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Wednesday, July 6, 2011

Mongolia Briefing is a magazine and daily news service about doing business in Mongolia. We cover topics relating to the Mongolian economy, the market in Mongolia, foreign direct investment and Mongolian law and tax. It is written in-house by the foreign investment professionals at Dezan Shira & Associates

Mongolia to Speed Up Power Plant Preparation Work

Feb. 28 – Mongolia’s Cabinet has asked to accelerate the completion of the project proposal for the construction of the Fifth Thermal Power Plant in Ulaanbaatar, which is scheduled to start in 2013, according to local media. The government would like to announce the tender winner no later than June, 2012.

At the start of the bidding procedures, 11 companies submitted formal applications to participate in the process. Now, only four of them remain, according to the Ministry of Mineral Resources and Energy.

The future Fifth Thermal Power Plant is planned to be based at the existing Third Power Plant situated in the southeastern area of the Mongolian capital. The facility will have six furnaces, five turbines, and the capacity to produce 820 megawatts of electricity, and heat at a rate of 1101 gcal/hour.

Estimates indicate that the power plant will use 3.6 million tons of coal annually – 70 percent will come up from the Shivee-Ovoo Coal Mine and the remaining 30 percent will be supplied by the Baganuur Coal Mine.

According to officials, the construction of the facility’s first section will be completed in 2015 and the second section in 2020.

Furthermore, two small eco-friendly factories will be built near the new power station to recycle the waste from the plant. Officials say that the small factories will use the new power plant waste to produce concrete.

All of the work associated with the construction of the power station will require massive financial support, which will be included in next year’s budget by the cabinet. Around US$300 million in total will be invested in the project completion with a five-year estimated payback period.

The Fifth Thermal Power Plant is intended to supply electricity and heat not only to Ulaanbaatar, but also to other parts of Mongolia. Currently, the whole country produces only about 4 billion kilowatt hours of power annually, and relies on imports from its northern neighbor Russia for around 4 percent of its current consumption and is in talks to import power from China.

To feed growing demand for electricity from miners, the Mongolian government is looking to build new power plants in the South Gobi region and as well as near the massive Oyu Tolgoi copper-gold mine project.

The government has also given approval for Oyu Tolgoi investors Rio Tinto and Ivanhoe Mines to build an electricity line to the Mongolia-China border to import power from China.

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