Energy Sector

Mongolia is a country with vast territory and small scattered population between Russian Federation and People’s Republic of China (PRC), and for its economic growth, poverty reduction and overall development, the development of infrastructure, such as roads, energy access and telecommunications, is vital. Due to its landlocked and remote location Mongolia is dependent on its neighbors and cross border trade, and the Government of Mongolia is keen to promote energy sector regional cooperation with its immediate neighbors and countries of the region.

From the policy view major priorities for the Government is to create necessary institutional framework for private sector participation (PSP), to meet increasing energy demand in most efficient way, to facilitative the development of renewable energy, to accelerate commercialization of energy companies and improve efficiency of energy sector.
Due to increased mining sector development it is expected that there will be a stable power demand increase. Mongolia’s the electricity transmission covers most of territory and power supplied to all 21 aimag and 305 soum centers from 334 soum.

The Mongolia’s power sector consists of:

Central Energy System (CES) - 5 coal burning thermal plants (802 MW) covering energy demand of Ulaanbaatar city, and 11 aimags or 40% of total population.

West Energy System (WES) - Connected to the Russian energy system Durgun hydro power plant with 12 MW

East Energy System (EES) - Coal burning thermal power plant

The Government of Mongolia according to the its action plan 2008-2012 has planned to carry out the project to resolve issues related to power supply for strategically important mining deposits, construct air power transmission line of 220 kwt connecting Baga Nuur – Undurhaan –Choibalsan and Ulaanbaatar – Mandalgovi – Tavan Tolgoi – Oyu Tolgoi and build two circuit power line of 220 kwt between Baga Nuur – Choir and Choir – Mandalgovi.

Mongolia has nomadic lifestyle herding more than forty million of livestock. Because of the nomadic style of living, it is a policy challenge to develop appropriate electricity access for them. The Government is encouraging the development of renewable energy, such as small hydro, solar and wind energy.

The Mongolian Parliament (State Great Hural) adopted the “National Renewable Energy Program” in 2005 aimed to promote the use and production of renewable energy in Mongolia in a sequenced and sustainable way, to reach the production of renewable energy to 3-5% from total electricity generation by 2010, and up to 20-25% by the year 2020.

There are many implemented projects to develop small hydro power plants (HPP), to promote the use of solar and wind energy. Such as:

• Portable PV system for nomadic families (NEDO, Japan)
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• 200W PV systems with measurement equipment were distributed to approx. 200 nomadic families throughout Mongolia
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• Master plan for rural power supply by renewable energy (JICA, Japan)
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• Project covered 167 off-grid soum centres
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• German-Mongolian cooperation for the promotion of renewable energy utilization in Mongolia (GTZ, Germany)
• • Stage I completed in year 2002 - Feasibility study for small hydropower sites
• • Stage II completed in year 2008

6kW wind-solar hybrid system installed as a pilot project
375kW hydropower project construction work implemented
150kW hydropower project under construction
111kW hydropower project under construction

• Stage III going on activity 2008 - 2011
• PV/Wind technology application for electrification in Desert area (MOCIE, Korea)
• Naran Soum, 8 kW

•  “100,000 Solar Ger” national program

 
Started in 1999

By 2000-2002 more than 5000 SHS distributed ( supported by the Government)

By 2003 some 11,170 SHS distributed (partially supported by the Japanese grant aid)

By 2004 some 20,620 SHS distributed (partially supported by the Chinese grant aid);

By 2008 40,400 SHS distributed (supported by the Mongolian Goverment);

Completion /2005-2008/ under development

By 2009-2011 some 20,000 SHS will be distribute (partially supported by the World Bank grant aid);

Moreover, the Government of Mongolia has planned to carry out the following projects in renewable energy sector:

• Choir Wind farm, 50 MW; Preliminary measuring at site is started now
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• Very large-scale PV power generation system in Gobi desert area of Mongolia: Pre-feasibility study completed. some research work and testing site is started now
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• Orkhon Hydro Power Plant, 100 MW; Pre-feasibility study completed
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• Egiin Hydro Power Plant, 200 MW; Technical and Economical Feasibility study completed
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• Erdeneburen Hydro Power Plant, 60 MW; Technical and Economical Feasibility study completed
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• Chargait Hydro Power Plant, 24.6MW; Technical and Economical Feasibility study completed
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• Onon Hydro Power Plant, 60.0MW; Pre-feasibility study completed
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• Khust aral Hydro Power Plant, 18MW; Pre-feasibility study completed

The use of Liquefied Petloleum Gas/LPG/ is increasing rapidly, and the Government of Mongolia gives an importance to the development of LPG use as a new fuel mix, as a relatively “clean” fuel compared to fossil fuel. The Government of Mongolia approved a program “Liquefied Petroleum Gas” by its decree #184 of 2000, and it aims to promote the use of LPG by households and transport, to introduce necessary safety standards and regulations. In 2005 from neighboring countries, such as Russian Federation and China, it was imported about 2200 tons of LPG for approximately 10000 users.

Construction sector

Mongolian construction sector has been developed successfully for last 80 years period, disregarding transitional period during 1990s which is the starting era of market economy transmission. One of the main examples is that the sector was grown by nearly 9 per cent in 2007, with significant growth in the construction, transport and tourism sectors. 
 
As of today some 1000 construction erection companies, 190 construction design companies and 250 building material producers, collectively employing over 30,000 engineering technical staff and skilled workers, are operating country-wide. Among those there are 90 construction, 5 construction design and over 50 building material companies with foreign investment.
 
At the end of December 2008, construction installation work was carried out 440.3 bln.tugriks, of which domestic construction entities to value of 416.0 bln.tugriks or 94.5% and foreign construction entities to value of 24.2 bln.tugriks or 5.5%.
 
Compared with end of December 2007, construction and capital repair decreased by 50.9 bln.tugriks or 13.1% and domestic entities work decreased by 51.6 bln.tugriks or 14.2%.
The total construction and repair comprises 29.9% residential building, 17.4% non-residential building, 38.8% general engineering building and 13.9% capital repair and maintenance.
Share of Orkhon aimag and Ulaanbaatar city in the total construction and capital repair done by domestic entities were 9.7 and 54.4% respectively.
 
Through the construction erection development, numbers of construction material industries, and construction material importers have effectively boosted in recent few years as well as numbers of construction material production types. As of today 470 construction material factories are in service, over 100 of them have established in last 3 years. 
 
The Government is taking actions to enhance foreign relations in the construction sector, study construction methodologies, materials, techniques and technology of the countries with technical and technological advancement.
 
Mongolian Government has announced and completed ‘’40.000 housing project” from 2005-2008, with a result of 37.000 houses completion. According to the experience of “40 000 housing project” and reviewing its pros and cons, in the next 4 years of period, Mongolian Government has just planned to implement “100 000 housing project”, which will be adopted by the Government in February, 2009.
 
Brief introduction of 100000 housing project
1. Scope:
 
Through creating favorable conditions to people with interests in gaining vocational training and eventually getting employed in the construction sector, increase their financial abilities in accepting home loan mortgages, loan repayments and improve their living conditions. This will decrease unemployment rate in society and generate more income for majority portion of population. 
 
2. Investment amount:
 
This project requires total investment amount of 2.7 bln USD.
 
3. Creation of Jobs:
 
With inception of “100,000 housing” project, there will be created 50 000 jobs in the construction sector, 20 000 jobs in the production of construction materials area, 15 000 support labor force, 10 000 in the infrastructure, totaling to 95 000 new jobs. This means 45 000 people will be employed full-time and on permanent basis
 
4. Benefits:
 
The construction materials industry will receive great business opportunities to develop and activate its productions of cement, all types filler materials, insulation, glass, steel and finishing materials, etc.

Transportation: Road, Aviation, Railway, Port

The transport sector plays a very important role in the development of Mongolia which is unique with its vast territory and sparsely settled population.
 
Mongolia has plans to be connected to the road network of South Asia and Europe in the near future through the "Millennium Road". The Mongolian transportation sector consists of 4 sub-sectors, namely road transport, railway transport, air transport and water transport.
 
Road sector
 
The main objective of the domestic road network is to provide connectivity between aimag centers and Ulaanbaatar, and between aimag centers and their surrounding region. To achieve this, Mongolia has a state road network of just over 11,200 km, of which only about 1,500 km are paved, 1,440 km has a gravel surface and 1,346 km has an improved earth surface. Over 6,900 km is earth tracks. On the state road network there are 364 bridges with a total length of just over 13,500 meters (an average length of 37 meters). But of these, 178 are of wooden construction and account for about 20 percent of the total length.
 
A second objective is to provide connectivity between aimag centers and their surrounding regions, and this is achieved by a local road network of about 38,000 km, of which only 400 km is paved and 500 km have a gravel surface, so about 96 percent of this network comprises earth tracks.
 
The third objective is to provide links to neighboring countries. At present only one paved road leads to a border post, the road from Ulaanbaatar to the Russian border, but the road to the Chinese border at Zamyn Uud is nearing completion. A third paved border road, in Western Mongolia linking China to Russia, is under consideration.
 
The road network has been developing in Mongolia since 1929. Over the past years a total road network of 49.250 kilometers been developed, of which 1714.9 kilometers is paved, 1946.3 kilometers is graved, and 1923.36 kilometers is improved earth. In addition, there were constructed 16419.3 meters of concrete and 11287.3 meters of wooden bridges. The Mongolian Department of Roads was assigned as the Government Implementing Agency for developing the state road network, implementing Government road-related policies, providing road construction and maintenance companies with professional administration and operational co-operation, and supervising road bridge construction and maintenance.
 
Millennium road
 
The Parliament of Mongolia approved the "Millennium Road" project by its resolution No.09 of 2001 and instructed the Government to arrange activities associated with the implementation of the project. Construction of roads and bridges under the "Millennium Road" project are set to be carried out within 8-10 years. As the capacity of the road construction machinery and equipment used in road sector industries is not adequate for construction of the "Millennium Road", "Laws on Customs Duty and Value Added Tax Exemption of road construction machinery and equipment imported for the purpose of "Millennium Road" and "law on Exemption from fee on common minerals" were ratified and followed for promoting technical innovation.
 
The "Millennium Road" has been planned to be constructed starting from Ulaanbaatar, and directing towards east and west and construction is carried out in accordance with the plan. 
Urban Transport
Capital city of Mongolia, Ulaanbaatar has a road network of 464 km, of which about 78 percent is paved, the remainder being mostly earth tracks within ger districts. Of the 50 bridges in Ulaanbaatar, almost 90 percent are of concrete construction. The paved road network has remained largely unchanged in length for two decades, during which time the vehicle fleet has more than doubled.
 
Railways
 
The Mongolian rail network comprises 1,815 km of broad gauge track, of which 1,110 km are on the main line linking Russia to China /Trans-Mongolian main line/, 239 km are on separate network in Eastern Mongolia that has its own link to the Russian railway, and the remaining 477 km are branches from the main line.
 
For Mongolia, which is landlocked, Mongolian Railway is critically important, linking the country with Europe and East and South East Asia through our 2 great neighboring countries. Being an integral part of the International Railway Network it is the land bridge and shortest way, connecting East with West. A fiber-optic terrestrial network linking Mongolia, China and Russia was launched in April 2004.
 
In addition to mining outputs, the railway is the preferred means of transport for most of Mongolia’s international trade. The current dominance is likely to reduce when the paved road is completed to compete with the railway from Ulaanbaatar to the Chinese border at Zamyn Uud. The Chinese authorities require that some Mongolian products, especially animal products including cashmere, be transported by road within China. But even given these disincentives, the railway should be able to retain a cost advantage over road transport over this distance, particularly if road transport from Ulaanbaatar to Zamyn Uud is expected to contribute to its infrastructure development and maintenance cost in a way comparable to that of the railway.
 
Mongolian Railway is a member of the Railway Cooperation Organization, the International Railway Union, and the International Union for Freight Coordination of Trans-Siberia.
 
Aviation
 
Due to the sparse population, and the severe weather conditions during winter, surface transportation by road and railway is not well developed in Mongolia. Air transport plays an important role in smoothing socio-economic activities in Mongolia. Particularly, tourism is highly considered in view of the importance of this industry to the general economy of Mongolia. Without the proper air transportation infrastructure that provides the connection of Ulaanbaatar and the regional centers, tourism would be disadvantaged. More than 98 percent of international air transport services use the Genghis Khan International Airport in Ulaanbaatar, while domestic aviation has 17 airports available with runways suitable for un-pressurized turbo-prop aircraft.
 
The international airport faces frequent closures because of strong winds, sand or snow storms or unacceptable visibility because of excessive air pollution. The runway is relatively short for a full service international airport. Consideration is being given to construction of a new airport in a more appropriate location, but this would be very expensive for the relatively small number of passengers who would use it.
 
Few domestic airports have infrastructure that complies with the International Civic Aviation Organization standards, but they mostly have sufficient infrastructure to accommodate the few scheduled domestic services that operate. Only four have paved runways, and only these and one other have runway lighting. All four paved runways exceed 2,440 m in length and the thirteen gravel runways exceed 1,800 m. Gravel runways are adequate for operations by un-pressurized turbo-prop aircraft, such as have been used on domestic services for the last three decades, but are likely to cause damage to pressurized jet powered aircraft now beginning to be used on domestic routes.
 
Membership also makes it possible for MIAT to do business and cooperate with foreign airline members with the status of a fellow member. In Mongolia also operate 6 private air companies. The main operation of private airlines is the charter flights, particularly to the tourist camps, and flights to certain sites during emergency situations. The Mongolian Government's policy on the development of the civil aviation sector is the acceleration of the participation of private sector, decrease market monopolization and supporting the foreign investment and cooperation.
 
MIAT makes 6 international flights to Moscow, Beijing, Soul, Tokyo, Berlin and Irkutsk from Ulaanbaatar.
 
Ports and Shipping
 
As a land-locked country, Mongolia does not have any external ports.
 
Inland waterways, Mongolia has a total of 580 km of waterways. However, only Lake Khovsgol has ever been heavily used. The Selenge (270 km) and Orkhon (175 km) rivers are navigable but carry little traffic. The lakes and rivers freeze over in the winter and are usually open between May and September.
 
At present there is the "Sukhbaatar" ship, 3 barges and over 30 motorboats on Khovsgol Lake. There are also more than 20 motor-boats in operation in Khovd, Dornod and Selenge aimags.
 
Transport
 
In 2008, 23.9 mln.ton of freight and 231.6 mln.passengers (duplicated) were carried by all type of transport. Compared to 2007, volume of freight and number of passengers were increased by 2.5% or 574.1 thousand ton and by 10.3% or 21.7 mln.persons, respectively.
 
In 2008, 14.6 mln.tons of freight and 4.4 mln.passengers, 1.8 thousand tons of freight and 365.5 thousand passengers, and 9.3 mln.ton of freight and 226.9 mln.passengers (duplicated) were carried by railway, air and auto transport respectively.
 
In 2008, total revenue of transportation reached 412.1 bln.tugriks which increased by 20.4% or 69.8 bln tugriks, compared to 2007.
 
In 2008, 190.5 thousand vehicles were counted by auto vehicle inspection which was increased by 17.6% or 28.5 thousand vehicles compared to 2007. 40.1% of the total vehicles have been used up to 10 years and 59.9 percent more than 10 years.