PPPs have a great role to play and can make effective contributions to the infrastructure development sector of Mongolia, including transport, energy, mining, education, and health. In Mongolia, the term “concessions” encompasses PPPs, build–transfer projects, and a range of other structures. The Parliament of Mongolia enacted the Law of Mongolia on Concession in 2010 (the “Concession Law”). This law was formulated by taking guidance from UNCITRAL Model Legislative Provisions on Privately Financed Infrastructure Projects, OECD Basic Elements of Law on Concession Agreements, EC Green Paper on Public Private Partnerships and Community law on Public Contracts and Concessions as well as considering recommendations of UNDP, ADB and USAID. EBRD has evaluated that the Concession Law is “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”.
The most types of concession are stipulated in the Concession Law such as BOT, BT, BOO, BOOT, BLT, DBFO, ROT and others (depending on the nature of the specific concession item and works and services to be rendered). The concession can be granted to the Mongolian and foreign legal entities or their consortia meeting the general requirements set out in the Concession Law. The concession shall be granted by selecting the project through a tender. The government of Mongolia has adopted several regulations on the detailed procedures for tender, sample documents and criteria for the evaluation of proposals. In addition, the Concession Law allows for the contracting authority to award a concession without competitive process only in limited circumstances. For instance, a concession can be granted by concluding a direct agreement under the circumstances as (i) if it is deemed that conducting a tender would jeopardize national security, (ii) if a candidate owns intellectual property that is only capable of implementing concession, (iii) if no proposal was submitted in response to the tender announcement or no proposals met the requirements of the tender and, in the opinion of the authorized entity, it is deemed unlikely that any proposals would be submitted within the required timeframe if a tender is announced again and (iv) when a concession item is transferred to other entities by reason of breach of concession agreement, bankruptcy or liquidation of the concessionaire. The contents which must be included in the concession agreement are stipulated in the Concession Law. Besides, the terms and conditions of these contents are negotiable.
Establishment of the project finance agreement, including the concession agreement is a complex, knowledge-based process and require a high level of professional skills by the parties and they need to design the finance agreement accurately. Our lawyers have a wide experience and in-depth knowledge of PPP and Project Finance and we advise clients in all stages of a project, including tender process, contractual structuring, negotiation of contracts, and construction through to financing and operation.
Our PPP/Project Finance practice is headed by Uchralbayar Iderkhangai.