After Wednesday’s parliament meeting, the minister of the sector announced that the Tavan Tolgoi Thermal Power Plant, which will be built based on the Tavan Tolgoi coal deposit, will be divided into two phases, 300+150 MW, and the first stage will be 300 MW. The Minister of Energy was assigned to negotiate and supervise the implementation of the project by receiving applications of all types of financial methods for project financing, cooperation with banking and financial institutions, joint construction and financing of the project (EPC+F), selection of financial proposals with open conditions that do not limit the financing options of the bidder, and to sign contracts with the financiers.
The board of directors of Erdenes Tavan Tolgoi was instructed to finance 30 percent of the EPC+F contract for the 300 MBt phase I of the project, be responsible for the operating costs of the Tavantolgoi Thermal Power Plant LLC, pay the rest of loan and interest fee payments taken from the Development Bank, and to cover these costs by Erdenes Tavan Tolgoi JSC and the state.
In this regard, Minister of Energy B.Choijilsuren said, “At the meeting, the government’s resolution on the measures to be taken in the direction of intensifying the Tavan Tolgoi Thermal Power Plant (TPS) project was approved. Four decisions were made in the resolution. There is a technical and economic basis for building Tavan Tolgoi TPS with a capacity of 3*150 MW. It was decided to build a 300 MW power source in the first phase, and put the third block of 150 MW into operation when the consumption stabilizes. Second, the tender for the plant will be announced on a turnkey basis plus financing model (EPC+F). According to preliminary estimates, about 600 million USD will be required to build a resource with a capacity of 300 MW. Of it, 70 percent will be financed by the winning company, and the remaining 30 percent, or about 180 million USD, will be financed by Erdenes Tavan Tolgoi company over the period of three years. It is estimated that the plant will be put into operation within three years after signing the contract. Technical and economic calculations have been made to pay the financing of the project within five years from the commissioning of the plant. The plant will supply 1.3 billion kWh of energy per year to the Oyu Tolgoi company at 9.6 to 11 cents per unit. In the future, when the third block is built, it will be possible to fully supply the energy needed for the operation of the Oyu Tolgoi project from within.
The relevant Minister said, while replying to journalists, “The operation of Egiin Gol Water Plant is having difficulties. Russia opposed building it and made a complaint to UNESCO. They invited me to the economic forum that will take place in June in Saint Petersburg. A request was sent to Russia to discuss this matter peacefully in the upcoming forum. We are hoping we will reach a definite decision then. Energy consumption in the central region of our country is growing by 4.8 to 6.4 percent annually. It is true that there is a lack of energy sources. The energy industry gave their all to overcome the winter season of 2022 and 2023.
We are making plans to get through next winter. In the first phase, an 80 MW charge collector will be put into operation at the “Songino” substation. It cannot be ruled out that there will be a necessity to import energy from inner Mongolia in 1-2 years. Energy system experts of inner mongolia have agreed to come to Mongolia next month and study technical possibilities together. In any case, the peak load of the winter of 2023 and 2024 will be overcome by the energy sector.”
As a reminder, in the 2014 report of the Development Bank, it was mentioned that 14.8 million USD were allocated for the operational costs of the Tavan Tolgoi power plant project unit, as well as research and development work and consultant fees, in accordance with the approval of the government to provide 50 million USD through the bank. The project unit selected investors in 2014, started raising the necessary funds to implement the project the following year, and plans to put the power plant into operation in 2017. In addition, a decade ago, in July 2013, the government issued a resolution to intensify the Tavan Tolgoi power plant project.
