Mongolia : Southeast Gobi Urban and Border Town Development Project

Energy / Energy utility services

Transport / Urban roads and traffic management

Water and other urban infrastructure and services / Urban policy, institutional and capacity development - Urban sewerage - Urban solid waste management - Urban water supply

The aimags (provinces) of Omnogovi and Dornogovi (Southeast Gobi) are poised to experience a rapid increase in economic activity as a result of rapid growth in mining and cross-border trade. The influx associated with these economic activities is projected to more than double urban populations in the project towns by 2020. For some soum (district) centers in Southeast Gobi, population is expected to increase by an order of magnitude by 2020.

The provision of urban infrastructure and services is currently poor and is not keeping pace with population growth. Many services are either inadequate or absent. There are low levels of access to water supply and sanitation, and smaller urban areas do not have piped networks. Insufficient and unreliable urban services add to business and household costs, damage the urban environment and diminish quality of life, and decrease the attractiveness of towns to further potential investment. Investment and capacity development are required to enable government to expand the coverage and improve the quality and reliability of urban services. Local governments are ill-equipped to meet the joint challenges posed by increased demand for scarce water resources.

Maximizing the benefits to existing and future residents of Southeast Gobi from mining investments, trade growth, and associated economic development opportunities depends on effective urban planning, management, and service delivery policies and structures being in place. Strengthening the provision of basic urban services will require institutions and policies that provide incentives for performance while also ensuring affordability. Services are currently provided by utilities that are largely owned by local government, and are delivered at a loss due to unwillingness of local government councils to raise tariffs to cost-recovery levels. This is costly in terms of the resources spent on untargeted subsidies and foregone opportunities to attract private sector expertise and financing.

Economic development and livability in aimag centers (mining and border towns in Southeast Gobi) enhaced.

Urban governance improved and access to sustainable infrastructure and services expanded in urban places in Southeast Gobi and other aimags.

1. Infrastructure services reforms, including perforamance-based contracts for urban services delivery implemented

2. Urban planning and policy making, including master plans for participating towns strengthened.

3. Cross-border cooperation established

4. Water source development, transmission, storage and distribution completed

5. Wastewater collection and treatment infrastructure constructed and operationalized

6. District heating infrastructure constructed and operationalized

7. Surfaced central roads network constructed

8. Improved solid waste collection and disposal enhanced

9. Stormwater drainage infrastructure constructed and operationalized

10. Strategic planning management, and cost recovery for wastewater management strengthened

Output 1. Completed under G0204Package A4 consultants provided advisory services to local governments in identifying a suitable PPP transaction mode approach for public utility services organization (PUSO). Due to unavailability of funds to finance a service fee, replacement of replace operating management contract approach with a lease contract for the existing PUSOs has been proposed. The lease contract includes setting tariffs that will recover operational and maintenance costs including depreciation, service quality targets and required investment.

Output 2. Completed under G0204. Urban master plans for four soums have been prepared, approved and handed over to the aimag governments. Women participation in the consultation process has been recorded and reported.

Output 3. Completed under G0204. Working group was established by the Government.

Output 4. Completed under G0204. One 1,000 m3 water reservoir and four 100 m3 water reservoirs were constructed (one each in Dalanzadgad and Gurvantes and two in Tsogttsetsii). In addition, two water reservoirs with 48m3/d capacity were constructed in Erdenedalai, Dundgovi aimag under Loan 3713. Total of 39.4 km of water supply pipeline was installed (1.4 km in Dalanzadgad, 6.8km in Sainshand, 13.4km in Zamyn-Uud, 5.7km in Gurvantes, 6.6km in Tsogttsetsii, 5.5km in Khanbogd). Under the L3388 and L3713, additional 6.3 km water supply pipeline was installed.

Output 5. Completed under G0204. Ongoing under L3388 and L3713. In total of 79.4 km sewer pipes have been installed under three projects. As of 20 September 2022, of nine original and two additional WWTPs planned for construction under Loan 3388 and Loan 3713, nine WWTPs constructed and commissioned and two plants will be completed by 31 December 2022. Project supplied sewage vacuum trucks and machinery for five PUSOs under loan 3713 and conducted the training on machine operations and labor safety.

Output 6. Completed under Grant 0204. 10.2 km heating supply pipelines were constructed under Grant 0204 by 2016. Loan 31713 financed construction of additional 5.1 km heating supply pipelines in 2020.

Output 7. Completed under G0204. In Khanbogd soum, 5 km road was constructed from the source other than the grant (by Oyu Tolgoi), hence at the local government request the project built only 6 km road in the project towns.

Output 8. Completed. Two landfill sites were constructed under the provincial government budget in Tsogtsetsii and Sainshand soums. Hence, project constructed one landfill site in Zamyn-Uud, and, at the government request, built a waste compaction transfer station, and supplied additional waste segregation bins, containers and machinery.

Output 9. Completed under G0204. 1.8 km storm drainage was built in accordance with the detailed engineering design.

Output 10. Completed under G204. Ongoing under L3388 and L3713. Women participation is recorded and reported.

Consultants will be selected and engaged using ADB's quality- and cost-based selection procedures, consultant qualification selection, and/or individual consultant selection procedures The Project will require a total of about 80 person-months of international and 350 person-months of national consulting services to support: (i) the PMU and PIUs in project implementation and management; (ii) development of structure plans for all project towns; (iii) an improved institutional and incentive framework for urban service delivery; (iv) improved local government capacity for urban planning, land management system planning, operations and maintenance; (v) enhanced cost recovery from services through metering and tariff reform; and (vi) improved local government revenues and financial management through the establishment of predictable recurrent financing and performance-based contracting and private sector participation. The ADB grant will finance 80 person-months of international and 350 person-months of national consultants.

The international consultants will have expertise in: (i) project management and procurement - including performance-based contracting; (ii) urban and regional planning; (iii) financial management; (iv) institutional and organizational development; and (v) capacity building and training. The national consultants will have expertise in: (i) water and wastewater engineering; (ii) resettlement; (iii) environmental management; (iv) legal aspects; (v) database development; (vi) financial management; and (vii) construction supervision and engineering design.