Ulaanbaatar
Standing Committee on Economics Supports Draft Loan Agreement for the Third Energy Sector Project
Economy
Ulaanbaatar, January 14, 2025 /MONTSAME/. On January 13, 2025, the Standing Committee on Economics of the State Great Khural of Mongolia reviewed the draft Loan Agreement for the Third Energy Sector Project between Mongolia and the International Bank for Reconstruction and Development (IBRD).
Minister of Finance of Mongolia Javkhlan Bold emphasized that the Third Energy Sector Project is a priority initiative, featuring the construction of a 188-km, 220-kV double-circuit transmission line and the expansion of substations along the Baganuur-Choir route. The Project aligns with the long-term Development Policy of Mongolia "Vision 2050," the "New Revival Policy," and the Government's Action Program for 2024-2028. The Government of Mongolia negotiated the Loan Agreement with the World Bank's IBRD on October 16, 2024, and approved it on November 27, 2024.
The Third Energy Sector Project will be financed through a USD 47 million loan from the World Bank. The loan carries a variable interest rate based on the Secured Overnight Financing Rate (SOFR) plus a 1.44 percent margin, with a five-year grace period and a 25-year repayment term. Repayment will be made according to Article 24.3 of the Law on Public Debt Management and the "National Power Transmission Grid" SOE, the designated borrowing entity, will be responsible for repayment.
Minister Javkhlan noted that the project would double the transmission capacity of the 110 kV power line along the Baganuur-Choir route. The expanded Baganuur and Choir substations will enhance energy quality, reliability, and stability, ensuring an uninterrupted power supply to meet the region's growing energy demands.
Members of the Standing Committee on Economics expressed their support for the Project, recognizing its critical role in strengthening the energy sector. During discussions, it was noted that planning for the Third Energy Sector Project began in 2007-2008, with the Loan Agreement negotiations being initiated in 2022. A vote followed, with 64.7 percent of the 17 members voting in favor of the proposal. The decision was made to forward the draft to the Standing Committee on Budget and the Standing Committee on Security and Foreign Policy of the State Great Khural for further consideration.
