Ulaanbaatar, September 14, 2023 /MONTSAME/. The Prime Minister of Mongolia Oyun-Erdene Luvsannamsrai tasked to start the EPC-04 Package Work of the Oil Refinery and commission the plant in 2027. The Government of Mongolia pursues the policy of intensifying the construction of the Oil Refinery. The Premier instructed to make up for the 13 months of work lost during the Covid-19, start the EPC-04 Package Work of the Oil Refinery, and intensify the work to put the plant into operation in 2027.

In 2016, the General Loan Agreement of USD 1 Billion was signed between the Government of Mongolia and the Export-Import (EXIM) Bank of the Republic of India. According to the Feasibility Study released at that time, it was concluded that the "Oil Refinery Construction Project" requires funding equivalent to USD 1 billion 236 million. Therefore, a loan agreement was signed in October 2019 to settle additional funding of USD 236 million from the Government of Mongolia.

The principal repayment of the loan was scheduled to be paid annually in the amount of USD 64.5 million starting from February 2023. However, as of February 2023, USD 112 million was taken out of the USD 1 billion loan. Therefore, a proposal to change the repayment schedule of the loan, which had been used to a minor extent, was made to the Indian side, sub-loan agreements have been signed on August 17, 2023, and the repayment has been postponed. The sub-loan agreement reduces the principal repayment of the loan from USD 64.5 million to USD 13.1 million. In addition, the period of exemption from the principal payment of 789.0 million US dollars, which is the financing of EPC-02 and EPC-03 Package Works, has been extended for another seven years.

With this agreement, the implementation of the four Package Works of "Oil Refinery Construction Project" that were regulated by one contract, which were dependent on each other and delayed, can be separated, thus enabling to intensify implementation of the Package Works.

Currently, EPC-04 Package Works, namely the construction and equipment works of the main plant, are pending. "Mongolian Oil Refinery" has announced that the budgeted cost of EPC-04 Package of USD 236 million will be increased by USD 422.0 million during the bidding process, making it a total of USD 648 million.

The Government of Mongolia confirmed the loan agreement for the initial cost of USD 236 million, and submitted a request for financing to the Export-Import Bank of the Republic of India in order to quickly start the work on the three facilities that will require the longest period of work in the EPC-04 Package: hydrocracking, sulfur separation facility, and hydrogen plant.