Additional Loan Agreement for Mongolian Oil Refinery under Discussion
Politics
Ulaanbaatar, January 14, 2025 /MONTSAME/. On January 13, 2025, the Standing Committee on Economics of the State Great Khural discussed the issue of whether to agree on the draft loan agreement between the Government of Mongolia and the Export-Import (Exim) Bank of the Republic of India.
Minister of Industry and Mineral Resources Tuvaan Tsevegdorj presented the draft agreement, stating, “Mongolia has been implementing the project to build an oil refinery with the financing of a concessional loan from the Exim Bank of India since 2017. The Parliament ratified the loan agreements for a total of USD 1 billion 236 million to finance the project in 2017 and 2019. During the implementation of the project, the “Mongolian Oil Refinery” state-owned LLC reported an increase in the budgeted cost of the EPC-4 package of works, which includes the construction of the main plant. The increase in the project cost was discussed by the Mineral Resources Expert Council under the Ministry of Industry and Mineral Resources in September 2023, and the total cost of the project was confirmed to be USD 1 billion 698 million, or USD 462.2 million more than the previously budgeted cost. Accordingly, the Government held negotiations with the Exim Bank of India on a loan agreement to fund the additional financing required for the Oil Refinery Construction Project."
The loan for the additional financing,
like the previous loans, has an annual interest rate of 1.75 percent, a service
fee and a capital reserve guarantee fee of 0.5 percent each, a 5-year principal
waiver, and a total repayment period of 20 years. This loan agreement is crucial for the completion of the Oil Refinery Project, which is one
of the 14 mega projects included in the Government's 2024-2028 Action Plan.
At the meeting of the Standing
Committee on Economics, 12 out of 17 members of the Standing Committee voted in
favor of supporting the draft loan agreement between the Government of Mongolia
and the Export-Import Bank of the Republic of India. Therefore, the conclusion
of the Standing Committee on Economics will be presented to the Standing
Committee on Budget and the Standing Committee on Security and Foreign Policy.