WASHINGTON DC, March 25, 2010 – The World Bank’s Board of Executive Directors today approved a US$ 12 million scale up of a successful Mongolian energy project.
The Energy Project, which was first introduced in 2001, was instrumental in improving the financial sustainability of the energy sector by reducing losses and improving revenue collection in Ulaanbaatar and 9 aimag (provincial) centers in Mongolia. As of 2009, the cumulative reduction in total distribution network losses resulted in increased revenues of around US$17 million.
The population of Ulaanbaatar has nearly doubled since 1995, and the city is now home to more than one million of the country’s 2.7 million inhabitants. The increase in residential and commercial development has resulted in an increased demand for energy. According to estimates by the Ulaanbaatar Electricity Distribution Network Company (UBEDN), demand for electricity is expected to double in the next five years and triple by 2020.
This has increased demands on the city's power system, including transmission and distribution networks, which has been in operation for over 40 years without the benefit of major technical rehabilitation. The system is straining to provide a reliable supply of electricity and cannot accommodate new connections. This situation compounds the risk of system failure, especially during winter months when temperatures regularly plunge to minus 35 degrees Celsius.
The energy project has helped to successfully lower technical and non-technical losses (from 31 percent to 22.7 percent in UB) and there is now consensus in the country that it should be scaled-up to enhance impact. The project’s scale up will enable the government of Mongolia to further reduce losses in distribution networks and to address urgent investment needs for Ulaanbaatar electricity distribution network.
“World Bank support for the Energy Project will further contribute to the energy sector’s financial viability, improve efficiency, and serve as a platform for continued dialogue and engagement in this important area of Mongolia’s development.”Arshad Sayed, Country Manager and Resident Representative, the World Bank in Mongolia.
“The project will support the carrying out of critical investments in Ulaanbaatar Electricity Distribution Network Company, development of distribution and transmission planning activities for Ulaanbaatar and the central region and building capacity of utility staff in system planning and related activities such as information technology and project management,.”said Tumentsogt Tsevegmid, Infrastructure Operations Officer and Task Team Leader of the Energy project.