Ulaanbaatar /MONTSAME/ The Government of Mongolia clarifies that the cancellation of the Southern Region Power Sector Cooperation Agreement (SRPSCA) with Oyu Tolgoi LLC doesn’t rule out the Tavan Tolgoi Power Project (TTPP).
The Government expressed its stance regarding the ongoing inaccurate media reports on February 20, at a press conference held by Minister of Energy Ts.Davaasuren and TTPP Project Director D.Batbileg.
The officials confirmed that the Mongolian Government had expressed its intention to annul the SRPSCA, which was signed in 2014.
The 2009 Oyu Tolgoi Investment Agreement between the Government and Rio Tinto states that the Investor will, within 4 years of Commencement of Production, secure its total power requirements for the OT Project from one or more of the following sources within Mongolia – coal-fired power plant developed or funded by the Investor, coal-fired power plant developed or funded by a third party, or the Mongolian electricity grid.
In accordance with the above provision (7.3), Oyu Tolgoi was liable to secure its energy need from domestic sources starting from July, 2017.
“However, the then Government illegally signed the SRPSCA on August 14, 2014, thus invalidating the provision 7.3 in the Investment Agreement. We only cancelled the 2014 Agreement, which is evidently not benefitting Mongolia,” said the Minister.
Oyu Tolgoi has been importing energy from the People’s Republic of China. “The Government’s cancellation of the PSCA triggers the start a four-year window for Oyu Tolgoi to develop an alternative power option, including the possible construction of a site-based power plant,” said Oyu Tolgoi in a press release issued on February 16, reaffirming its commitment to the development of a domestic power solution.
On the other hand, TTPP Director D.Batbileg reported that the project was running normally. “The feasibility study has been completed, and the construction works are ready to commence,” he said. If the construction works begin in 2018, it will wrap up in 2021. The TTPP is worth USD 1 billion.