Tender looms for 1100 km of new railway /Preconditions for new railway introduced/

On September 11 a ‘Pre-tender Conference for Construction of New Railways in Mongolia’ was held at the Chinggis Khaan Hotel. During this conference, the Mongolian side introduced a State Policy on Railway Transport, Law on Concession, preliminary basis of the Feasibility Study and the funding and heard opinions of investors.a Mongolia’s Parliament endorsed the State Policy on Railway Transportation last June. As the resolution stated, approximately 1100km of railroad will be built in the first stage.
As A. Gansukh, Deputy Minister of Road, Transport, Construction and Urban Development presented during the conference, National Development Strategy (NDS) envisions has two development phases; 2007-2015 and 2016-2021, where envisioned annual Gross Domestic Products (GDP) growth are to be 14 percent and 12 percent, and per capita GDP of USD 5,000 and USD 12,000 respectively.

A pre-tender conference for new railway construction was held at the Chinggis Khaan Hotel

Moreover, it is expected that the national GDP would reach USD 41 billion.
He said that an issue by whom and in what conditions 1100 km railway main composition, which is the first stage of State Policy on Railway Transportation, looks like a matter for Mongolia; however, it concerns regional development as well. The newly built railway will be a bridge to the sea and effective to eliminate single market dependence and can bring minerals into a profitable market. The first stage of 1100km will be constructed from Dalanzadgad- Tavantolgoi-Tsagaan suvraga- Zuunbayan–400km; Sainshand- Baruun Urt–350km, Baruun Urt- Khuut -140km and Khuut-Choibalsan -150km. This giant construction work is proposed to complete within 2.5 years and is planned not to exceed 4 years. However, there are some investors willing to complete it in 2.5-4 years. The track gauge of the new railroad will be 1520mm. As the first stage of railroad is built, the total volume of current cargo transported by the railway will increase by 3.5- fold as the amount of products for export is estimated to reach an average of 50 million tonne per year as a result of coming into exploitation of group coal deposits at Tavan Tolgoi, Tsagaan suvraga copper deposit, large coal, copper, wolfram, zinc and fluoride mineral deposits at Aduunchuluun, Chandgana, Talbulag and Khuut. Construction of the first stage railroad will be sufficient to transport coal to Russia, the European Union, China,Japan and South Korea.

Work has already started to draw up a Feasibility Study for the new railway and study conditions for building the railway. It was said that it is likely to take much cost to build the railroad which will mainly run through the gobi area. Currently, two neighbors and third countries including Japan and South Korea expressed their interest to take part in this constructional work.
The Deputy Minister said that they plan to complete construction of first stage railway by 2012 and it was preliminarily estimated that the cost for construction per kilometer would be USD 2.5 million. However, these all have not been estimated as final. Tender conditions will be clear while grounds of the Feasibility Study are finalized after hearing suggestions of investors. The government will soon resolve which one of two options Build-Operate-Transfer (BOT) or Build-Transfer (BT) to utilize. Also, whether the international tender will be organized in one or two stages has not yet been decided. The Government will resolve this when the tender is announced.
Both of Russia and China are transitioning to bigger trains. It should be considered and there are clear main conditions including heavyhaul and 1520 mm of gauge track in qualifications for the tender. As Ch. Ganbat, advisor at the Ministry of Road, Transportation, Construction and Urban Development stated in his report at the conference, Mongolia needs to plan for long-term growth.
As of the volume of coal transport by railway, it is likely to reach 10 mpta (million tonne per year) in the nearest three years, 30 mpta in ten years and 70-100 mpta in 25-30 years.
At the conference, B. Zayabal, head of Public and Private Partnership and Concession Department at the State Property Committee, introduced organizing a tender to give authority of concession under the Law on Concession. The Law on Concession will provide a legal framework for building a new railway infrastructure.
B. Zayabal introduced three options the to give the tender an authority of concession to build new railway infrastructure will be conducted with one or two steps in accordance with the Concession Regulations and announce an open tender to build new railway infrastructure under the Law on Tender.
If a one-step tender is organized, it will be possible to select by this December; if a two-step tender is run, the selection will be by March of 2011. If organizing an open tender under the Law on Tender, the selection will be this November.
Representatives from the Asian Development bank, Embassies of some countries and companies of Russia and China attended the conference and heard preliminary introductions. As of today, investors from Russia, Japan, and South Korea expressed their interest to cooperate. For instance, over 80 companies including Mongolia, Republic of Korea, Japan, China and others are interested. 

The government of Mongolia will soon start with phase 1 of the recently ratified ‘State Policy on Railway Transportation’

source: The Mongol Messenger