SFECO provides $26.5 million supplier credit for 12MW Durgun Hydropower Project

Project narrative

On August 23, 2001, Shanghai Corporation for Foreign Economic and Technological Cooperation (SFECO) and the Government of Mongolia signed a $26.5 supplier’s credit agreement for the 12MW Durgun Hydropower Project. Bank of China provided the supplier's credit to SFECO, which then on-lent the funds to the Government of Mongolia. The borrowing terms of the supplier credit (loan) were as follows: 2% interest rate and 12.5 year maturity. However, the IMF characterized the loan as ‘nonconcessional’. At the time that the loan was contracted, the IMF noted that is was worth 2.2% of Mongolia’s GDP. The purpose of the project was to construct a 12MW hydropower facility on the Chono Kharaih River in the Durgun soum (detailed locational coordinates: 48.3262, 92.808). Upon completion, the project was expected to generate an estimated 38,000 MWh of electricity per year and transmit the generated power to Bayan Ulgii, Khovd and Uvs provinces for commercial and residential purposes. The project was built in a narrow steep canyon of the Chono Kharaih River, 6km downstream from the Dalai-Kharus lakes. It consisted of a 230 meter long earth-filled dam and an adjacent 60 meter long concrete gravity dam incorporating the powerhouse, a low-level outlet spillway, and fishway. The powerhouse was designed to accommodate 3 generating units each consisting of a 4MW Kaplan turbine. The electricity generated by the power plant was to be dispatched to the grid (Myangad substation) by a 76 km, 110 kV transmission line. SFECO was the contractor responsible for implementation. Construction commenced on June 8, 2004 and ended on October 12, 2008. Commercial power generation began on January 7, 2009. The project was officially handed over to the local authorities January 28, 2010 handover ceremony.