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Saturday, 04 July 2009 14:44 |
 By Business Council Mongolia
Mr. L.Zorig, Vice Chairman of the National Development and Reform Committee, feels that public-private partnership (PPP) will be very important in the plans being formulated for a comprehensive development of infrastructure in the mineral deposits locations in the southern parts of the country. The plan includes construction of energy facilities, roads, railways, water supply, property maintenance, urban planning and port development and is estimated to cost USD5 billion before mining in Oyu Tolgoi, Tavan Tolgoi, Tsagaan Suvarga and Nariin Suhait can properly begin.
The State will be responsible for energy supply, but is likely to need foreign investment to build high-capacity power stations in Tavan Tolgoi and Shivee Ovoo. Similarly the Government will construct all roads, but much of the rest of the work will need private investment. The railway to carry coal to China will be constructed with private money, and that from Tavan Tolgoi to Sainshand and Zuunbayan will call for cooperation between foreign and local investors, both Government and private. Parliament has set up a working group to help the Ministry of Legal Affairs and Justice prepare a draft law on PPP.
Undesnii Shuudan
Areas Of PPP Must Be Expanded, Says Chamber Boss
Mr. S.Demberel, Chairman of the Mongolian National Chamber of Commerce and Industry, has stressed the need to expand areas of public-private partnership (PPP). Both the Constitution and the Minerals Law give the State the full ownership of all subsoil assets and this ownership is inviolate but this does not mean, he said, that the State has to do everything about them and get all the profits from them. “History has proved that a so-called state authoritarian regime is not efficient at all,” he said. The owner must transfer parts of its rights via exploration licenses, operation permits, development or investment permits, etc.
Ownership is pointless if it does not give the right to dispose of the asset in an efficient, profitable and responsible manner. PPP does not take away the State’s rights to ownership, but does mean that it cannot be the only side to profit from such ownership. PPP, he said, leads to a "win-win situation, where both the State and the private sector win”. In his view Mongolia does not need an elaborate law like South Korea to regulate PPP here. It will be enough if a legal basis is in place for "a case by case implementation”. The general law will govern individual agreements on projects. These would be legally binding and to facilitate their enforceability they can be modeled on existing international contracts. This can apply to both leasing, where operational rights are transferred for a given period, and to development, where investment is made without disturbing the ownership. The present laws on both are poorly worded in Mongolia, he said.
Mongolian Mining Journal
 The Business Council of Mongolia aims to advocate increased trade and investment in Mongolia and serve as a forum for dialogue on the important business climate issues. Join us at the Business Council Mongolia Official Website
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Last Updated on Sunday, 05 July 2009 14:51 |
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