Early in the drafting of its energy policy, the regional government launched a capacity-building programme, to ensure that tangible benefits of our oil and gas wealth are felt across the Kurdistan Region, and to support the development of local expertise.
Upon signing the KRG’s production-sharing contract, oil companies pay a capacity building bonus, which is an upfront payment towards funding large social programmes including infrastructure development. The bonus goes towards funding projects such as hospitals, housing, schools and universities, water treatment plants, humanitarian aid, security, as well as towards vocational, technical and higher education programmes to help develop Kurdistan’s workforce.
As well as the signing capacity-building bonus, companies make a further capacity-building payment once they generate profit oil, which in 2012 was between 2.4 to 4.8 percent of profit oil.
Through funds specifically earmarked for the programme in production-sharing contracts, companies are both incentivised and mandated to facilitate the development of a strong local workforce and dependable services and infrastructure. University work-placement programmes are helping to expand the local workforce. To continue expanding the local workforce, new vocational training centres are planned to help bolster local employment across the sector.
Watch Kurdistan – A New Dawn, a 10-minute film about how companies’ capacity building payments are contributing to infrastructure and communities.
The capacity building payments from all production sharing contracts, and how the payments are being used, are shown in this table.