CDB provides $60 million loan for 50MW Choibalsan Thermal Power Plant (TPP) Expansion Project (Linked to Record ID#46979)

Project narrative

In 2013, the China Development Bank (CDB) and the Development Bank of Mongolia (DBM) signed a ‘Memorandum of Cooperation’ for the expansion of the 50MW Choibalsan Power Plant. Then, on August 21, 2014, CDB and DBM signed a $162 million loan agreement that carried the following borrowing terms: 8 year maturity and 6% interest rate. The Government of Mongolia issued a sovereign guarantee in support of the loan. The proceeds of the loan, which is captured via Record ID#46979, were to be used for the construction of a highway, electricity projects, urban infrastructure projects, a project called Steppe Road, railway and energy sector projects to increase mineral experts to China, Japan, and South Korea, and and/or other projects approved by China Development Bank. As of June 30, 2018, the loan had achieved a 76.3% disbursement rate ($123.5 million). DBM used the proceeds of the CDB loan to on-lend $60 million to the Government of Mongolia for the 50MW Choibalsan Thermal Power Plant (TPP) Expansion Project (captured via Record ID#105532). The borrower was expected to use the loan proceeds to partially finance a $79,488,266 commercial (EPC) contract with TBEA Co., Ltd. The purpose of the project was to increase the power generation capacity of the Choibalsan Thermal Power Plant (TPP) in the city of Choibalsan within Dornod Province (exact locational coordinates: 48.079288, 114.554981) by 50MW. TBEA Co., Ltd. was the EPC contractor responsbile for implementation. A groundbreaking ceremony took place on November 8, 2019. However, the Covid-19 pandemic led to major implementation delays. A team of 31 Chinese engineers and technicians arrived in Choibalsan on July 22, 2020. They entered Mongolia through the Zamyn-Uud border crossing and were put under observation for coronavirus symptoms in the city’s Choibalsan Hotel. They were expected to complete their 21 days of mandatory isolation on August 12, 2020. Construction commced on August 26, 2020. By September 2020, the project had achieved a 36% completion rate. However, by April 2021, the project has still only achieved a 37.5% completion rate. Then, in June 2023, Mongolia’s Minister of Finance B.Javkhlan was instructed to ensure the completion of the project, irrespective of the counterpart financing contributions from DBM. By August 2023, the project had achieved a 75% completion rate. Test commissioning of the expanded power plant took place in April 2023. The expanded power plant began commercial operations in June 2024.