Mongolia is resource-rich, yet land-locked. With the 19th largest territory in the world and little over 3,0 million population, it is one of the least densely populated areas. Thus, in order for any of Mongolia’s major industries – mining, agriculture and tourism – to take off, infrastructure is vital. To date, however, infrastructure has proven to be a bottleneck in production and transportation of minerals and other products. Building of effective infrastructure requires enormous capital investment. It is estimated that Mongolia will need US$8bn to US$10bn in investments in the next decade or so to unlock its potential in energy sector.
The current Government of Mongolia has been elected in 2020 on an election platform which provides for development of several important mining and energy projects – Tavan Tolgoi, Tsagaan Suvarga, Baganuur, Shivee Ovoo and, of course, the underground phase of the flagship Oyu Tolgoi. Also, it is hoped that the USD 1,0 billion petrochemical refinery being built with aid from India will be completed on time COVID19 permitting (December 2022) and will go a long way toward reducing Mongolia’s almost total dependence on petroleum imports from Russian Federation. Another infrastructure project to watch out for is the New Ulaanbaatar International Airport. After several years of delays, the New Ulaanbaatar International Airport which is managed by a Mongolian-Japanese JV (consisting of Mitsubishi, Narita Airport, Japan Airport Terminal Co. and JALUX is expected to finally become operational in 2021 (COVID 19 permitting).
Mongolia’s infrastructure development has required reliable provision of energy. The energy sector, however, has been suffering both funding gap and inefficiencies in production. On the one hand, Mongolia’s intended Nationally Determined Contributions under the Paris Agreement has enabled substantial investments by private sector into renewable energy. On the other hand, recent legal and regulatory shifts have had an effect of slowing down potential investment into the renewable energy. (please see our client advisory “Amendments to the Energy Act of Mongolia” under “NEWS”).
The lawyers at KhanLex Partners have traditionally been at the forefront of the infrastructure in general and renewable energy, in particular, projects in Mongolia.
Our first notable infrastructure work (led by Partner Enkhbat Batsukh) was our mandate for Asian Development Bank to act as local counsel in advising the Government of Mongolia in negotiating Combined Heat & Power Plant No.5 of Ulaanbaatar. Another notable infrastructure experience is Mongolian Railways SOE in development of a new railway project and construction of Ukhaakhudag-Gashuunsukhait railway of 245 km.
Since then, KhanLex Partners have remained one of the few Mongolian firms consistently advising on the Mongolia’s booming energy projects. Over the years KhanLex Partners have accumulated unique experience of advising various parties to a power project – (i) government agencies of Mongolia (such as Ministry of Energy of Mongolia and state-owned offtakers), (ii) developers (such as IPPs), (iii) sponsors and (iv) lenders. In addition, our energy experience is present in both conventional (clients: ADB/Government of Mongolia, PRC’s ChinaPower Resources and Zhejiang Energy Group) and renewable (clients: ADB, EBRD, Japan’s Softbank Energy, Mongolia’s Clean Energy Asia). Some of these energy projects that KhanLex Partners advised have been internationally recognized – the project finance of Tsetsii Wind Farm was awarded: (i) the “2017 Asia Pacific Wind Deal of the Year” by IJGlobal, affiliate of Euromoney Institutional Investor, and (ii) the “2017 Inaugural Asia Business Law Journal Deal of the Year Award”. We acted as advisors to the sponsors on this groundbreaking project in Mongolia.
Combination of our track record in energy with our experiences in project finance, PPP and natural resources gives our lawyers an edge in our providing comprehensive advice on power projects.
Our Energy and Infrastructure Practice is headed by Enkhbat Batsukh.