Mongolia: Energy Efficiency and Urban Environment Improvement

Sovereign Project | 46343-002

Summary

The proposed Energy Efficiency and Urban Environment Improvement Project will upgrade the electrical transmission and distribution networks in and around Ulaanbaatar, thereby improve energy efficiency, reduce transmission and distribution losses and emission of greenhouse gases and other air pollutants from existing power plants in Ulaanbaatar. It will also facilitate financial closure of an on-going combined heat and power plant number 5 (CHP 5) through a public-private partnership (PPP) model, which has been supported by Asian Development Bank (ADB). The components of the project include (i) upgrading the electrical transmission and distribution networks, (ii) computerizing the system at load dispatch center, transmission and distribution level, and (iii) capacity building.

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Consulting Notices

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Procurement Notices

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Procurement Documents

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Project Name Energy Efficiency and Urban Environment Improvement
Project Number 46343-002
Country Mongolia
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 8649-MON: Energy Efficiency and Urban Environment Improvement
Japan Fund for Poverty Reduction US$ 2.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change
Sector / Subsector Energy - Electricity transmission and distribution
Gender Equity and Mainstreaming No gender elements
Description The proposed Energy Efficiency and Urban Environment Improvement Project will upgrade the electrical transmission and distribution networks in and around Ulaanbaatar, thereby improve energy efficiency, reduce transmission and distribution losses and emission of greenhouse gases and other air pollutants from existing power plants in Ulaanbaatar. It will also facilitate financial closure of an on-going combined heat and power plant number 5 (CHP 5) through a public-private partnership (PPP) model, which has been supported by Asian Development Bank (ADB). The components of the project include (i) upgrading the electrical transmission and distribution networks, (ii) computerizing the system at load dispatch center, transmission and distribution level, and (iii) capacity building.
Project Rationale and Linkage to Country/Regional Strategy

In Mongolia, the energy sector has been unbundled into generation, load dispatch center and, transmission and distribution companies since 2001. Due to lack of available public funding, the private sector investment in the sector is a key policy priority for the Government of Mongolia. The existing facilities for providing heating and electricity (power plants and transmission and distribution lines) are energy inefficient and vulnerable since these facilities are old and outdated. Two out of three coal-based CHP plants (number 2 and 3) in Ulaanbaatar have been operating for more than 40 years without proper emission control devices, whereas the largest CHP plant, number 4, has operated for more than 25 years. Due to inadequate heat supply and coverage of central heating system, residents in ger areas surrounding Ulaanbaatar (60% of residents in Ulaanbaatar), have to use coal based household stoves and small inefficient heat only boilers without proper emission control devices. Lack of investments in expanding the coverage of electricity and heating network is the primary cause for continued use of inefficient and polluting heat system. The result is serious urban air pollution during the winter season in Ulaanbaatar, which is widely regarded amongst the most polluted cities in the Asia Pacific region. During winter months, particulate matter less than 10 micrometers (PM10) in Ulaanbaatar's atmosphere routinely measures 279 micrograms per cubic meter of air, which is about five times higher than World Health Organization's air quality guidelines of 50 micrograms/cubic meter.

Mongolia has experienced rapid economic growth (11.5% in 2013) led by mining development. The electricity and heating demand has also been growing in Ulaanbaatar due to rapid urbanization and improved economic and commercial activities. But due to the unavailability of new power and heat plants these demands are largely unmet and suppressed. As a result, the electricity consumption in the central energy system (CES), which covers Ulaanbaatar and other major cities, and mining development areas grew modestly to 3,542 gigawatt-hour (GWh) in 2012, about 34% higher than 2003. It is projected that the electricity consumption in the CES will increase to 4,422 GWh in 2015 and will more than double to 8,189 GWh in 2025 compared to 2012. The reserve margin of heat and power supply has become close to zero. To overcome the potential supply shortage, the Government of Mongolia planned to (i) build a new CHP 5 in Ulaanbaatar through a PPP model, and (ii) install additional capacity in the existing CHP plant number 4.

Impact
Project Outcome
Description of Outcome
Progress Toward Outcome
Implementation Progress
Description of Project Outputs
Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation Work of international individual consultants for Part 1 commenced, recruitment of Part 1 national consultants is ongoing.
Business Opportunities
Consulting Services The TA will take a unique approach (two stages of consulting services) to use efficiently the limited loan processing time. Part 1 (data gathering and preliminary assessment) will require individual consultants (2 international, 4 person-months; and 2 national, 4 person-months) while Part 2 (preparation of feasibility studies, capacity building, and due diligence) will require a consulting firm (8 international, 34 person-months; and 10 national, 103 person-months). The consulting firm will be engaged through quality- and cost-based selection method (with a quality-cost ratio of 90:10) using a simplified technical proposal. The consultants for Parts 1 and 2 will be recruited in accordance with Asian Development Bank's (ADB) Guidelines on the Use of Consultants (2013, as amended from time to time). The procurement of equipment by consultants under the TA will follow ADB's Procurement Guidelines (2013, as amended from time to time). The proceeds of the TA will be disbursed in line with ADB's Technical Assistance Disbursement Handbook (2010, as amended from time to time). The equipment procured under the TA will be turned over to the executing agency upon TA completion.
Procurement All procurement will be undertaken in conformity with ADB's Procurement Guidelines (2013, as amended from time to time).
Responsible ADB Officer Teruhisa Oi
Responsible ADB Department East Asia Department
Responsible ADB Division Energy Division, EARD
Executing Agencies
Ministry of EnergyGovernment Building XIV,Chinggis Avenue
Khan-Uul District, Ulaanbaatar, 17060
Timetable
Concept Clearance -
Fact Finding -
MRM -
Approval 12 May 2014
Last Review Mission -
Last PDS Update 12 Mar 2015

TA 8649-MON

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
12 May 2014 30 May 2014 30 May 2014 31 May 2016 - -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
0.00 2,000,000.00 200,000.00 0.00 0.00 0.00 2,200,000.00 12 May 2014 262,915.31
Title Document Type Document Date
Energy Efficiency and Urban Environment Improvement Project Technical Assistance Reports May 2014

Safeguard Documents

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Evaluation Documents

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