39256-024: Urban Transport Development Investment Program-Tranche1 | Asian Development Bank

Mongolia: Urban Transport Development Investment Program-Tranche1

Sovereign (Public) Project | 39256-024 Status: Active

The first tranche under the proposed MFF will require $59.9 million from ADB's ADF resources and $10.0 million of the government counterpart funds to finance (i) $29.3 million for BRT infrastructure development; (ii) $22.5 for BRT system development; (iii) $2.2 million for ITS system; (iv) $5.3 million for project management, detailed design, and institutional development; (v) $7.0 million for physical and price contingency; and (vi) $3.6 million for financing charge during implementation.

Project Details

Project Officer
Ganbaatar, Anand East Asia Department Request for information
  • Mongolia
  • Transport
Project Name Urban Transport Development Investment Program-Tranche1
Project Number 39256-024
Country Mongolia
Project Status Active
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Grant 0315-MON: Urban Transport Development Investment Program-Tranche1
Global Environment Facility Grant US$ 1.50 million
Loan 2934-MON: Urban Transport Development Investment Program-Tranche1
Ordinary capital resources US$ 29.70 million
Loan 2935-MON: Urban Transport Development Investment Program-Tranche1
concessional ordinary capital resources lending / Asian Development Fund US$ 30.20 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Sector / Subsector

Transport / Transport policies and institutional development - Urban public transport

Gender Equity and Mainstreaming Effective gender mainstreaming

The first tranche under the proposed MFF will require $59.9 million from ADB's ADF resources and $10.0 million of the government counterpart funds to finance (i) $29.3 million for BRT infrastructure development; (ii) $22.5 for BRT system development; (iii) $2.2 million for ITS system; (iv) $5.3 million for project management, detailed design, and institutional development; (v) $7.0 million for physical and price contingency; and (vi) $3.6 million for financing charge during implementation.

Tranche-1 will (i) develop BRT infrastructure: upgrade 7.7 km of road, expand the Peace bridge, and install 14 km of electric trolleybus infrastructure (electric wires, feeder cables, and substations) for the BRT system; (ii) introduce a 14 km BRT line in the north-south corridor of Ulaanbaatar; (iii) construct 3 bus stations in ger area subcenters ; (iv) install an intelligent transport system (ITS) component: bus management system (BMS); and (v) provide resources for project management, detailed engineering design, and institutional development. The investment program will also help MUB (i) develop a clean transport policy and investment program, procure and install emission testing equipment, and pilot a clean energy-based transport modality in Ulaanbaatar; and (ii) prepare a performance based BRT operation contract.

Project Rationale and Linkage to Country/Regional Strategy

Transport infrastructure and services in Ulaanbaatar are suffering from increasing road congestion, inefficient traffic management, poor safety conditions, and a weak public transport system. Most of the major intersections in the city center are severely congested (220 seconds/vehicle) resulting in average speeds of 5-8 kilometers (km) per hour at the central section of the city during peak hours. Traffic congestion is aggravated by insufficient parking management and enforcement, excessive and inappropriate designation of parking spaces, lack of pedestrian facilities and driver discipline, and inadequate traffic signaling and control. Traffic accidents are common due to poor traffic management and the uncontrolled interaction of pedestrians and vehicles. Encroachment on roads and sidewalks by parked vehicles worsens the traffic situation. Planning and budgeting for pedestrian and parking infrastructure is lacking.

Inefficient public transport policies and lack of coordination among the urban development and public transport regulatory agencies exacerbate the situation. Increased trip times, excessive fuel use, and health problems due to poor air quality, all serve to reduce residents' quality of life and have a negative impact on the economic growth of the city. The public transport system is struggling with low service quality; and technical, financial, and institutional challenges. Public transport service has lagged behind the recent urban growth and majority of buses are more than 10 years old. The public transport tariffs do not fully cover the costs of the operators and about 40% of the passengers are subsidized by the municipal budget. As a result, the municipal budget subsidizes a substantial part of the bus companies' annual costs, but the mechanism for allocating subsidies lacks transparency and is perceived as inequitable. Bus operators lack financial resources to renew and expand their bus fleet and provide adequate transportation services. Interaction among the different modes of public transport is far from optimal. The public transport routes are not designed as part of a feeder-and-main-line system, and the route allocation and management system needs to be improved.

Ulaanbaatar has a range of serious road traffic safety problems. While the total number of recorded traffic accidents may have peaked in the year 2000 and appear to have been falling since then, the rates of traffic fatalities and personal injury accidents relative to the number of registered vehicles are alarming. It is evident that, while the capital city is home for about 42% of the total population of Mongolia, Ulaanbaatar routinely accounts for over 70% of the annual traffic accidents in the country. An incidence of 7.5 deaths per 10,000 vehicles per year highlights the extent of the road safety issue.

The road network is well developed only in the central area of the city, but in outlying residential and ger areas, where many low income families live, an undeveloped road network became a barrier for provision of public transport services. The government increased budgetary allocations for upgrading the city road network, but the growing fleet of private vehicles requires a substantial amount of investments to expand the road network. Efficacy of these investments is reduced by the lack of a systematic road maintenance program and budgeting mechanism.

The Municipality of Ulaanbaatar (MUB) is preparing the city master plan that aims to develop the city infrastructure, including urban roads, utility network, transport system, and services. In line with the city master plan, MUB established a road fund that finances the road network construction and maintenance works, but the funds are still insufficient to cover the city's needs. The following areas of MUB's capacity require considerable improvement: (i) development, implementation, and enforcement of the urban transport policy and strategy; (ii) long-term investment planning, capital budgeting, and financial management; and (iii) design and management of urban transport projects financed by international development partners.

The urban poor suffer disproportionately from an inadequate transport system. Underinvestment in public transportation raises the cost of commuting and restricts access to jobs and services. The poor tend to be more exposed to risks associated with externalities in transport: they lack adequate means to avoid exposure to polluted air, face higher commuting distances and costs, and are particularly affected when there is a lack of provisions for pedestrians. The poor stand to benefit significantly from improved transportation services. Road improvements will only make limited and temporary improvements. Strong institutions with clear mandates are required to implement investments, attract financing, coordinate among stakeholders, and regulate service providers. Without a viable public transport system, Ulaanbaatar has started experiencing serious traffic congestion with negative impacts on economic vitality and quality of life. Improvements in traffic and parking control, driving behavior, and enforcement are also critical for addressing the city's transport needs. The problem tree that highlights the key urban transport sector challenges in Ulaanbaatar is in Appendix 2.

Development partner engagement in the urban transport has been increasing. The Japan International Cooperation Agency (JICA) is (i) helping MUB update the city master plan that also includes the transport sector; (ii) developing an international airport construction project; (iii) financing construction of a railway flyover; and (iv) financing a feasibility study for a light rail transit (LRT) system for Ulaanbaatar. The European Bank for Reconstruction and Development (EBRD) is developing a project that aims to develop an electric transport company that operates trolleybuses and upgrade the electric transport infrastructure of the city. The Export-Import Bank of Korea has financed an intelligent transport system project, at an estimated cost of $17.0 million, to improve traffic signals at 79 intersections that are being integrated and coordinated through a central control center. The World Bank team is preparing Ulaanbatar Services Improvement Project 3, which will improve secondary roads in ger areas. The Asian Development Bank (ADB) is (i) implementing the Urban Development Sector Project that is improving road access of ger areas to the central areas of Ulaanbaatar; and (ii) developing the Urban Services Development Investment Program (USDIP) that will help MUB develop urban subcenters. Tranche 1 of the proposed Urban Transport Development Investment Program will finance upgrading of 3 bus stations in the urban subcenters of Ulaanbaatar that will be included in the USDIP's scope. The project team is coordinating its activities with all the international financial institutions to strengthen policy dialogue with the government on introducing a financially sustainable and environmentally-friendly transport system to support economic growth of the capital city.

The above challenges and setbacks of Ulaanbaatar's urban transport system require a comprehensive program that includes investments in infrastructure improvement combined with modern traffic management technologies, policy reforms, efficient and sustainable transport modalities, and institutional development.

Impact Economic growth of Ulaanbaatar is promoted by sustainable and efficient urban transport system and services
Project Outcome
Description of Outcome Efficient, safe, and affordable urban transport services developed in Ulaanbaatar
Progress Toward Outcome

The project start-up activities are progressing. The Municipality of Ulaanbaatar (MUB) established a project implementation unit (PIU) and 13 staff positions on full time basis have been approved by ADB based on MOF's approval of the PIU staff composition. The recruitment of three PIU staff (procurement specialist, public transport planner, resettlement, social safeguards and gender specialist) and two individual national consultants (environmental specialist and project management specialist) is ongoing.

The MUB established the Project Steering Committee (PSC) and held the first meeting on 16 June 2017. The PSC approved the (i) selection of the east-west (Moscow Street, Peace Avenue, Namyanju Street and Niislel Khuree Avenue) BRT corridor as a priority corridor, (ii) project implementation schedule, (iii) investment plan, (iv) the work plan for 2017, and (v) request extension of loan closing date for Project 1.

The MUB rented an office space for the PIU operation starting from 1 April 2017 and the rental expense has been approved by ADB based on the letter from the Ministry of Finance. The MUB procured some office equipment and furniture for the PIU staff under Shopping method.

A new Subsidiary Loan Agreement between the MUB and MOF was signed on 27 July 2017 and ADB approved the fulfillment of conditions of withdrawals from loan accounts under ADF and OCR resources on 31 July 2017.

The project opened the imprest and sub-accounts at the commercial bank acceptable to ADB. The MUB/PIU received the initial advances under L2934 and G0315 funds.

The loan inception mission was fielded on 24-27 July 2017 to (i) familiarize the Borrower, MUB and PIU staff with ADB procedures and requirements in project implementation and (ii) discuss and agree on the update of the project documents, those were prepared in 2011.

The MUB requested ADB to consider the extension of the loan closing date by five-year from 28 February 2018 to 28 February 2023 which was supported by the Ministry of Finance.

The project hand-over mission was fielded on 17-20 April 2017 and the project administration was delegated from EATC to Mongolia Resident Mission effective 9 June 2017.

Implementation Progress
Description of Project Outputs

1. Infrastructure for BRT installation developed

2. Sustainable, affordable, and efficient BRT system established and operational

3. Intelligent Transport System (ITS): bus management, bus information, and smart-ticketing systems

4. Improved traffic and pedestrian safety

5. Improved public transport and traffic management, policies, and institutional capacity

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

The MUB established a Consultant Selection Committee (CSC) in July 2017 for recruiting the consulting services for the BRT detailed engineering design and construction supervision .

The PIU in close cooperation with CSC is preparing the draft terms of reference and cost estimates for the above consulting service. This consulting service will be announced in Q4 2017.

Geographical Location Ulan Bator
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects To comply with national laws and ADB requirements, an environmental assessment and review framework was reviewed by ADB's Regional and Sustainable Development Department and the MUB. Environment classification of project 1 is category B as it will not have significant irreversible or permanent negative environmental impacts during or after construction. To comply with ADB's Safeguard Policy Statement (2009), an initial environmental examination was prepared and disclosed. The environmental management plan will become an integral part of construction contracts. Assuming effective implementation of the mitigation measures and monitoring requirements outlined in the plan, project 1 is not expected to have significant adverse environmental impacts. Subsequent projects are expected to be classified environment category B.
Involuntary Resettlement Project 1 has been classified involuntary resettlement category B. A land acquisition and resettlement framework has been prepared for the investment program; it was endorsed by the MUB and disclosed on ADB's website. It specifies compensation eligibility and entitlements, land acquisition and related conditions for subproject implementation, and mechanisms for the preparation of land acquisition and resettlement plans (LARPs) for subprojects. Subsequent projects are expected to be classified involuntary resettlement category B. A LARP has been prepared for project 1 and endorsed by the government and the MUB, and has been disclosed to affected persons in the local language. The PIU will be responsible for implementing land acquisition and resettlement activities, and internal monitoring and reporting. An external monitoring agency will be engaged to investigate and assess LARP implementation, and results of monitoring will be reported to the MUB and ADB semiannually. The LARP has been posted on the ADB website. It will also be disclosed on the MUB website and made available to affected persons and communities at the local level.
Indigenous Peoples Project 1 has been classified category C for indigenous peoples. Subsequent projects are expected to be classified category C.
Stakeholder Communication, Participation, and Consultation
During Project Design

The potential initial stakeholders are users of public transport, including the urban low and mid-income population groups, public transport bus services, private minibus services, residents using private vehicles, and the local government.

The project team will continue active dialogue with key project stakeholders to (i) sustain their support to the investment program, and (ii) ensure inter-modal integration of the BRT and LRT modalities.

C&P plan for the project will include (i) focus group discussions, (ii) workshops, and (iii) mass media campaign.

During Project Implementation Consultation will be carried out with public transport service providers and operators, the general public, residents adjacent to the proposed BRT lines, and the local government. Focus group discussions will be held with members of the communities as well as several consultation workshops with transport providers and the local government.
Business Opportunities
Consulting Services The project management consultant will help the MUB and PIU manage contracts under the investment program and provide training in project management and monitoring, financial management, disbursement, operation and maintenance, and reporting. The details of consulting services input and outline terms of reference for consulting services are in the FFA.
Procurement A procurement plan will be prepared for each tranche. Procurement to be financed from the ADB loan will be carried out in accordance with ADB's Procurement Guidelines (2015, as amended from time to time). The civil works and materials have been packaged into contracts that will be procured through international and national competitive bidding procedures. ADB standard bidding documents will be adopted.
Responsible ADB Officer Ganbaatar, Anand
Responsible ADB Department East Asia Department
Responsible ADB Division Mongolia Resident Mission
Executing Agencies
Ulaanbaatar Municipal Government
Sukhbaatar Square-11
Ulaanbaatar-46, Mongolia
Concept Clearance -
Fact Finding -
MRM 31 May 2012
Approval 08 Nov 2012
Last Review Mission -
Last PDS Update 15 Sep 2017

Grant 0315-MON

Approval Signing Date Effectivity Date Closing
Original Revised Actual
08 Nov 2012 05 May 2015 09 Jun 2015 28 Feb 2018 28 Feb 2020 -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 1.50 Cumulative Contract Awards
ADB 0.00 08 Nov 2012 0.00 0.11 7%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 1.50 08 Nov 2012 0.00 0.26 17%

Loan 2934-MON

Approval Signing Date Effectivity Date Closing
Original Revised Actual
08 Nov 2012 05 May 2015 09 Jun 2015 28 Feb 2018 28 Feb 2020 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 46.70 Cumulative Contract Awards
ADB 29.70 08 Nov 2012 0.00 0.00 0%
Counterpart 17.00 Cumulative Disbursements
Cofinancing 0.00 08 Nov 2012 0.10 0.00 0%

Loan 2935-MON

Approval Signing Date Effectivity Date Closing
Original Revised Actual
08 Nov 2012 05 May 2015 09 Jun 2015 28 Feb 2018 28 Feb 2020 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 30.20 Cumulative Contract Awards
ADB 30.20 08 Nov 2012 0.00 0.30 1%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 08 Nov 2012 0.00 2.50 9%

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.

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