China Eximbank pledges $271.1 million loan for Erdeneburen Hydroelectric Power Plant Project (Linked to Project ID#49148)

On March 15, 2019, a memorandum of cooperation was signed by Government of Mongolia and China Water Resources Beifang Investigation, Design and Research Co. Ltd. (BIDR) to conduct a feasibility study for the Erdeneburen Hydroelectric Power Plant Project. The feasibility study was approved in November 2019. Then, in 2020, the Government of Mongolia announced that China Eximbank would provide a $271.1 million loan for the Erdeneburen Hydroelectric Power Plant Project and draw upon the proceeds from a $1 billion preferential buyer’s credit (PBC) agreement (captured via Umbrella Project ID#49148). The borrowing terms of the PBC (loan) are unknown. However, it is known that the borrower expect to use the loan proceeds to finance 95% of the cost of a $285.5 million commercial contract with PowerChina and Powerchina Chengdu Engineering Corporation Limited, which was signed on September 17, 2021. Multiple sources indicated that a financing arrangement would be finalized during Wang Yi's visit to Mongolia August 2022, and on source claims the financing was decided on August 7, 2022 during a meeting with Wang Yi. However, AidData has not yet independently corroborated that a loan agreement was signed and countersigned by the lender and the borrower. The purpose of the project is to construct a 90MW hydroelectric power plant in Erdeneburen Sum within Mongolia's Khovd Province (exact locational coordinates: 48.6614, 91.3402). PowerChina and Powerchina Chengdu Engineering Corporation Limited are the contractors responsible for project implementation. Construction was originally expected to commence in April 2022 and reach completion within 61 months (May 2027). In November 2021, the project’s environmental impact assessment (EIA) report was approved by the Ministry of Environment. Then, in April 2022, a contract was signed with the Institute of Archeology at the National Academy of the Sciences of Mongolia to complete an archeological survey. However, the project has encountered multiple implementation challenges and obstacles. One is a conflict with Russia over a related hydropower plant. Another is difficulties compensating and relocating herdsmen who live in the area and expected to be affected by flooding near the dam site. A third is allegations of incompetence leveled against high-raking officials working on this project. A fourth is the possibility that archeological sites in the area that will be flooded. A fifth is the allegation that the selection of PowerChina was ‘illegal’.

Additional details

1. The Mongolia project title is Эрдэнэбүрэнгийн усан цахилгаан станц төсөл. The Chinese project title is 额尔登布仁水电站项目. 3. This project is similar to ProjectID#49412. However, they are not duplicate records. Nor are they linked projects/transactions. 4. One source indicates that the project will be financed through a build-operate-transfer agreement (BOT). This source claims that the government is not spending any of its own money on the project, which is inconsistent with other sources. This issue warrants further investigation.

Number of official sources

9

Number of total sources

16