AND PRINCIPLES
Offset Definition:
An obligation imposed on defense contracts that are signed by government entities with foreign entities and whose value is equal to or greater than KD 3 million, in addition to civil contracts whose value is equal to or greater than KD 10 Million.
Value of Offset Obligation
Equivalent to 35% of the net monetary value of the supply contract after deducting the Monterey value of any of the following if existent:• Subcontracts signed with Kuwaiti companies• Purchases of goods and services of national origin that are made within the context
of the supply contract• The monetary value of the Kuwaiti share in a joint venture that is subject to offset.
Types of Offset projects
• Direct Projects (Donation)• Indirect Projects
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OBJECTIVES AND MANDATES
OBJECTIVES
Transfer and integration of appropriate technology to
Kuwait
Creation of high-skill jobs for Kuwaiti nationals
Advancement of education & training opportunities for
Kuwaitis
MANDATES
Manage optimally the full cycle of the offset program, dealing with both foreign obligors and relevant government entities
Identify and assess offset investment opportunities to
achieve maximum benefits to both Kuwait and the obligors
Facilitate effectively and efficiently all procedures and
fulfillment steps to the obligors
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02
TRANSITION PHASE AND KDIPA ACCOMPLISHMENTS
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• Council of Ministers Resolution No. 691 Dated 26th May 2014
“Approving the transfer of the offset program from the jurisdiction of MOF to KDIPA”
• Council of Ministers Resolution No. 890 Dated 7th July 2014
“Suspension of offset program on all contracts that are tendered by Kuwait government”
COUNCIL OF MINISTERS DECISIONS PERTAINING TO OFFSET
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Re-assessed the Program’s viability
Identified the constraints and obstacles that confrontedthe program and specified suitable solutions
Reviewed previously adopted offset related rules andregulations to assess their accuracy.
Efficiently monitored the implementation of ongoingoffset projects, initiated under previous offsetmanagement.
TRANSITION PHASE
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Number of Obligations Transferred to KDIPA = 105
No. of the Outstanding
Obligations is 71
No. of the Ongoing
Projects is 19
No. of Completed
projects by NOC is 11
No. of offset releases
Provided by KDIPA is 4
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Procedures and Opportunities of the New Strategy
03
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Council of Ministers Resolution No. 1212 Dated 24th August 2015
“Permanent cancelation of offset program, and entrustment of KDIPAto coordinate and seek assistance from any concerned entities, that itdeems necessary, to implement the outstanding offset obligations, whiletaking into consideration the achievement of the economic developmentobjectives and the priorities of the economic development plan ofKuwait”
In line with the Directives of Resolution No. 1212, KDIPA cooperatedwith various Kuwait government and private sector entities with the aimof assessing and developing a number of government and private sectorprojects that could be implemented through utilizing the outstandingoffset obligations.
STRATEGY DEVELOPMENT FOR THE IMPLEMENTATION OF
OUTSTANDING OFFSET OBLIGATIONS
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A short list of projects were identified by KDIPA and werepresented to the Council of Ministers.
A framework for effective and efficient implementation of thesuggested projects was presented to the Council of Ministers.
The Council of Ministers adopted Resolution No. 400 on March27, 2017, approving a number of the identified projects whichwould achieve Kuwait’s economic and social developmentobjectives to implemented by one of the options.
STRATEGY DEVELOPMENT FOR THE IMPLEMENTATION OF
OUTSTANDING OFFSET OBLIGATIONS (Cont’d)
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3.1
OFFSET FULFILLMENT OPTIONS
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Option No. 1
AVAILABLE OPTIONS FOR IMPLEMENTATION OF IDENTIFIED OFFSET PROJECTS
Directly implementing a project chosen by the offset obligor to the
benefit of the concerned entity
Providing cash contributions to
finance the identified projects, by depositing the
total offset fulfillment
contributions in an account, which
would be reserved for that purpose, within the state
budget, in coordination with
the Ministry of Finance
Choosing a third party to implement one or more of the
list of identified projects, after securing the
approval of KDIPA and the concerned government entity.Option No. 2
Option No. 3
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ADVANTAGES OF AVAILABLE OPTIONS
Preapproved projects which are ready for execution
Each project has its own ready TOR
Ease and timely implementation
Clear and efficient procedures
Granted Multiplier of 5.5
Shorter period for offset fulfillment & obtaining release
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3.2
IMPLEMENTION PROCESS OF AVAILABLE OPTIONS
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Option No. 1
MOF SPECIAL ACCOUNT
KDIPA: Receives obligors’ requests for cash contribution.
KDIPA: Studies and reviews obligors requests in coordination with the concerned government entities.
OBLIGOR: If granted approval, remits the offset obligation cash value equivalent to the MOF special account.
MOF: Confirms the cash remittance.
KDIPA: Grants final offset fulfilment certificate to obligor.
KDIPA: Instructs the concerned bank to cancel the bank guarantee
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Option No. 2 DIRECT IMPLEMENTATION
OBLIGOR: Selects one or more of the approved projects.OBLIGOR: Submits project “Implementation Plan (IP)” to KDIPA in line with
the TOR.KDIPA: Reviews IP in coordination with relevant project beneficiary entity,
in line with TOR and decides on granting approval.OBLIGOR: If granted approval, signs implementation agreement with the
beneficiary entity.OBLIGOR: Maintains valid bank guarantee until completion of project
implementation.BENEFICIARYENTITY: Provide KDIPA with periodic progress reports on
project implementation.
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Option No. 2 Cont’dDIRECT IMPLEMENTATION (CONT’D)
OBLIGOR: Submits credit claims to KDIPA upon the completion of each pre-
agreed milestone.
KDIPA: Reviews and Compares submitted credit claims in line with IP and
grants offset credits.
KDIPA: Reduces obligor offset obligation corresponding to achieved offset
credits, and instructs bank to reduce bank guarantee.
KDIPA: Grants “Offset Fulfillment Certificate” upon obligor total
implementation of project.
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Option No. 3
IMPLEMENTATION THROUGH A THIRD PARTY
OBLIGOR: Notifies KDIPA of intention to implement offset obligation throughappointing a third party, providing details of its qualifications and expertise.
KDIPA: Coordinates with the project beneficiary entity through delegated officer toassess the capabilities of the third party.
THIRDPARTY: Provides its commitment to implement the project on behalf of offset
obligor, in fulfilment of offset obligation, and provides a bank guaranteeequivalent to that required from obligor.
OBLIGOR: Transfers monetary equivalent of its offset obligation value to third party,and provides KDIPA with proof of money transfer.
KDIPA: Instructs the concerned bank to cancel the bank guarantee of obligor andissues “Offset Fulfillment Certificate” to the obligor.
KDIPA: Follows up the implementation of project and offset fulfillment with thirdparty.
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ع ي خط تنفيذ المشر Content of Project Implementation Planمحت
ع :Project Profile:مالمح المشر
ر ع المخت .اس المشر Name of the selected project
ع مشر ط الرئيسي ل .النش Project main activity
اصف الم ط شر ته طبق ل مخرج أهدافه ع صف المشرلح ع لص .الفني المقررة من الج التي سينفذ المشر
Project description, objectives and outputs in
accordance with the conditions and technical
specifications indicated by the beneficiary for which
the project shall be implemented
تزمه مؤهال الشركه الم عخبرا .لتنفيذ المشر Experience and track records of the obligor to execute
the project.
ن الفني :Technical Aspects:الج
ل الزمني لمراحل التنفيذ الجد .الخط التنفيذيه Implementation plan and execution timeframe.
ه من مراحل تز في كل مرح همه من قبل الم مقدار المس قيمه ع المخطط له .المشر
Equivalent value of the contributions by offset obligor
in each of the stages of the project
ع ب المشر :صف متطع - الس اد الخ المالمعدا -ع- فره المشر البرامج التدريبي التي سيتز- همه من قبل الم ع المس . الدع من الخبراء حس ن
Specifyi g the p oject’s e ui e e ts of:- Raw materials and goods
- Equipment
- Training programs provided by the project
- Experts assistance
مشر ريده ل لي المعرف المط ت أس جي ل اع التكن .عان The required types of technologies and know-how for
the project.
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GUIDE FOR THE IMPLEMENTATION PLAN “IP”
ع ي خط تنفيذ المشر بع)محت Co( ت te t of Project I ple e tatio Pla Co t’d
ع عالق ى تنفيذه ن ئمه ع الق ع لمشر ه األطراف المعنيه بن بين .التع
The parties involved in the implementation of the
project and nature of business cooperation among
them.
ء التنفي اع أثن ن الخدم ب د ع من العق ب المشر ذ متط The project various requirements for contracts and
services during implementation.
لي ن الم :Financial Aspects:الج
ع تز في المشر م ي ل همه الك قيمه المس .طبيع Nature and total value of contribution of Obligor in
Project
لي ي/ تقديرا الخط الم ليف التنفيذ السن .تك Financial projections and Forecasted annual
implementation costs of project
التتخ ن قيمه االئتم ه فه لكل مرح التك همه فيض قيم المسعف المحدد مل المض ى الع ءا ع . المط بن
Cost for each stage of project, the contribution value of
obligor towards each stage and the corresponding
offset credits generated/reduction of offset obligation,
based on the granted multiplier.
الدراس ير التط ث ي البح ف عم تك طبيع Nature and cost of the R&D and other studies
ريع التدريبي المش ص ب Relating to Training Projects:خ
ن التدري فر خبرا المدربين الذين سي Qualifications of the trainers
فيره را التدريبي التي سيت ت اصف الد م Nature and specifications of the training programs
دا التي سيت منح (هل معتمدة)الش Granted Certificates (Certified /Not certified)
ي التدري المعدا التي سيت استخدام في عم اآلال Machinery and Equipment utilized in training
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3.3
PRE-APPROVED LIST OF PROJECTS
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LIST OF PROJECTS APPROVED BY THE COUNCIL OF MINISTERS
Governmental Sector Projects
1) Sabah Al-Ahmad Chair in Knowledge
2) Management of Organic Waste (Composting Project)
3) Central DNA Facility for Animals and Plants.
4) Development of Yarmouk Cultural Centre - Dar Al-Athar Al-Islamiyah.
5) Preservation, Protection, Development and Enlargement of Qaruh Island
6) Commercial Utilization of Products Extracted from the Catfish Skin for
treatment of Wounds, Inflammations and Some Neurological Disorders
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LIST OF PROJECTS APPROVED BY THE COUNCIL OF MINISTERS
Governmental Sector Projects
7) Hydraulic Systems Testing and Training Center.
8) Air Conditioning Laboratory and Testing Facity.
9) Dental Simulation Laboratory
10) Establishment of a Composite-Pipes Center and Testing Facility.
11) Education Program for Diabetes Care, Management and Research in
Kuwait
12) Advanced Infrastructure Management (AIM) Project
13) MEW Power Transmission and Distribution Capacity Building Centre
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LIST OF PROJECTS APPROVED BY THE COUNCIL OF MINISTERS
Private Sector Projects
Gustave Roussy Institute of Oncology – Kuwait
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Sabah Al-Ahmad Chair in
Knowledge
General Secretariat of the Supreme Council for Planning
and Development
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Management of Organic WasteComposting Project
Public Authority for Agriculture and Fisheries
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Central DNA Facility for Animals and Plants
Public Authority for Agriculture and Fisheries
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Development of Yarmouk Cultural Centre
Dar Al-Athar Al-Islamiyyah
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Preservation, Protection, Development and Enlargement of
Garuh Island
Kuwait University
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Commercial Utilization of products from the Catfish skin for the
treatment of Wounds, Inflammation and some Neurological Disorders
Kuwait University
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Hydraulic Systems Testing and Training Centre
Kuwait University
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Air-Conditioning Laboratoryand Testing Facility
Kuwait University
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Dental Simulation Laboratory
Kuwait University
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Composite-Pipes Centre and Testing Facility
Kuwait University
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Education Program for Diabetes Care, Management and Research
in Kuwait
Dasman Diabetes Institute
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Advanced Infrastructure Management Project
Ministry of Public Works
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MEW Power Transmission and Distribution Capacity
Building Centre
Ministry of Electricity and Water
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Gustave Roussy Institute of Oncology
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3.3
Closing Statement
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PRESERVED RIGHT OF OBLIGORS TO CHOOSE PROJECT
The Council of Ministers Resolution No. 400 confirmed the right of obligors to
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Choose and Implement one of the Listed Pre-approved
offset Projects
Develop and submit an offset project of its
choice, such that it will be assessed and
evaluated by KDIPA in line the economic
development objectives of Kuwait.
OR
Offset obligors shall be entitled for compensations corresponding to
any financial burdens that they may have incurred during the
transitory period. These include: Compensations corresponding to costs incurred for the provision
of bank guarantee.
Compensations corresponding to costs incurred for undertakingadditional studies that are pre-approved by KDIPA.
Upon the quantification of the compensation entitlements their
values shall be deducted from the pending obligation values.
COMPENSATION OF OBLIGORS FOR EXPENSES INCURRED DURING TRANSITARY PERIOD
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FOR ANY ADDITIONAL INFORMATION
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Please Contact:
Ms. Manal Jaber
Email: [email protected]
Tel: +965-225054050 Ext: 6058