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PESA Middle East Chapter Hosts Fall Meeting

IMG-20191010-WA0009Speakers addressed value-added tax (VAT) inspection, in-country value, contractual risk and road safety at the PESA Middle East Regional District Chapter meeting on September 19. The event was hosted by Energy Alloys at the Amwaj Rotana Hotel in Dubai. Chapter Chair Dennis Jol, Vice President, International, DistributionNOW, provided opening remarks, and Daniel Watson, Managing Director – Middle East, Energy Alloys, encouraged participants to attend the networking reception following the program.

Peter Whatley, Partner, Gulf Tax Accounting Group, presented on VAT Inspection and discussed why organizations are selected for inspections, the powers of the tax authorities, the obligations of a company relative to these inspections and the penalties an organization can face. He also touched on what a company can expect on the day of an inspection, highlighting the importance of having documentation in place. In order to protect your company, Whatley recommended an external party to review solutions, being well prepared before the inspection and having accurate post-inspection corrections.

Dr. Constantin Frank-Fahle, Senior Associate, SCHLÜTER GRAF Legal Consultants, addressed ADNOC’s In-Country Value (ICV) program, focusing on how to make sense of localization in the oil and gas sector in the United Arab Emirates. He discussed key facts about ICV, noting the program is designed to stimulate local economic growth and development, in additional to contributing to UAE’s 2021 vision.

IMG-20191010-WA0005In addition to certification that is required by contractors, which ensures the ICV scores are calculated according to ADNOC’s defined methodology, Dr. Frank-Fahle also mentioned an ICV Improvement Plan — a required forward-looking schedule showing which actions the bidder will undertake to achieve its ICV commitments, up to five years. In closing, he recommended examining the impact of ICV for ADNOC involvement and becoming familiar with ICV calculation mechanisms, certification procedure and improvement plan.

Olga Labai, Director, Oil and Gas Consultants, reviewed several types of risks within the oil and gas industry such as commodity price, natural disasters, industrial accidents, political instability and resource/material availability. In order to manage these risks, Labai discussed how risks are allocated, which risks should be addressed by the contract and which party should bear the risk.

Labai provided examples of cases where under one contract, several organizations were held responsible for different risk categories during a disaster. As a result of indemnity obligations in these cases, indemnity trends came into play; operators challenging traditional risk allocation, regulators shifting where responsibility sits and contractors dealing with long-term adverse implications. To help achieve efficiency with contract drafting, management and closeout processes, Labai closed with practical contract drafting tips and recommendations.

Lastly, Thomas Edelmann, Managing Director, Road Safety UAE, discussed what motivates UAE motorists, including the link between the main cause of accidents and behaviors causing those accidents. Edelmann presented key reasons for automobile fatalities, highlighting 60% of road deaths in Abu Dhabi are due to not wearing seatbelts.

He shared a root cause analysis to help understand the rationale behind individuals not wearing seatbelts, noting responses in the research such as “trips are short,” “I am a safe driver” and “inconvenient”. In order to raise awareness, Edelmann launched road safety campaigns in 2013. Organizations started to support his research-based approach, and in 2017, Road Safety UAE was recognized for its initiative in expanding the existing “front-row only” seat belt law to a “holistic” seat belt law which includes passengers in the back seats. Shortly thereafter, the UAE holistic seatbelt law was implemented which, when violated, can result in high fines and points on a driver’s license.

Edelmann closed by stressing the importance of companies leading by example in their respective organizations. Sharing best practices, engaging with staff and implementing a strategic, long-term commitment are all ways to build continuous awareness.

If you have interest in the Middle East Chapter, please contact Director Government Affairs Maria Suarez.

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Energy Alloys