ULAANBAATAR, April 21, 2006 - The World Bank (International Development Association) and the Mongolian Ministry of Finance have concluded negotiations on a grant agreement for the Information and Communications Infrastructure Development Project (ICIDP) that will be aimed at significantly increasing the coverage and use of relevant ICT services among the rural population and improve e-government services by encouraging private sector participation in information communication services.
Over last ten years teledensity in Mongolia has increased substantially. But most of the growth has been in the capital Ulaanbaatar and the larger towns. More than 90 percent of all subscribers are in the Ulaanbaatar (over 60 percent), the aimagcapitals and larger soums. There are virtually no services available outside out of the soum centers, at the bagh level, where the vast majority of residents are seasonally nomadic.
The Government of Mongolia (GOM), which takes leadership role for National ICT Vision for 2010, has strategy to improve productivity, attract investments and significantly reduce the economic and social isolation of rural populations by improving the availability and quality of ICT infrastructure and services, thus eliminating one of the major causes of poor economic competitiveness.
ICIDP has three main interrelated components aimed at achieving the project development objective. The first component will entail private sector led development of the information and communications infrastructure in rural Mongolia, through output based aid (OBA) schemes. The secondly, the project will support the regulator in establishing a regime that promotes fair competition and market based incentives for the provision of access in rural Mongolia. The third component will entail building ICT policy leadership in Mongolia and will include investment support for the implementation of key aspects of the national ICT policy focusing on increased and improved use of ICTs in the public sector.
The World Bank will support the project through the Government Agencies such as ICT Authority and Communications Regulation Commission, which are main implementing institutions of the project. The project is one of four grant projects supported by the World Bank to be effective in 2006. The project cost would be US$11.85 million of which US$8.00 million would be financed under the IDA grant of the World Bank, US$2.00 million under the Government of Japan PHRD co-financing grant and US$1.85 million by GOM contributions.
“Implementation of this project will have a direct impact in rural development of Mongolia by providing rural people and herders with opportunity to participate in the national economy through adequate communication services” said Saha D. Meyanathan, World Bank Country Resident Representative. The project will also assist herder communities vulnerable to natural disaster with improved communications and help overcome the tyranny of distance and facilitate the provision of other services that would have a direct impact in rural Mongolia.
The project will be implemented for five years. As expected outcomes of the project 35 soum centers and 350-400 herders’ communities of rural area of Mongolia will be provided with voice telephony and Internet services (soum centers). The herder network will reduce the critical distance hurdle to communication from an average of 25 to 39 km to access the nearest telephone of any kind (in the soum centers), to 14 to 16 km.
 For administrative purposes, Mongolia is divided into 21 aimags or provinces. A soum is the administrative unit below an aimag, and a bagh is a small rural settlement or administrative unit below the soum.