Mongolia: Regional Logistics Development Project

Sovereign Project | 41192-013 Status: Approved

Summary

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.

Latest Project Documents

Consulting Notices

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Procurement Notices

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Procurement Documents


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Project Name Regional Logistics Development Project
Project Number 41192-013
Country Mongolia
Project Status Approved
Project Type / Modality of Assistance Grant
Loan
Source of Funding / Amount
Grant 0240-MON: Regional Logistics
Asian Development Fund US$ 5.00 million
Loan 2719-MON: Regional Logistics
Asian Development Fund US$ 40.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Regional integration
Drivers of Change 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

Civil works bid proposals were submitted 12 August 2015. The recent change in governmnet resulted in replacement of the Bid Evaluation Committee (BEC). The new BEC is considering the previous bid evaluation report (BER) and it is expected to be submitted to ADB before mid October.

MRT are yet to advance the necessary recruitment of a construction supervision consultant. It is probable that this delay will not permit full utilization of the 2016 construction season.

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) A supplementary financing is anticipated to cover additional costs related to the design, installation and commissioning of a computer based interlocking signaling system ($3.5m) and the rail mounted gantry crane ($6m).
Geographical Location
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 (2010, 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 new supervision engineer is ongoing. Waiting submission of report for Preparing Shortlist, RFP and Consultant Recruitment Activities Monitoring Sheet Submission 1.

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 is underway. The EA is preparing the bid evaluation reports for sumbission to ADB.

Responsible ADB Officer David Fay
Responsible ADB Department East Asia Department
Responsible ADB Division Transport and Communications Division, EARD
Executing Agencies
Ministry of Road and Transportation
ONON@MRT.GOV.MN
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 23 Sep 2015

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 3.55 0.00 71%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 13 Dec 2010 1.84 0.00 37%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - - - - - Satisfactory

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 0.10 0.00 0%
Counterpart 26.64 Cumulative Disbursements
Cofinancing 0.00 13 Dec 2010 0.10 0.00 0%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - - - - - Satisfactory
Title Document Type Document Date
Regional Logistics Development Project Procurement Plans Dec 2013
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 Summary Poverty Reduction and Social Strategies Nov 2010
Regional Logistics Development Project Project/Program Administration Manual Nov 2010
Regional Logistics Development Project Reports and Recommendations of the President 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.

Title Document Type Document Date
Regional Logistics Development Project: Environmental Monitoring Report (January-December 2014) Environmental Monitoring Reports Dec 2014
Regional Logistics Development Project: Environmental Monitoring Report (June to December 2012) Environmental Monitoring Reports Dec 2012
Regional Logistics Development Project Environmental Monitoring Reports Jan 2011
Regional Logistics Development Project Environmental Assessment and Measures Nov 2010
Regional Logistics Development Project: Initial Environmental Examination Initial Environmental Examination Nov 2010

Evaluation Documents

See also: Independent Evaluation

None currently available.

Related Publications

None currently available.


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