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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

Update on the Allocation of the Government Bond

By Elena Fehrbach

Jun. 14 – Mr. N. Altankhuyag, the Prime Minister of Mongolia, has provided an updated decisions related to the allocation of the Government Bond, also known as the Chinggis Bond.

According to the resolution of the Government of Mongolia and the Policy Council of the Chinggis Bond, US$50 million will be spent to build Thermal Power Plant at Tavan Tolgoi coal mine with capacity of 450 megawatts. The start up of the Plant is expected in 2017.

Another US$200 million will be spent on Ulaanbaatar city renovation project “Streets.” The project’s target is to improve traffic in the city streets and reduction of air pollution in the capital. It would provide much more comfort for citizens and reduce environmental issues in Ulaanbaatar.

Project “Streets” is divided into 3 subprojects:

  • “City center”
  • “Re-planning of the Ger District”
  • “Highways”

It has been estimated that re-planning of ger district and city streets improvement will involve construction of 500 kilometers of roads within the city. “Highways” project covers construction of 65 kilometers of highways along Tuul and Selbe rivers. It is forecasted that the highways would reduce the traffic congestion in Ulaanbaatar by 25 percent.

City renovation plan also assumes the construction of the engineering infrastructure and the network of pipelines. This particular project is worth US$140 million of proceeds from the Bond.

The country network of paved roads with the total length of 1,800 kilometers will be financed by the Bond in the amount of US$400 million. Construction of the roads connecting Ulaanbaatar with 6 main industrial provinces (Dornod, Dornogobi, Dundgobi, Umnugobi, Bayankhongor and Khuvsgul) will start this year.

Proceeds from the Bond will also finance cashmere sector development in the amount of US$68.8 million and 15 dairy production farms, which are planned to be built near Ulaanbaatar in compliance with international standards. Dairy production farms would receive US$27.7 million SD financing from the Bond.

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