PPP/Project Finance

Practices

22 Dec PPP/Project Finance

PPP/Project Finance

Projects and project financing will be critical to Mongolia’s development over the course of the next two decades. With resource wealth estimated to exceed US$1 trillion in value, Mongolia holds the promise of vast potential for exploration and growth. Beyond the renowned Oyu Tolgoi and Tavan Tolgoi deposits, respectively constituting among the largest undeveloped copper and coking coal reserves in the world, Mongolia lays claim to some 6,000 known deposits of over 75 different minerals, the vast majority of which are likewise undeveloped. Harvesting these resources will require substantial investment in mining, energy, infrastructure, and downstream industrial projects, as well as other ancillary facilities typically associated with the development of mineral resources. The capital required to implement even a modest number of the presently proposed projects substantially exceeds Mongolia’s current GDP. Project financing presents the most viable approach to bring these projects to fruition and thereby establish the building blocks for the broader development of the country. To achieve this, the Parliament of Mongolia enacted first ever Law on Concession in 2009, which is appraised by EBRD recently as “one of the few laws in all the EBRD countries of operations which has been drafted to take account of the best internationally accepted standards and in accordance with lenders expectation in order to ensure the bankability of project finance based transaction”. As a result of it, total of 24 Concessions has been signed and are in effect. Eight are in transportation sector and six in energy sector, including 450 MW CHP5 project, which is the first and largest PPP in Mongolia of this scale in the energy sector; and Construction of Railway base structure of 547 km in northern part of Mongolia, connecting Ovoot coking coal deposit to existing railway line. Additional 14 projects out of proposed 165 projects are under negotiation. Our lawyers are well positioned to advice clients on Mongolian PPP/Concession related legal framework and policy approach of the Government of Mongolia; assist clients and international law firms in project development, structuring, concession negotiation, implementation and other local matters including project sight related matters. Our experience in acting for SOEs, Project sponsors, SPVs provides us a clear and comprehensive understanding of the issues facing the full range of private sector and public participants in PPPs and gives us a comprehensive view of what may be both commercially and legally viable for your particular business. In addition to our experience in PPP/Concession, our involvement with particular projects covering negotiation of Shareholder arrangement, Joint implementation, RfP process and EPC related matters can provide commercially minded advice needed to procure and structure your project. Our PPP/Concession practice is headed by Maizorig Janchivdorj, the Partner of the firm. Maizorig’s previous experience with Ministry of Justice and Home Affairs of Mongolia and heavy involvement in drafting of State Policy on PPP in Mongolia and Law on Concession really pays off when client is in need for reliable guidance and insight on policy issues.