41192-013: Regional Logistics Development Project | Asian Development Bank

Mongolia: Regional Logistics Development Project

Sovereign (Public) Project | 41192-013 Status: Active

ADB is helping Mongolia develop a logistics terminal with road and rail links in Zamyn Uud, a poor, isolated desert area on the southeast border with the People's Republic of China. The project will establish a multimodal transport system and equip the new terminal with modern customs and quarantine facilities.  The management of the logistics facility will be contracted out to a private operator.

Project Details

Project Officer
Ganbaatar, Anand East Asia Department Request for information
Country
  • Mongolia
Modality
  • Loan
Sector
  • Transport
 
Project Name Regional Logistics Development Project
Project Number 41192-013
Country Mongolia
Project Status Active
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Grant 0240-MON: Regional Logistics
concessional ordinary capital resources lending / Asian Development Fund US$ 5.00 million
Loan 2719-MON: Regional Logistics
concessional ordinary capital resources lending / Asian Development Fund US$ 40.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Regional integration
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Sector / Subsector

Transport / Transport policies and institutional development

Gender Equity and Mainstreaming Some gender elements
Description

The Project will be implemented in the Zamyn Uud, a relatively poor area. The region is a desert and many people are poor and the economic growth necessary to reduce rural poverty has failed to develop because of inadequate transport services and high costs. The local governments and people living in the region see the development of the logistics facility as a key investment for addressing this problem. Logistics development is a part of the Government's program for the integrated development of free economic zone in this poor region, which shares borders with the PRC and is the main gateway for Mongolia's trade with the PRC and other parts of the world. The development of this facility is expected to play an important role in facilitating and integrating this poor and underdeveloped region, and stimulating international, regional and domestic trade. The proposed Project is in line with the National Development Plan and the Government's Regional Development Strategy.

The Project is a key intervention in the transport sector, with many technical, operational, safety, and economic benefits. It seeks to introduce well developed logistics terminal equipped with modern technology and managed by private sector through a management contract for enhanced efficiency, increased throughput, and improved reliability--all of which will lead to a more affordable, faster, cheap, safe transport services in Mongolia. ADB intervention in financing this facility is expected to play a catalytic role in facilitating the flow of further foreign and private capital to finance the development of logistics in Mongolia.

Project Rationale and Linkage to Country/Regional Strategy

Mongolia is a landlocked country and such countries face greater transportation challenges. Located between two large neighbors, Mongolia has no direct access to seaports and has to depend upon RF and the PRC for access to seaports. In the recent years, trade flows have been reoriented from RF and most of the imports (over 80%) are now coming from the PRC, from a border point in the southeast of the country called Zamyn Uud. The bulk of Mongolia's exports also travel through Zamyn Uud on its way to Tianjin port, the only port available to Mongolia for the export of its goods and international trade in the PRC. As a consequence the traffic handled at Zamyn Uud witnessed explosive growth rates in the recent years. However, Zamyn Uud is now badly congested, thereby affecting the imports, exports and the transit traffic. Though a number of reasons contribute to these delays (non availability of rolling stock, change of gauge, delays at customs), the main reason is the grossly inadequate development of logistics at Zamyn Uud in particular and in Mongolia in general.

Efficient and well developed logistics are identified as the key to a cost effective and competitive transportation. Trade logistics, or the capacity to connect to international markets to ship goods, is critical for developing countries to improve their competitiveness, reap the benefits of globalization, and fight poverty more effectively in an increasingly integrated world. A World Bank funded study based on a world survey of international freight forwarders and express carriers, indicates that facilitating the capacity to connect firms, suppliers and consumers, are crucial in a world where predictability and reliability are becoming even more important than costs. Countries ability to connect to global markets is fast becoming a key aspect of a country's capacity to compete, grow, attract investment, create jobs and reduce poverty, and for those unable to connect, the costs of exclusion are large and growing. Unfortunately, Mongolia's performance in all indicators of logistics management is at the bottom end. Based on a worldwide survey completed by more than 800 logistics professionals, World Bank developed a comprehensive cross-country assessment of logistics performance in 155 countries called logistics performance index. Mongolia has an overall logistics performance index ranking of 141 (1 is the best and 155 is the worst), and its ranking for customs procedures is 149, logistics costs (including freight rates) is 144, infrastructure quality is 133, ability to track and trace shipments is 122, and timeliness in reaching a destination is 147. Mongolia's ranking clearly indicates serious issues in the development of logistics, which in turn is hurting its competitiveness and has serious repercussions for country's economic performance.

Impact International and regional trade promoted in Mongolia
Project Outcome
Description of Outcome An efficient, competitive, and reliable multimodal transport system developed at Zamyn Uud
Progress Toward Outcome The contract for the construction supervision was awarded to the JV consulting firm Soosung Engineering Co., Ltd. (Republic of Korea), Geo Zuraglal LLC (Mongolia), and NBCC LLC (Mongolia). The consulting service contract for the construction supervision was signed on 24 June 2016 with Ministry of Road and Transport Development (MRTD). The consultants submitted the inception and quarterly progress reports on time. The contract for the civil works of Zamyn-Uud logistics center was awarded to China Railway 1st Bureau Group Co., Ltd. The MRTD signed the contract with the contractor on 1 February 2016. The contractor and consultants are all mobilized on site. On 17 May 2017, the Government approved 434 labor permits for the contractor and exempted from work station duties and taxes. As of 13 September 2017, contractor mobilized 270 workers including 90 Mongolian workers while the consulting firm mobilized 8 supervision engineers on site. During the site visit by ADB on 28-29 August 2017, the contractor was advised to increase the number of workers to expedite the civil works. The overall project implementation progress is estimated at 45% with the elapsed time of 79%. In 2017, the project has the contract award and disbursement projections of $2.6 million and $11.3 million respectively. By 13 September 2017, the project disbursed $2.97 million with $0.11 million contract awards. The project administration was delegated from the East Asia Transport Division (EATC) to the Mongolia Resident Mission (MNRM) effective 4 April 2017. The loan review mission is planned in mid-November 2017.
Implementation Progress
Description of Project Outputs

1. A multimodal facility with facilities for road-to-road, road-to-rail, and rail-to-rail transshipment developed at Zamyn Uud

2. Terminal equipment and management systems procured and installed

3. Strengthened institutional capacity

Status of Implementation Progress (Outputs, Activities, and Issues)

MRTD is procuring the rail mounted gantry crane for the Zamyn-Uud Logistics Center (ZULC) at the estimated budget of MNT4.589 billion under 100% government financing. The bid was opened on 9 March 2017 and the gantry crane will be installed by end of 2017.

The MRTD proposed to procure the computer-based interlocking railway signaling and telecommunication works at the estimated budget of $1.7 million under ADB financing. ADB approved the draft bidding document and invitation for bids (IFB)under ICB on 24 August 2017. The posting of the IFB on ADB website and local newspapers in process.

ADB approved the updated procurement plan (version 1) on 11 August 2017 which includes the procurement of computer-based interlocking railway signaling and communication works.

ADB approved the reallocation of loan proceeds based on the MRTD's request approved by the Ministry of Finance on 26 July 2017 to address a negative amount in the civil works category as the civil works contract exceeded the initial allocation.

The MRTD has completed the following consulting service and procurement of works in the Zamyn-Uud Logistics Center under 100% government financing:

- detailed environmental impact assessment;

- construction of water supply pipeline;

- construction of fence on project site;

- construction of electric power transmission line and substation;

- construction of road and bridge;

- design works for external power supply;

- construction of external internet and telecommunication; and

- construction of voltage power supply transmission line and substation;

Geographical Location Zamiin Uud
Safeguard Categories
Environment B
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects Environmental Management and Environmental Monitoring Plans have been prepared and responsibilities for implementation assigned. A full environmental impact assessment is not required.
Involuntary Resettlement The project has not required any resettlement of affected people through land acquisition because it is a vacant desert area.
Indigenous Peoples No indigenous peoples have been identified. If there were any, they would not be adversely affected by the project.
Stakeholder Communication, Participation, and Consultation
During Project Design Five consultative meetings were held in Zamyn Uud with local officials, businesses, and area residents during 2009-2010. Surveys were conducted of 450 area households (1,623 people), 90 businesses, 314 women, 130 poor households, and 7 minority households. In addition, some informal individual discussions and conversations were held with a number of residents. All support the project, which they expect will have positive impacts on theri lives through increased economic activity.
During Project Implementation Support actions and assist in resolving implementation constraints in consultation with relevant Government counterparts and other stakeholders
Business Opportunities
Consulting Services

All consulting services will be recruited according to ADB's Guidelines on the Use of Consultants (2013, as amended from time to time). A total of 172 person months of consulting services (60 international, 112 national), grouped into one pakcage will be funded under the Project, to support the EA in (i) Preparation of detailed design and implementation supervision; (ii) training of PIU staff; (iii) terminal operations management; (iv) environmental monitoring; (v) procurement management; and (vi) project implementation and institutional capacity improvement. Consultants will be engaged using QCBS, with standard ratio of 80:20.

Recruitment of a construction supervision services for the construction of Zamyun-Uud Logistics center has been contracted.

Procurement

All procurement of civil works and goods will be undertaken in accordance with ADB's Procurement Guidelines (2010, as amended from time to time). International Competitive Biddiong (ICB) will be used for civil works and goods contracts estimated to cost more than $1 million and $500,000, respectively. National Competitive Bidding (NCB) will be used for civil works and goods contracts estimated to cost below ICB thresholds but more than $100,000. All ICB contracts are subject to prior review. Prior review and approval of ADB of the procurement documents (bidding and contract) is required. For NCB, prior review for first English language version of bidding documents which will be used as a model for subsequent procurement.

Procurement of civil works for construction of Zamyn-Uud logistics center has been finalized and contract signed.

Responsible ADB Officer Ganbaatar, Anand
Responsible ADB Department East Asia Department
Responsible ADB Division Mongolia Resident Mission
Executing Agencies
Ministry of Road and Transportation
[email protected]
11 Chinggis Avenue, Sukhbaatar District
Ulaanbaatar 14251 Mongolia
Timetable
Concept Clearance 15 Oct 2010
Fact Finding 03 Oct 2010 to 08 Oct 2010
MRM 29 Oct 2010
Approval 13 Dec 2010
Last Review Mission -
Last PDS Update 15 Sep 2017

Grant 0240-MON

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
13 Dec 2010 03 Jan 2011 23 Mar 2011 30 Jun 2016 30 Jun 2019 -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 5.00 Cumulative Contract Awards
ADB 5.00 13 Dec 2010 4.13 0.00 83%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 13 Dec 2010 3.28 0.00 66%

Loan 2719-MON

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
13 Dec 2010 03 Jan 2011 23 Mar 2011 30 Jun 2016 30 Jun 2019 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 66.64 Cumulative Contract Awards
ADB 40.00 13 Dec 2010 32.50 0.00 91%
Counterpart 26.64 Cumulative Disbursements
Cofinancing 0.00 13 Dec 2010 15.75 0.00 44%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - - - - - Satisfactory

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Public Communications Policy (PCP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Title Document Type Document Date
Regional Logistics Development Project: Procurement Plan Procurement Plans Aug 2017
Financing Agreement for Regional Logistics Development Project between Mongolia and Asian Development Bank dated 3 January 2011 Financing Agreement Jan 2011
Regional Logistics Development Project Reports and Recommendations of the President Nov 2010
Regional Logistics Development Project Summary Poverty Reduction and Social Strategies Nov 2010
Regional Logistics Development Project Project/Program Administration Manual Nov 2010
Regional Logistics Development Project Initial Poverty and Social Analysis Sep 2010

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.


The Public Communications Policy (PCP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.

Tenders

Tender Title Type Status Posting Date Deadline
L2719/G0240-MON: Regional Logistics Development Project [W2] Invitation for Bids Active 22 Sep 2017 03 Nov 2017

Contracts Awarded

No contracts awarded for this project were found

Procurement Plan