Mongolia: Ulaanbaatar Urban Services and Ger Areas Development Investment Program

Sovereign Project | 45007-003

The Asian Development Bank is working with Mongolia to improve the lives of people living the country’s ger areas, or traditional tent communities. The program is providing and improving infrastructure and services in a variety of ways. This includes improving access to banking, lending and other financial facilities; upgrading transport systems; improving land use planning; upgrading water supply and waste water systems; and improving heating systems.

Project Name Ulaanbaatar Urban Services and Ger Areas Development Investment Program
Project Number 45007-003
Country / Economy Mongolia
Project Status Active
Project Type / Modality of Assistance Grant
Source of Funding / Amount
MFF Facility Concept 0078-MON: Ulaanbaatar Urban Services and Ger Areas Development Investment Program
Asian Development Fund US$ 70.34 million
Ordinary capital resources US$ 89.66 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Private sector development
Sector / Subsector
Gender Equity and Mainstreaming Effective gender mainstreaming

The program approach aims to initiate a redevelopment process in ger areas. Improving infrastructure within the ger area subcenters and connectivity with the city core center is critical for inclusiveness and important to facilitate the movement of people and goods, develop urban corridors, and create clusters of subcenters. Better urban planning combined with a network of infrastructure along priority roads will initiate a structural change of subcenter urban fabric. This will (i) improve residents' access to basic urban services, public space, and socioeconomic facilities; (ii) support local economic development; (iii) allow residents and businesses to take advantage of urban economies; and (iv) provide better housing options._The changes in land use and higher urban density will improve water, sanitation, and heating services delivery.

Road map. Based on government and Municipality of Ulaanbaatar (MUB) priorities to redevelop ger areas, the road map for the program will support the MUB in establishing a network of well-developed subcenters to provide jobs, housing, and economic opportunities with reduced soil and air pollution. It comprises sequenced investments, municipal reforms, and capacity building (policy, planning, and monitoring), with four strategic objectives: (i) expand roads and basic urban services (water, sewerage, and heating) within subcenters and improve connectivity to initiate land use transformation; (ii) increase economic and public services through investments in socioeconomic facilities to meet population needs, increase urban functions, and encourage job creation; (iii) increase service provider efficiency by improving water supply, sewerage, and heating service operations; and (iv) strengthen institutions and capacity by improving urban planning and subcenter development, community awareness, participation and empowerment, service provider operations and management, and program implementation capacity.

Strategic context and sector policy. In February 2013, Parliament approved the Adjustments to the Ulaanbaatar City Urban Development Master Plan 2020 and Development Directions 2030. The master plan produced two important outcomes: (i) integration of ger area development into the city master plan, and (ii) acknowledgement of the value and function of ger area subcenters as key elements of future city growth._The MUB is developing the Ger Area Development Program and established a Ger Area Development Agency, supervised by the vice mayor in charge of urban development and investment. On 30 May 2013, the city council resolution No.10/38 endorsed the program, subcenter locations under project 1, and coordination of the investment program with the city master plan. The MUB proposed a special purpose development vehicle (subcenter redevelopment authority) to facilitate, supervise, and coordinate the redevelopment process of the selected subcenters. In addition, the Ministry of Economic Development's Street Project is to improve road conditions in Ulaanbaatar and includes a ger area component. The National Development Strategy and the New Reconstruction Midterm Program (20082016) constitute the national framework for program implementation. The program is consistent with the Asian Development Bank (ADB) country partnership strategy, 20122016 for Mongolia;_ADB's Strategy 2020_priorities, including environmental sustainability and private sector development; as well as the core themes of green, competitive, and inclusive cities of ADB's Urban Operational Plan.

Policy dialogue and capacity development. To supplement the strong policy framework, policy dialogue and capacity development will focus (i) in communities, on community participation, awareness, and empowerment,_including design and implementation of the social and gender action plan; and establishment of community development councils (CDCs) and small- and medium-sized enterprise (SME) development councils (SDCs); (ii) in subcenters, on subcenter upgrading, including technical guidance for preparing and implementing local development plans, urban zoning regulation and construction standards, and a development framework with a transparent mechanism to regulate land redevelopment insuring current residents are integrated in the redevelopment plan; and (iii) in the city, on the master plan through ongoing ADB technical assistance to strengthen urban planning capacity._Capacity development for water and wastewater utilities will target (i) improving the MUB and USUG management contract, (ii) defining a clearer tariff road map, and (iii) providing technical support to the Water and Sewerage Regulatory Commission. For heating, the focus will be to ensure financial sustainability and capacity of new and existing heating facilities operators in the selected subcenters and to strengthen provisions in management contracts.

Financing modality. An MFF is the proposed financing modality to promote a long-term partnership between ADB, the government, and the MUB to facilitate the development of sustainable, inclusive, and livable ger areas. The MFF will support the policy framework for the redevelopment of ger areas, and provide opportunities for constructive dialogue and capacity development on city planning, policy reforms, and physical and nonphysical investments. It will generate critical mass, predictability, and continuity for basic urban services provision in ger areas, and enable ADB to better respond to MUB needs.

Development coordination. In preparing the program, ADB coordinated closely with development partners involved in Ulaanbaatar's urban sector. Three ADB-financed projects will directly support the program: (i) a bus rapid transit line from the city center to Selbe subcenter;_ (ii) support for housing and micro-, small-, and medium-sized enterprise financing in ger areas targeted by the program;_and (iii) capacity development technical assistance to strengthen MUB urban planning capacity.

Project Rationale and Linkage to Country/Regional Strategy

In 2012 Ulaanbaatar had a population of 1.3 million. Since the 1990s, it has had limited formal extension of its core, which largely comprises apartment blocks with comprehensive utility services, including dedicated heating, water, and sanitation. However, successive waves of in-migration with ger tents have reshaped the city's geography, with (i) little upgrading or extension of basic urban services; and (ii) government policy, since 2003, to give each citizen about 700 square meters of land._A vast low-density peri-urban area, named ger areas, now extends around the city core, characterized by unplanned settlement of low- and medium-income households with land ownership,_unserviced plots, unpaved roads, and poor facilities. The ger area population is estimated at 800,000, representing 60% of Ulaanbaatar or 30% of the country population. Despite their size, ger areas have until recently been considered temporary settlements. However, their official integration in the 2013 city master plan provides the necessary provision to plan the redevelopment of a formal peri-urban area.

Living conditions in ger areas are difficult. Poor sanitationhouseholds almost exclusively rely on open pit latrinesand poor waste collection have created highly unsanitary living conditions. Air pollution is among the most severe in the world, particularly during winter because of inadequate household heating systems_and unpaved roads. Access to water, supplied by kiosks operated by the Ulaanbaatar Water Supply and Sewerage Authority (USUG), is limited._In 2011, most of the 40,000 people migrating to Ulaanbaatar settled in ger areas; by 2022 the population is estimated to grow by 400,000 from in-migration and natural growth. Under current situation, the forecasted population increases is a serious threat to the city environment and the health of the population if the situation is not improved.

Lack of long-term planning, infrastructure investment, and land use regulation in ger areas have resulted in haphazard development, limited availability of space for public facilities, poor access to socioeconomic services, reduced livelihood opportunities, and insecure neighborhoods. The lack of basic urban infrastructure is constraining rational and dynamic urban development, increasing the costs of doing business and of accessing services. The city core where jobs and services are concentrated now has unprecedented congestion. The service gap between the city core and ger areas means ger residents are poorly integrated in the urban economy; it is one of the most urgent and difficult development challenges. While various government and development partner initiatives have significantly improved living conditions in ger areas, approaches have generally focused on specific sectors, failing to design a sustainable vision and provide integrated solutions for the problems of peri-urban development.

Subcenter upgrading. High construction cost,_lack of urban planning, and inadequate infrastructure constrain the upgrading of ger areas. These areas are predominately residential with pockets of activity nodes, called subcenters, providing commercial and administrative services. The influence area of a subcenter varies from 30,000 to 100,000 people. Despite the critical function of subcenters in overall spatial and local development, urban services have not been substantially improved. The lack of basic infrastructure limits economic growth and increases negative environmental impacts.


Improved living conditions in Ulaanbaatar

Project Outcome
Description of Outcome

A network of livable, competitive, and inclusive subcenters in Ulaanbaatar's ger (yurt or traditional tents) areas

Progress Toward Outcome 158 households are connected to water network, and 102 households connected to sewer network. Additionally, 720 households outside of target subcenter (from new heating pipelines from extension to Bayankhoshuu subcenter) are connected to central heating system. Unit production cost of water is MNT1,139 per m3 (reduced by 80.8%). Electricity consumption for water production reduced from 69 kW (2012) to 66 kW in 2019 per m3.
Implementation Progress
Description of Project Outputs

1. Roads and urban services are expanded within the targeted subcenters and connectivity between subcenters is improved

2. Economic and public services in subcenters are improved

3. Service providers become more efficient

4. Institutions and capacity for urban development, program management, and service delivery are strengthened

4.1 Subcenter development and community engagement

4.2 Operations and management of service providers improved

4.3 Strengthened program implementation capacity

Status of Implementation Progress (Outputs, Activities, and Issues) Tranche 1 closed on 31 December 2021; and preparation for its financial closure is ongoing. All project outputs for Tranche 1 has been successfully delivered. Tranche 2 encountered delays mainly due to (i) lengthy detailed design completion process for the subcenters' infrastructure; and (ii) COVID-19 related impacts on budget and community consultation, and was extended until 11 December 2023. Tranche 3 implementation is ongoing.
Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects The environmental safeguard category for Project 1 is B---anticipated impacts from infrastructure components are site-specific and reversible, are not unprecedented in scale, and mitigation measures can be easily designed. An initial environmental examination for Project 1, and an environment assessment and review framework for the entire investment program were prepared and disclosed on ADB's website in accordance with ADB's Safeguard Policy Statement (2009).
Involuntary Resettlement A land acquisition and resettlement framework for the investment program as a whole and resettlement plans for individual subprojects were_prepared and disclosed on ADB's website. In view of the preliminary analysis which indicated significant land acquisition and involuntary resettlement, the involuntary resettlement category for Project 1 is A. During PPTA, efforts were made to minimize resettlement.
Indigenous Peoples The categorization for indigenous peoples is 'C_. The review of the subcenters done by TA 7591 indicated that the population in the project area does not include communities that could be treated as indigenous peoples under the ADB''s Safeguard Policy Statement (2009).
Stakeholder Communication, Participation, and Consultation
During Project Design Consultation with initial stakeholders included ger area residents, private and public services, service providers in the subcenters, local government, Ulaanbaatar Municipal Government, public utilities (i.e., USUG and heating companies). The PPTA conducted a poverty and social analysis and addressed social safeguards. A socioeconomic survey, affordability survey, stakeholder workshops, focus group discussions, and key informant interviews were also conducted during the PPTA.
During Project Implementation Relevant sections of the Facility Administration Manual such as social action plan, gender action plan, resettlement plan, environmental management plan, and stakeholder communication strategy provide information on stakeholder communication, participation, and consultation for the investment program.
Business Opportunities
Consulting Services The investment program will include a program management facility under which consulting firm will assist MUB in overseeing program development, implementation, and management. Consulting firm specializing in engineering and urban services operation will be engaged to develop the capacity of service providers in compliance with ADB's Guidelines on the Use of Consultants (2013, as amended from time to time).
Procurement All procurement of goods and works will be undertaken in accordance with ADB's Procurement Guidelines (2015, as amended from time to time).
Responsible ADB Officer Mamatkulov, Raushanbek
Responsible ADB Department East Asia Department
Responsible ADB Division Urban and Social Sectors Division, EARD
Concept Clearance 14 Dec 2011
Fact Finding 20 Jun 2013 to 03 Jul 2013
MRM 02 Sep 2013
Approval 12 Dec 2013
Last Review Mission -
Last PDS Update 30 Sep 2022

MFF Facility Concept 0078-MON

Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 160.00 Cumulative Contract Awards
ADB 160.00 - 0.00 0.00 %
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 - 0.00 0.00 %

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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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
Ulaanbaatar Urban Services and Ger Areas Development Investment Program: Environmental Assessment and Review Framework Environmental Assessment and Measures Feb 2017
Ulaanbaatar Urban Services and Ger Areas Development Investment Program - Tranche 2: Land Acquisition and Resettlement Framework Resettlement Frameworks Nov 2016
Ulaanbaatar Urban Services and Ger Areas Development Investment Program - Tranche 2: Environmental Assessment and Review Framework Environmental Assessment and Review Framework Aug 2016
Ulaanbaatar Urban Services and Ger Areas Development Investment Program - Bayankhoshuu Subcenter: Resettlement Plan Resettlement Plans Apr 2016
Ulaanbaatar Urban Services and Ger Areas Development Investment Program: Selbe Sub-center Sewer Main Collector Pipes - Resettlement Plan Resettlement Plans Jun 2015
Ulaanbaatar Urban Services and Ger Areas Development Investment Program: Bayankhoshuu Sub-center Sewer Main Collector Pipes - Resettlement Plan Resettlement Plans Jun 2015
Ulaanbaatar Urban Services and Ger Areas Development Investment Program Initial Environmental Examination Oct 2013
Ulaanbaatar Urban Services and Ger Areas Development Investment Program Resettlement Frameworks Aug 2013
Ulaanbaatar Urban Services and Ger Areas Development Investment Program: Bayankhoshuu Subcenter Improvement Subproject Resettlement Plans Aug 2013
Ulaanbaatar Urban Services and Ger Areas Development Investment Program: Selbe Subcenter Improvement Subproject Resettlement Plans Aug 2013
Ulaanbaatar Urban Services and Ger Areas Development Investment Program Environmental Assessment and Review Framework Jul 2013

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.

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Tender Title Type Status Posting Date Deadline
EIB 83097: Ulaanbaatar Urban Services and Ger Areas Development Investment Program: Tranche 1 [WSC16A] Invitation for Bids Closed 26 Apr 2019 06 Jun 2019
Detailed Design and Construction Supervision of Affordable Housing Pilot Project in Selbe Subcenter Firm - Consulting Closed 26 Apr 2018 08 Jun 2018

Contracts Awarded

No contracts awarded for this project were found