Narrative
Full Description
Project narrative
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) loan for various projects (captured via Umbrella Record 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 April 9, 2018, China Eximbank and the Government of Mongolia signed a subsidiary PBC agreement [CHINA EXIMBANK PBC 2018 (13) TOTAL NO. (470)] worth $49,120,000 for the 35MW Erdenet Thermal Power Plant Expansion Project. The proceeds of the PBC were to be used by the borrower to finance 95% of the cost of a $51.8 million commercial (EPC) contract between Mongolia’s Ministry of Energy, China Energy Engineering Group Hunan Power Construction Co., Ltd, and Hunan Industrial Equipment Installation Co., Limited, which was signed on January 17, 2017. The remaining 5% of the commercial contract cost was to be directly funded by the Government of Mongolia. The PBC (loan) agreement went into effect on July 27, 2018. The purpose of the project was to expand the coal-fired Erdenet Thermal Power Plant (Эрдэнэт ДЦС or Эрдэнэтская ТЭЦ or Эрдэнэтийн дулааны цахилгаан станцын) by installing a 35MW turbine generator with a CC-50 engine, refurbishing chemical and water purification facilities, constructing a water-cooling tower, and building a 110 kV overhead transmission line (measuring 3 km in length) and substation. This power plant is located in Erdenet, capital of Mongolia's northern province of Orkhon. Upon completion, this project was expected to increase the power plant's electricity production two-fold (from 36MW to 71MW). A groundbreaking ceremony took place on March 22, 2019 and construction originally expected to conclude by the end of 2019. However, a project completion and power plant commissioning ceremony did not take place until September 3, 2021.
Staff comments
1. This project is also known as the Erdenet Thermal Power Plant 35 MW Generator Installation Project. The Mongolian project title is “Эрдэнэтийн дулааны цахилгаан станцын өргөтгөл” төсөл or Эрдэнэтийн дулааны цахилгаан станцын шинэчлэл төсөл or Эрдэнэтийн дулааны цахилгаан станцын шинэчлэлтийн төсөл. 2. The China Eximbank loan for this project is not included in the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020. 3. Hunan Industrial Equipment Installation Company previously conducted an expansion of Thermal Power Plant No. 3 in Ulaanbaatar. 4. The PBC (loan) agreement can be accessed in its entirety via https://www.dropbox.com/s/a9zqkgbb1qnho1y/Mongolia%202018%20China%20Eximbank%20Loan%20for%20Erdenet%20Thermal%20Power%20Plant%20Modernization%20Project.pdf?dl=0. 5. The July 27, 2018 notice of the effectiveness of the April 9, 2018 loan agreement can be accessed via https://www.dropbox.com/scl/fi/jf5yaxdvzmufyoisbndwm/Notice-of-Effectiveness-of-Loan-Agreement-Erdenet-Power-Plant.pdf?rlkey=zqisqct2mepjhxmfbhrr88js1&dl=0 6. The November 10, 2015 general loan agreement can be accessed in its entirety via https://www.dropbox.com/scl/fi/6517ecol3fwzuqo536c54/Government-of-Mongolia-and-China-Eximbank-General-Loan-Agreement-November-2015.pdf?rlkey=9r8cibj3kt0v3d891n6hy33rb&dl=0. A May 4, 2017 amendment to the November 10, 2015 general loan agreement can be accessed in its entirety via https://www.dropbox.com/scl/fi/1055dq0pvwpxm45fk2fmk/Government-of-Mongolia-and-China-Eximbank-General-Loan-Agreement-2015_May_4_2017_Amendment-1.pdf?rlkey=hbj7c8wgm6udzr0icw8tufnwa&dl=0.