Eg River Hydroelectric Power Plant construction approved

During the regular cabinet meeting on November 14, the construction of a 220 MW hydroelectric power plant at Eg River was discussed and members approved the task group that undertake the project construction.

According to the cabinet, the project’s financing for pre-construction works will be allocated from the 50 million USD fund which was earmarked for the 450 MW power plant project adjacent to the Tavan Tolgoi coal mine.

The cabinet instructed the Minister of Energy, M.Sonompil, and Minister of Economic Development, N.Batbayar to collect the required budget for the project’s next phases though commercial bank loans and by establishing contracts with domestic and foreign investors. The funding for the hydroelectric power plant construction is set to be approved by next year and the construction is to start immediately afterwards, according to officials.

Once the hydroelectric power plant is operations, Mongolia’s central energy system will have a greatly improve and the national energy supply will become much smoother. Most importantly, experts estimate that the hydroelectric plant will enable Mongolia to reduce energy dependency on imports by developing its own energy sources.

The plant is also expected to save around ten million USD per year and Mongolia will be able to make up the cost within ten to 15 years.

Experts from the Asian Development Bank (ADB) have been studying ways to establish hydroelectric power plant in Mongolia since 1991. The studies confirmed the profitability of the project and the bank has expressed interest to provide grant-in-aid and soft loans for the pre-feasibility study and designs of the Eg River hydroelectric plant in May, 1991.

In 1991, the government accepted the ADB proposal and made deals for pre-feasibility study and designs. The parties signed a contract of loan and grant-in-aid in April, 1992.

The pre-feasibility study, design and bid documents of the plant were ready by 1994. But the construction of the plant was postponed in 1996 due to conflicts in the project financing.

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