Economic Policy Reform and Competitiveness Project

At the request of the Ad Hoc Parliamentary Committee on Public-Private-Partnerships (PPPs), EPRC teamed up with The World Bank Institute, The Asian Development Bank (ADB) Institute and the Ad Hoc Parliamentary Committee on PPPs to hold a two-day PPP seminar on 2 and 3 July at the Government House.
The seminar brought together Mongolian and international experts and decision makers from the public and private sectors to examine, discuss, and learn from best international practices in PPPs for mobilizing private investment for infrastructure projects. Objectives of the program were to:

• Identify priority sectors and potential PPP projects in infrastructure investment in the context of Mongolia’s economic growth trends
• Apply lessons learned from international experience to develop an enabling legal, regulatory, and institutional environment to attract private investment and make projects ‘bankable’ by proper risk allocation
• Discuss and develop priority policy actions required in Mongolia to develop an enabling environment for PPP infrastructure projects in the transportation and energy sectors.

The first day of the program focused on ‘Infrastructure Development and Financing’ and examined links between Mongolia’s economic development and the potential for PPPs, experiences from other countries in attracting private investment for infrastructure financing, and legal, regulatory and institutional requirements for doing so.

Mr. Amarjargal, Member of Parliament and Chair, Ad-Hoc Committee on PPPs along with Mr. Khashchuluun reiterated the Government of Mongolia’s (GoM) commitment to implementing PPPs as part of the GoM Action Plan for 2008 – 2012 and both cited the importance of openness, transparency, equality and accountability in the PPP process.


Mr. Anthony Smith, International Legal Counsel, Pinsent Masons, LLP, Mr. Patricio Mansilla, PPP Expert, USAID/EPRC and Mr. Ganbaatar, Executive Director, Mongolia Employers Federation (MONEF) led a panel discussion on PPPs for Infrastructure: Modalities and Approaches. The panel and subsequent group discussion concluded that Mongolia can learn from its mistakes, including the recent failure of the CHP #5 procurement by ensuring that risks are properly allocated and terms for proposed PPPs are perceived as fair, with proper risk allocation in a predictable operating environment. Mr. Mansilla’s presentation on Global PPP Approaches provided the audience with alternative approaches and international examples of PPP implementation that could be applied to improve the PPP process in Mongolia.

Further discussions on the PPP legal, regulatory and institutional framework provided the audience with key issues to consider for a PPP legal framework in addition to examples from UK and Korea and the next steps Mongolia must take to formalize its own PPP policy framework. The final discussion described sources and trends in infrastructure financing and experiences from Asia and the rest of the world. Mr. Joe Chang, Executive Director, Morgan Stanley Infrastructure Fund, reiterated the significance of transparency and proper risk allocation for successful PPPs and highlighted the importance of a country’s overall investor friendliness and the need to prioritize projects and treat them as a comprehensive portfolio of projects as opposed to ad-hoc transactions. This is required to build and maintain credibility and investment confidence in Mongolia.

The second day covered ‘Policies for Creating an Enabling Environment for PPP Infrastructure Investment in Mongolia’ and began with opening remarks from Mr. Zorigt D., Minister of Mineral Resources and Energy, and with Mr. Battulga Kh., Minister of Transport and Urban Development. Both Ministers commented on the dire need for investment to upgrade obsolete or inefficient railway, road and energy infrastructure and the particular importance of these infrastructure investments to support Mongolia’s mining industry. Experts and seminar participants continued to discuss the potential of specific concrete priority projects in Mongolia, including the re-bid of CHP #5 and the development of a logistics park and road-to-rail transshipment facilities in Zamyn Uud.

Major recommendations of the seminar included:

• Building of consensus around the draft Concessions Law and a proper PPP policy framework
• Development of a portfolio of potential PPP projects and working with the National Development and Innovation Committee (NDIC) to prioritize these and not treat PPPs as ad-hoc transactions
• Consensus on the institutional locus and mandate for a PPP unit responsible for management and implementation of the PPP portfolio
• The importance of proper risk allocation among parties and a predictable operating environment to attract and retain investments.

At the conclusion of the Seminar, the audience was informed that Cabinet had submitted the draft Concession Law to Parliament and that it will have priority for consideration during the fall session. The project will provide assistance to help develop a consensus around key amendments that will be required to bring the current draft law into closer conformity with best international practices to facilitate private investment by proper recognition and allocation of risks.