Finance Minister S.Bayartsogt and Minerals and Energy Minister D.Zorigt told media on Wednesday afternoon that the National Security Council, at its meeting the day before, had approved the terms in the draft of the investment agreement on Oyu Tolgoi as prepared after the latest round of negotiations. The Government will now ask Parliament to ratify the text of the agreement at a special session.
The Ministers announced that the Mongolian Government will own 34 percent share in the project and invest MNT816 million, which is half of what had been agreed earlier. There will be no tax relief measures for the investors, but now their initial outlay will be USD4 billion and not USD5 billion as earlier agreed.
The investors had previously offered to pay Mongolia an initial amount of USD125 million before work began. USD25 million of this would have carried no interest, but the rest was to be repaid with 9.9 percent interest. The revised draft raises the quantum of preliminary payment to USD250 million and the interest has been reduced to 5 percent.
All these are important gains for Mongolia. The investors, however, did not accept the proposal to limit the first phase of the agreement to 15 years, after which it could be renegotiated. It will be in force for 30 years, as decided before.
The 68 percent windfall profit tax will be in force when the agreement is signed, but the Minister for Finance said the tax would be abolished with effect from January 1, 2011.
Source: en.News.mn
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