Economic Policy Reform and Competitiveness Project (EPRC)

Chemonics International
www.eprc–chemonics.biz

Economic Policy Support

Impact of tax reform:  Working closely with the General Department for National Taxation (GDNT), the project completed an analysis of the initial impact of the tax reform. The analysis indicates that there has already been a significant positive impact within one year after enactment of the new laws, introduction of revised regulations and tax forms, intensive tax payers’ public education efforts, and training of tax officers and inspectors on the new laws, regulations and underlying IFRS standards.

Market analysis of cement, glass-making, and iron bar manufacturing: EPRC continued gathering data for a market demand analysis on cement, glass and iron bar, at the request of the Deputy Prime Minister. Project received an additional request to assist with mechanisms of finance for rural industrialization as part of the current GoM Action Plan. Project is coordinating this activity closely with the Working Group established by a Resolution of the Deputy Prime Minister, the Construction Material Producers’ Association and concerned ministries.

Legal and regulatory framework for Public-Private Partnerships (PPPs) and Concessions:  Patricio Mansilla, a PPP expert with thirteen years of experience implementing PPPs in Latin America, completed a consultancy to familiarize stakeholders with the PPP concept and its application. Project worked with the Non-Standing Committee of the Parliament, and conducted workshops and meetings. Topics discussed included legal and regulatory frameworks, institutional frameworks adopted in different developing countries to manage and supervise PPP projects, and specific case studies of successful PPPs in Chile and Peru.

Financial Markets Support

Credit Information Bureau: The board of directors of the Credit Information Center Limited (the company formed to operate the private Credit Information Bureau) held its first meeting on 9 January 2009. The company is proceeding to recruit a project manager and finalize a mandate with the International Finance Corporation to conduct an international tender for a strategic operating partner and investor. The 18 shareholders of the Credit Information Center Limited include Zoos Bank, Xac Bank, Trade and Development Bank, Khan Bank, Mongol Post Bank, Golomt Bank, Capital Bank, Capitron Bank, Savings Bank, Chingiss Khan Bank, Erel Bank, Transport Development Bank, National Investment Bank, Credit Bank, United Finance NBFI, Credit Mongol NBFI, Anod Bank and the Mongolian Bankers Association. The board of directors requested that an EPRC long-term advisor continue as an observer/advisor to the board.

Logistics

Zamyn Uud Gateway Logistics Park:  An expert in implementing Public Private Partnership (PPP) projects completed a consultancy to familiarize stakeholders of the Zamyn Uud Logistics Center with the requirements for successful PPP company structures and potential alternatives for the Zamyn Uud PPP company. The consultancy culminated with presentations to private and public sector stakeholders on alternatives and recommendations for the proposed Zamyn Uud Logistics Park PPP in particular and PPPs in Mongolia in general.

The final report, currently in review stage, concludes that the project’s proposed structure is appropriate for the transaction. The report further recommends that the GoM finalize the regulatory framework and institutional arrangements for the management of PPPs as soon as possible. Subsequently, ten privately owned Mongolian freight forwarding companies signed a memorandum of understanding (MoU) to proceed with the Zamyn Uud Logistics Park PPP and also authorized a working group to negotiate with the Government of Mongolia (GoM). The project assisted the working group to finalize a draft MoU for presentation to and negotiation with the GoM.

Energy Sector Support

Energy sector financial status: Project continues to assist the Energy Regulatory Authority (ERA) in implementing the remaining tasks in the approved Tariff Reform Plan in accordance with the plan schedule. The ERA is collecting information from the energy enterprises and other interested parties and preparing a resolution for the next tariff increase now scheduled for mid-2009. The Ministry of Mineral Resources and Energy (MMRE) along with the Ministry of Finance (MoF) have developed a priority list of the most critical actions, along with estimated funding needs, to improve the sector’s financial position.

Competitive electricity market design and implementation:  The ERA and a working group of all important stakeholders have approved the high level design of the new competitive power market. Project has completed a new draft of the market rules for submission to the ERA and the main stakeholders for review and comment in mid-February. The Grid Code, associated operating procedures, and a pro forma vesting contract are currently being revised or prepared. The Cabinet is expected to review the market design in June.

Energy sector reorganization and priorities: The new structure of the MMRE has been finalized. It has seven departments: Geological Policy, Energy Policy, Fuel Policy, Mining & Heavy Industry Policy, State Administration (with a legal division), Finance & Investment (with an international cooperation division) and Monitoring & Evaluation. Two Deputy Ministers have been appointed. Until a final appointment of the State Secretary is made by the Civil Service Council, the incumbent State Secretary of MMRE will serve as Acting State Secretary. Consequently, as the State Secretary appoints respective dept. directors, all the incumbent dept. directors are also serving in acting capacities. Recent Cabinet discussions focused on investment needs of the energy sector.

Update of ERA Assessment: Project has completed an update of the November 2006 assessment and will submit it to USAID, counterparts and the Energy Working Group (EWG) in February.

Development of the CHP #5 tender process and documents: The Tender Evaluation Committee for CHP-5 construction and operation met on 15 January 2009 for the purpose of opening and determining the adequacy of bids received by the submission deadline of 1400hrs. on 15 January 2009. The committee chairman noted at the outset that despite over twenty expressions of interest only one bid was received by the deadline. The Chinese Datang Company was the sole bidder. The committee opened their technical bid, checked it for administrative compliance and accepted it. The Tender Committee will now review the technical proposal in detail for technical adequacy. If the Committee accepts the technical proposal, then the commercial/financial bid will be opened and evaluated. The entire process will take about six months.

Energy Working Group (EWG) and GoM-External partners meetings:  The EWG met on 22 January for the eleventh time since April 2007. The MoF and the World Bank are working to define the priority actions for all line ministries, in matrix form, for the next 1-2 years. A GoM-External Partners Technical Session has been scheduled for 11 February to discuss the government’s priorities.

Consensus Building, Public Education, and National Dialogue Support

National dialogue and consensus building on mining policy and issues: The project continues to assist civil society organizations and MMRE in developing proper communications strategies for a productive dialogue on mining policy issues. A short term international mining expert is completing a second assignment working with civil society groups and an international communications strategy expert is assisting MMRE with their communications strategy.