Ministry explains railway policy, law on concession to investors, diplomats

The Ministry of Road, Transportation, Construction and Urban Planning organized a meeting on Saturday to introduce to domestic and foreign investors, diplomatic representatives, and officials of international organizations the railway policy and law on concession, so that those keen to bid for constructing the railway would get a clear idea of what was expected of them.

Deputy Minister L.Gansukh explained that the development policy envisions two basic phases of growth, one between 2007 and 2015 and the other from 2016 to 2020. In this total period economic growth is expected to be at an annual average of 14-15%, and the GDP is likely to reach USD41 billion, with per capita GDP projected at USD5,000 in 2015 and USD12,000 in 2020. All this, however, depended on Mongolia’s success in exporting its coal and other mineral resources to the best markets and the proposed new railway was essential for this. It will carry Mongolian products to new sea ports, freeing Mongolia from dependence on just one market.

The 1,100-km railway, expected to be constructed within 4 years if not earlier, will have four sections. The Tavantolgoi-Tsagaan Suvarga-Zuunbayan stretch will be 400 km long, the Sainshand- Baruun-Urt one 350 km, the Baruun Urt- Khuut one 140 km, and the Khuut-Choibalsan 150 km. The gauge will be 1,520 mm. The railway will serve the coal basin of Tavantolgoi, the copper deposit of Tsagaan Suvarga and Aduunchuluut, and also areas like Chandgana, Talbulag and Khuut that have coal, zinc, tungsten and fluorspar. It should be able to transport about 50 million tons of minerals annually, about 3.5 times more than at present.

After the meeting Gansukh told our reporter that no decision has yet been taken on the modalities of offering the contract for construction though some foreign companies -- from Russia, China, North Korea and South Korea -- have shown interest in the work. Asked what the main selection criteria would be, he said they would be the technical competence. The selected company will most likely be asked to do the work with its own funds, to be reimbursed by the Government when it starts to earn mineral revenues.

He did not indicate any deadline for announcement of the tender, bur said the terms are being prepared. The World Bank and The International Monetary Fund are likely to be involved.