China Eximbank provides $113.04 million preferential buyer’s credit for Ulaanbaatar-Mandalay Gobi Transmission Line Project (Linked to Project ID#49148)

On November 10, 2015, China Eximbank and the Government of Mongolia signed a general loan agreement regarding the utilization of a $1 billion preferential buyer's credit (PBC) for various projects (as captured via Project ID#49148). Under the terms of the general loan agreement, all subsidiary (individual) loan agreements for specific projects carry identical borrowing terms: a 20 year maturity, a 7 year grace period, a 2% interest rate, a 0% default (penalty) interest rate, a 0% management fee, and a 0.25% commitment fee. Then, on May 15, 2017, China Eximbank and the Government of Mongolia signed a $113,049,692 subsidiary loan (PBC) agreement [CHINA EXIMBANK PBC 2017 (18) TOTAL NO. (444)] for the Ulaanbaatar-Mandalay Gobi Transmission Line Project. The PBC agreement officially went into effect on September 21, 2017 (after the borrower met all conditions precedent). The proceeds of the PBC (loan) were to be used by the borrower to finance 95% of the cost of a $118,999,676 million EPC (commercial) contract between Mongolia’s Ministry of Energy and TBEA Co., Ltd., which was signed on July 5, 2016. The purpose of the project was to construct a 330 kV transmission line — measuring 250km in length — between Ulaanbaatar and Mandalay Gobi (Mandalgobi) and evacuate power from the 330MW Tavan Tolgoi power station. It also involved the construction of a 220 kV substation in Mandalgobi. Upon completion, the transmission line was expected to supply Oyu Tolgoi, Tsagaansuvarga, Tavan Tolgoi and other mining deposits in the southern region with domestic energy (and reduce the use of foreign currency on energy imports). TBEA Co., Ltd. was the contractor responsible for implementation. On June 21, 2017, a formal groundbreaking ceremony was held. The transmission line went into operation on October 7, 2019. The project was officially completed and handed over to the local authorities on October 18, 2019.

Additional details

1. This project is also known as the Ulaanbaatar-Mandalgobi Transmission Line Project. The Chinese project title is 乌兰巴托至曼德勒戈壁输变电项目 or 建的乌兰巴托—曼德勒戈壁330kV输变电项目 or 蒙古国330千伏输变电工程 or 第一条跨区域高压输变电线路（乌兰巴托至曼德勒戈壁输变电线路. The Mongolian project title is “УБ-Мандалговь цахилгаан дамжуулах агаарын шугам, дэд станц барих” төсөл or Улаанбаатар – Мандалговийн цахилгаан дамжуулах агаарын шугам, дэд станцууд барих. 2. The China Eximbank loan that supported this project is not included in the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020. 3. The PBC (loan) agreement can be accessed in its entirety via https://www.dropbox.com/s/yyek06kd44bxds4/Mongolia%202017%20China%20Eximbank%20Loan%20for%20UB-Mandalgovy%20overhead%20line%20and%20substation%20construction%20project.pdf?dl=0.

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