Earlier this week, the Minister of Energy Davaasuren Tserenpil gave an interview to a local media outlet “iToim.mn” on recent scandalous deals in the energy sector, including the Power Sector Cooperation Agreement (PSCA) with Oyu Tolgoi, and expressed Mongolia’s position on them.
-Will the Government renegotiate Eastern Energy System agreement? Why was the contracted get terminated?
-The agreement violated the article 7.3 of the Investment Agreement, which states to draw electricity from the territory of Mongolia within four years of operation. In other words, the Parliament-consented agreement was hard to amend for the Cabinet without having to negotiated with the Parliament. Thus, the agreement was terminated. Arnaud Soirat, Chief executive of Copper and Diamonds of Rio Tinto Group, said some uncanny remark that the company will establish the plant if the Cabinet issues a demand to draw electricity domestically within four years. That mister still do not understand the Investment Agreement. They accepted that responsibility under the investment Agreement. They were obliged to draw electricity within four years after commencing operations due in 2017. I do not understand what this mister meant by “issuing a demand”.
over 240MW cannot
be installed in
-It seems that the location of the power station is currently under
-I am curious about that. They
received a 5-years permission to
build the station at the mine from
our ministry in July 2012. The permit
was expired in 2017. Nothing
has been done within that period.
They should stop playing with the
Government of Mongolia. They did
not lift a finger before the Southern
Region Power Sector Cooperation
Agreement. The 2014 Tavan Tolgoi negotiation was also the same.
Therefore, the Cabinet decided to
terminate the contract.
-Will the Tavan Tolgoi coal-fired
power station project continue?
-The Parliament and Cabinet expressed
their position that Mongolia
will build the power plant based on
Tavan Tolgoi residual coal deposits.
It is up to them to select the three
options proposed through the Investment
-Although Oyu Tolgoi promised to draw power from Mongolia
within four years after commencing
operations, they violated the
agreement. Will they be held accountable
-The Government established a
working group on some issues concerning
high loan interest, tax act
and violation of investment agreement.
The group may report their
review on that.
-What about Baganuur power
station? Are there are talks on terminating
the agreement? There
are rumors that the Government
will go under MNT 512 billion
debt if the contract is terminated.
-As for the compensation, there
are talks about potential risks with
that amount. It does not mean we
are obliged to pay them. The thing
is, some compensation may come up
after the contract termination. It does
not mean the power station’s high
technology is not incompatible to
Mongolia. They are planning to install
high-capacity generator that are
not suitable for Mongolia’s system.
Generators with over 240MW cannot
be install in Mongolia. Because
we manage our system by drawing
240MW power from the Russian
Federation. We will not be able to
manage higher generators. The contract
was negotiated regardless of the
incompatibility. We demanded the
investors to install a system compatible
with Mongolia. We did not
discuss any termination of contract.
-Democratic Party’s group in
the Parliament made a statement
demanding the Cabinet’s dismissal.
What is your position on this?
-Cabinet penalized the related officials
regarding the issues around the
Ministry of Road and Transport Development.
The officials themselves
resigned from their position, acknowledging