Power: 25 Years To Recover Expenditures
Foreign investors want sustainable policy
During the two-day forum Invest Mongolia 2015, investors advised that Mongolia’s best solution to attracting them is to provide a quality health and legal environment, sustainable politics, and fixed principles on cooperation, as well as moving forward on the Oyu Tolgoi and Tavan Tolgoi projects, putting them into economic circulation.
Seven years ago, a Japanese citizen opened a strategic investment company in Mongolia to invest in the nation’s mining sector. At that time, Mongolia’s economic and mining sectors were developing, but in the past two years, mineral product prices began to drop in the global market. This was the main factor triggering the decline of Mongolia’s economic growth, said Director of Strategy Yuji Iwasaki.
He added that amendments and changes made by the government to the mining sector’s policy left no other choice for foreign investors than to leave Mongolia. Iwasaki also advised Mongolia to immediately unlock the OT and TT projects and put them into economic circulation.
Minister of Energy D.Zorigt said that Mongolia’s economy is in a recession, and reminded forum attendees that not repeating past mistakes, not polarizing mining issues, as well as looking for all possibilities and creating a positive investment environment is vital to improving the nation’s economic conditions.
The Minister said that the energy sector’s projects and programs have already attracted investors. The executing companies of Thermal Power Plant V and the Baganuur station have been selected and relevant ministers are currently establishing power sale and purchase agreements. A French-South Korean-Japanese joint company was selected as executor of Thermal Power Plant V, while a Chinese company was selected as executor for the Baganuur station. The executing companies will operate the stations for 25 years to recover expenditures, and then transfer ownership of the plants to the Government of Mongolia free of charge.
Minister Zorigt added that Mongolia’s economy circulates 10 billion USD, which means that Mongolia has a small economy in comparison with other countries. He also said that in order to grow the nation’s economy, more than ten percent of major projects in the railway, mining, and energy sectors should be moved forward.
In 2011, Mongolia’s economy was up by 17.8 percent, a result of taking steps to utilize the OT and TT deposits, as well as improvements to the transportation and construction sector, explained Minister Zorigt.
Chairman of the Mongolian National Chamber of Commerce and Industry (MNCCI) M.Oyunchimeg said that foreign investors didn’t turn away because the nation’s economy was facing difficulties. She added that the Mongolian government needs to negotiate well with investors and reflect investor’s ideas and suggestions in policies and laws.
Oyunchimeg added that following the implementation of domestic and foreign invested projects, regions develop and people are provided with jobs. She suggested implementing projects that have a direct positive effect on the economy.
One of the foreign investor representatives said that there are many foreign companies interested in Mongolian mining and willing to cooperate in this sector, adding that they wait for sustainable tax policy, collaboration agreement principles, and cooperation offers.
Investors also claimed that it was noticeable during the forum that there are big and small companies and businesses willing to invest in projects and programs in Mongolia, but forum attendees were reminded to break away from the concept that investing refers only to the mining sector and to the TT and OT projects.