World Bank Provides Assistance to Mongolia to Support Investments in Infrastructure
Today, the World Bank ’s Board of Executive Directors approved an investment credit of US$25.0 million for the Mining Infrastructure Investment Support Project (MINIS). The objectives of this project are to facilitate investments in infrastructure to support mining, and related economic activity by financing feasibility studies and building local capacity to prepare and transact infrastructure projects. Mongolia’s mining sector offers great economic promise for the country. It currently accounts for as much as 80 percent of exports and is approaching 50 percent of government revenue. However, turning that promise into productive activities and jobs will depend on the country’s ability to build the infrastructure facilities and services that support the production and commercialization of mineral deposits.Funding infrastructure assets is a challenge that will require good technical preparation and project costing. Estimates indicate that the cost to build the required transport, power, water and township infrastructure in Southern Mongolia, where several mineral deposits are poised for significant development, could approach US$10 billion over the next ten years. The Government intends to utilize all sources of funding to finance needed investments, including private sector investment. No matter how these projects are financed (i.e., public funds, private funds, or international assistance), good project preparation will be critical.
“This project provides the Government with the necessary resources to carry out a variety of studies to assess the feasibility of investments that the Government has identified as priorities. These will help ensure that investments in infrastructure are financed wisely and that their potential environmental and social impacts are also taken into account,” said Coralie Gevers, Country Manager for the World Bank in Mongolia.
The project will also seek to strengthen the management of water resources in the country’s south, where all activities rely on groundwater. Existing information suggests that there is enough groundwater in the region to support the needs of expected mining activities, local communities, and herders for at least ten years, possibly more. However, additional hydro-geological studies are needed to determine the extent of groundwater potential in the region, and to match demand with supply in the right locations and with the required quality.
“The extraction of groundwater needs to be carefully managed and monitored so that if unexpected negative consequences occur, alternate plans are ready to be implemented,” said Jim Reichert, Senior Infrastructure Specialist at the World Bank .
The project has four components to: (a) carry out a variety of feasibility studies and assessments for proposed investments in infrastructure; (b) develop local skills to prepare infrastructure projects, including transactions involving investors; (c) strengthen the management of groundwater; and (d) Project Management.
The Ministry of Finance will be the main executing agency of the project and will be responsible for its overall management and implementation. A Project Steering Committee, which will include representatives from key line Ministries and Agencies, will be established to determine jointly the infrastructure projects that will benefit from MINIS funds and oversee the use of the funds.
The project, which has a five-year duration, will be implemented between June 2011 and May 2016.