S. Batbold: Despite the pandemic, our transport and logistics sector has continued to advance

2022-02-16

We discussed road construction, transportation and logistical issues with Mr. S.Batbold, the State Secretary of the Ministry of Road and Transportation.

Due to the pandemic, transporting mineral products by rail is more effective than by road. Can we start the discussion with information about the new railway: how is the construction going and when will it start operating.

The past two years were challenging due to the pandemic, but railway construction never stopped. The implementation of the Tavan Tolgoi-Zuunbayan rail project is about 85%. We plan a test train on 15th March in accord with the approved plan. 73.9% of the Tavan Tolgoi-Gashuunsukhait railway was complete as of the end of 2021. All construction works are expected to be completed in the second quarter of 2022.

In accordance with the decision of the Government of Mongolia to launch the Bogd Khan Railway Project by 2021, Tavan Tolgoi Railway LLC was granted a license to build the project infrastructure and started operations on 23rd August 2021. A feasibility study and detailed project design are currently under development.

It is estimated that the commissioning of the new railways will reduce transportation and logistics costs, strengthen competitiveness and expand mineral exports. Can you share with us more concrete figures and numbers associated with these optimistic assumptions?

As part of establishing a national railway network, we will expand the railway network in the western, eastern and central regions, and connect border crossing points by rail. With the commissioning of the Zuunbayan-Khangi railway, the transportation distance from the Yeruu station of the Ulaanbaatar Railway to the Bugat station of the People's Republic of China will be shortened by 318 km: from 1,722 km (Zamyn-Uud-Erlian) to 1,404 km (Hangi-Mandal). The cost of transporting iron ore will decrease by $4-8 per ton. This will make domestically produced iron ore more competitive compared to Chinese and Australian iron ore prices, and expand export, import and transit traffic. Mongolia will have a new gateway to international markets, and it will create more than 1,600 new jobs.

The successful implementation of railway projects will yield the following results: 1) increase trade between Mongolia, Russia and China, 2) strengthen the competitiveness of Mongolian goods and products, 3) facilitate cross-border transportation, 4) increase tourism and freight turnover within the region, 5) link to the Trans-Asian Railway and create a new transportation route between Asia and Europe and 6) connect to Chinese seaports by railway. In addition, connecting the western, central and eastern regions by rail will improve the competitiveness of mineral exports, and establish a major economic hub in the eastern region. It is also estimated to generate $2.3 billion annually from coal exports and $227 million from railway transportation.

Within the objective to establish a new coal transportation route, the building of the railway in the eastern region is in the center of public attention. When will the construction of the 433 km Sainshand-Baruun-Urt-Khuut railway start? Have the funding issues been resolved?

Completion of Sainshand-Baruun-Urt (340 km) and Baruun-Urt-Khuut (140 km) railway projects are key elements of the Government Policy on Railway Transportation approved by Resolution No. 32 of 2010 of the Parliament.

Under the new railway project, a comprehensive feasibility study requested by the Mongolian Railway State JSC on the investment and construction of infrastructure for 1,800 km of railway and complex transportation operations between Tavan Tolgoi and Sainshand, Sainshand and Khuut, and Bichigt-Khuut-Choibalsan-Ereentsav, was completed in 2011.

In addition, the Japanese company Nippon Koei developed the technical design and bidding documents for the above-mentioned railway in 2014 and the Government approved the railway route by issuing Resolution No. 146 on 7th March 2016. We are working to get necessary support from the government to speed up the implementation of the Sainshand-Baruun-Urt-Khuut railway project.

The commissioning of the Sainshand-Baruun-Urt-Khuut railway, an extension of the eastern transport corridor between China and Russia through Mongolia, will bring real benefits to the Mongolian economy. Mongolian mineral products can flow through China and Russia to international markets and create new export opportunities. With the construction of an integrated domestic railway network, Mongolia will be able to exploit its mineral resources and inactive deposits and sell the minerals to customers at international market prices. This project will have significant economic impact by establishing Sainshand and Khuut industrial parks, connecting them to strategic deposits and other large projects, and exporting value-added mining products to international markets.

Mongolia, Russia and China signed an agreement to implement the Mongolia-Russia-China Economic Corridor Program in June 2016 at the initiative of the President of Mongolia. Under this, the parties agreed to study the feasibility of passing the western railway corridor through Mongolian territory (Kuragino-Kyzyl-Tsagaantolgoi-Artssuuri-Khovd-Takeshken-Khami-Tsonjiin Khoton Autonomous District-Urumqi regions) and start this project it if it was economically viable. Has this work begun?

The Presidents of Mongolia, Russian Federation, and PRC signed a five-year program in 2016 to establish the Mongolia-Russia-China Economic Corridor. This mainly focused on the renovation of the Ulan-Ude-Naushki-Sukhbaatar-Ulaanbaatar-Zamiin-Uud-Erlian-Jinin railway or the central railway corridor. At the 5th expert-level meeting to advance the implementation of the Mongolia-Russia-China Economic Corridor Program held on November 12, 2021, it was agreed to extend the program for another five years.

Parliament Resolution No. 82 of 4th November 2021, added the building of the Artssuuri-Nariinsukhait-Shiveekhuren railway to the National Strategy on Railway Development. The Artssuuri-Shiveekhuren western railway will transport minerals such as coal, iron ore, and copper concentrate, construction materials, transit cargos, and  certain amounts of other raw materials and goods.

A contract was signed with the "Urban Development Consulting Group" LLC on 5th July 2021 to conduct a preliminary feasibility study of the construction of the western railway. This company, selected as a consulting company in cooperation with the Ministry of Construction and Urban Development has begun working on the study.

-Let's talk about the road construction. At what stage are road projects related to mineral exports?

The mining sector is a key part of the Mongolian economy, and exports of minerals account for about 93% of total exports. Oil, coal, copper, and iron ore are exported by road through Bichigt, Bayan-Khoshuu, Gashuunsukhait, Shiveekhuren, Khangi and Bulgan ports, and other consumer goods and minerals are exported by rail and road through Zamyn-Uud port. Mongolia has a total of 20 border ports established under the intergovernmental border-crossing agreements with Russia and China. It includes 12 border crossing points with China and 8 border crossing points with Russia. Of these crossing points, Zamyn-Uud and Altanbulag have a regular rail and road service.

During the pandemic, our priority is to improve the capacity and infrastructure of border crossing points. Under the Action Plan for 2020-2024 and the New Reconstruction Program, the Government of Mongolia gives main attention to expanding the capacity of border crossings and facilitating trade and transportation. 14 projects to connect border crossing points by building  2,954.45 km of paved roads will be implemented. The construction of 874.6 km of paved roads in four directions has started, and the construction of 2079.85 km of paved roads is expected to start in 2022. The implementation of these projects will directly contribute to Mongolia's economic growth, increasing cross-border freight traffic, improving the convenience and comfort of passenger services, increasing the flow of low-cost goods and services along the road area, and developing tourism. It is possible to increase the number of passengers and vehicles passing through these ports by 50-100%.

It is estimated that the construction of the road will help to create about 1,800 temporary jobs, and 500 permanent jobs, and add 1200 new jobs in the tourism sector. The number of domestic and foreign tourists visiting the countryside will triple by 2025 and conditions for the development of tourism, manufacturing, and services will be improved.

In general, what is the current capacity of paved roads in Mongolia? How many soums and aimags are currently connected to the capital city?

The thickness of the road pavement is calculated based on the number of vehicles passing  during a 20-year period and axial load specified according to relevant standards. Mongolia has a total of 111,916.7 km of roads, of which 100,323.28 km or 89.6% are dirt roads and 11,593.42 km or 10.4% are improved roads. 9,781 km or 84.4% of the total of improved roads are paved, 1,207.9 km or 10.4% are gravel roads, and 604.9 km or 5.2% are improved dirt roads. Within the framework of the 2021 Budget Law of Mongolia, a total of 108 projects and activities with a cost of 659.7 billion MNT were implemented in the road and transportation sector.

In 2021, a total of 95 projects and activities were implemented, including the building of 1702.7 km of paved roads, construction, repair, and renovation of 1338.6 meters length of reinforced concrete bridging in 15 locations, with funding from the state budget, foreign loans, and public-private partnership investments. Of this, 326.3 km of paved roads and 550 meters of reinforced concrete bridging were put into service. Included here were the finished construction of 67 km of paved road from Tosontsengel to Uliastai through Zagastai Pass. All 21 aimag centers and 103 soums of Mongolia are now connected to the capital city by paved roads.

In order to create safe and comfortable travel conditions and ensure constant road-worthiness, 42 sets of special maintenance equipment, Romdas system equipment with a high detection and rapid accuracy of road damage, and two types of asphalt surface treatment equipment were supplied from the technologically advanced MAZ car factory in Belarus. Staff have also been trained to operate the equipment and the capacity of maintenance organizations strengthened.

In the future, we plan to use funding from the state budget, foreign loans, aid, and public-private partnership investments to build 978.6 km of paved roads and 1172.5 meters of reinforced concrete bridging to support local development; 893.47 km of paved roads and 220 meters of reinforced concrete bridging to support tourism; 2254.35 km of paved roads to connect border crossing points (of this, 998 km will be special-purpose roads) and 777.32 km of paved roads to expand the economic corridor.

We also plan to connect soum centers by constructing inexpensive roads under the “Local Road” project. This project will connect over 220 urban centers by low-cost roads and improve their infrastructure. In 2020-2024, a total of 45 soums are expected to be connected.

The tender for the construction of 272 km of concrete road between Baruun and Urt-Bichigt was announced in 2019. What happened to this tender?

This road will start in Baruun-Urt soum, pass through the Asgat and Erdenetsagaan soums of Sukhbaatar aimag and reach the Bichigt border crossing point. This will be part of the national road network No А2002. The total area of Sukhbaatar aimag is 82,000 km2 and the aimag population is around 56,347. 30% of the aimag population (17,000 people) lives in the aimag center Baruun-Urt.

Agriculture, animal husbandry, and mining are the key economic sectors of Sukhbaatar aimag. The aimag strategy is to develop meat processing, tourism, and regional trade based on these sectors. With the construction of the Baruun-Urt - Bichigt paved road, Bichigt will become the second-largest port after Zamyn-Uud. This road has high economic importance through creating opportunities to trade with DPRK through Chinese ports such as Tianjin, Jinzhou, and Dalian. In addition, the paved roads will reduce dust from traffic and help to restore livestock pastures.

This Baruun-Urt - Bichigt paved road is included in the list of state property concession items by Government Resolution No. 166 of 14th June 2017.This will be implemented under the “design-build-operate-transfer” type of concession. In line with the resolution, the National Development Agency announced two tenders for the project concession on 16th August 2017, but no bids were received.

Since it is unlikely that more proposals for the concession will be received in the future, we are studying the possibility of attracting other forms of investment for this project. If there is a person interested in working on this project, we are ready to grant the concession in accordance with relevant laws and regulations.

It is commendable that many new developments are taking place in the road and railway sectors. On the other hand, many countries consider making construction work environmentally friendly. In this context, it is necessary to build crossings and passes for wildlife. What is the position of the Ministry of Roads and Transportation on this issue?

Our agencies are working to address this issue. We collaborated with the Ministry of Environment and Tourism and environmental organizations and partners to improve the legal environment to ensure the free movement of wildlife, developed and approved national standards such as “Planning wildlife crossings along steppe and Gobi Desert roads and railways”, “Wildlife gateways in the mountainous areas” and “General requirements”. In accordance with the above standards, we started to develop a standard design of crossings in road and railway construction projects.

Using barbed wire on railways is one of the issues related to compliance with  standards. There are many government regulations governing railway safety. The Ulaanbaatar Railway issued a temporary regulation to partially open the wire in the three areas with the highest wildlife movement. Cameras are installed in selected areas to monitor and determine whether the wires obstrucs wildlife movements. The survey has produced positive results and determined that black-tailed deer, Mongolian gazelle, and wild ass use the openings to cross to the other side.

Future road and railway development projects must include road crossings and passes for wildlife, and ensure collaboration between road engineers and wildlife experts to develop the right solutions and determine optimal locations.

What has been done in 2021 to improve the legal environment of the road and transportation sector? Can you list your successes and achievements?

The road and transportation sector focused on introducing legal reforms in 2021, drafted a new version of the Law on Railways, Road Transport, Civil Aviation and Ocean Use, and submitted some draft laws to Parliament.

We are working to improve the safety, operation, production, and trade regulations of vehicles to meet international standards. Also we are seeking to develop a liability insurance system for infrastructure construction and transportation services. In addition, we would like to expand air navigation services and establish an optimal system for airspace management and flight flow planning, and deliver a demand-driven, integrated and fast service.  The legal environment for the road and transportation sector will also continue to improve.

R. Renchindulam

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