Completed Mixed AidData Chinese Aid

China Eximbank provides $99.9 million preferential buyer’s credit for Ulaanbaatar Housing and Infrastructure Project

$99.91M USD

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Mongolia Ministry of Finance
Country	Mongolia
Start Date	Jun 13, 2011
End Date	Aug 03, 2027
Duration	5,895 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`66085`

Grant Description

China Eximbank provides $99.9 million preferential buyer’s credit for Ulaanbaatar Housing and Infrastructure Project On November 28, 2005, the Chinese Government and the Government of Mongolia signed a general loan agreement regarding utilization of a $300 million preferential export credit. Then, on June 19, 2008, the parties signed a Memorandum of Understanding to amend the general loan agreement.

On June 13, 2011, pursuant to the terms and conditions outlined in the amended general loan agreement, China Eximbank signed a $99,908,163.60 preferential buyer’s credit (PBC) agreement [CHINA EXIMBANK PBC NO. (2011)23 TOTAL NO. (174)] with the Government of Mongolia’s Ministry of Finance for the Ulaanbaatar Housing and Infrastructure Project.

📋 Loan / Grant Terms

📅 Maturity25 years

⏳ Grace Period9 years

💹 Interest Rate1.75%

The borrower was responsible for making 32 equal, semi-annual repayments (worth $3,122,130.12 each) after the expiration of the grace period.

The borrower was expected to use the loan proceeds to finance 85% of the total cost ($117,539,016) of two commercial contracts between Beijing Construction Engineering Group Co., Ltd and Mongolia’s Ministry of Roads, Transportation, Construction and Urban Development: a commercial contract (BZA-2010/55-ISHC) signed on November 5, 2010 and a commercial contract (BZA-2010-Construction/172) signed on November 19, 2010.

The loan achieved a 99.8% disbursement rate ($99,800,000 out of $99,908,163.60).

The purpose of the project was to reduce air and soil pollution in the city of Ulaanbaatar, construct 2,592 apartments in the 7th and 14th districts (VII and XIV districts) of Ulaanbaatar, install water, wastewater, power, and fiber optic utilities outside the apartments in the 7th district and the MNB district of Ulaanbaatar, and construct a 23.3 km power transmission line to deliver electricity to the 7th district and the MNB district.

More specifically, this project supported the construction of 1800 apartments the in “Khangai Khothon” (“Хангай хотхон”) apartment complex within the 7th khoroo of Sukhbaatar district in Ulaanbaatar and the the construction of 792 apartments in the “Tsagaan Khuaran Khothon” (“Цагаан хуаран хотхон”) apartment complex 14th khoroo of Bayanzurkh district in Ulaanbaatar.

Beijing Construction Engineering Group Co., Ltd (BCEG or Бээжин констракшн инжинеринг групп ХХК) was the contractor responsible for project implementation.

As of 2018, all 2592 apartments were constructed and commissioned and all of the utilities outside the apartments in the 7th district were complete. However, at that time, the utilities outside the apartments in the MNB district were only 47.2% complete.

According to a project database (http://project.zasag.mn/) maintained by the Government of Mongolia's National Development Department, the project ultimately achieved a 100% completion rate. However, the precise implementation start and end dates of the project are unknown. This project eventually became a target of internal government scrutiny and criticism.

According to an internal audit conducted by the Government of Mongolia, the Ministry of Finance did not adequately record an on-lending arrangement with the Ministry of Construction and Urban Development of Mongolia (MCUD) in its consolidated debt database.

The Monitoring, Evaluation and Internal Audit Department of MCUD also found that the project lacked sufficient internal financial controls.

📋 Staff Comments

This project is also known as the Housing Project. The Mongolian project title is “Орон сууцны хороолол, дэд бүтэц” төсөл or or Улаанбаатар хотын VII, XIV, МҮОНРТ-ийн хорооллын орон сууц, дэд бүтцийн төсөл.
The China Eximbank loan that supported this project is not included in the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020.
The Mongolian translation of the June 13, 2011 loan agreement that was signed is ‘Монгол Улсын Сангийн яам, БНХАУ-ын Экспорт, импорт банк хоорондын орон сууцны хороолол төслийн тусгайлсан зээлийн хэлэлцээр’.
According to an internal audit conducted by the Government of Mongolia, the Ministry of Finance issued a subsidiary loan worth $70.543 million to the Ministry of Construction and Urban Development of Mongolia (MCUD) on February 7, 2012. However, MCUD did not repay the subsidiary loan to the Ministry of Finance and it is unclear how the remaining proceeds of the $99.9 million loan were utilized. This issue requires further investigation.
The loan (PBC) agreement can be accessed in its entirety via .https://www.dropbox.com/s/r6as2hnji0hqka0/Mongolia%202011%20China%20Eximbank%20Loan%20for%20Housing%20Project.pdf?dl=0.

📚 Sources & References

African Union for Housing Finance Conference: Financing Social Housing In Africa
China Eximbank, alban-shaardlaga
China Overseas Development Finance
China
Mongolia to expand bilateral economic ties
DEVELOPMENT COOPERATION BETWEEN THE GOVERNMENT OF MONGOLIA AND THE GOVERNMENT OF PEOPLE’S REPUBLIC OF CHINA
Groundbreaking ceremony for China-funded residential project held in Mongolia
Groundbreaking ceremony for China-funded residential project held in Mongolia
PREFERENTIAL BUYER CREDIT LOAN AGREEMENT
THE PEOPLE'S REPUBLIC OF CHINA, АВСТРАЛИ УЛС, Айлчлалын хүрээнд 15 баримт бичигт гарын үсэг зурлаа, БАРИЛГА, НИЙТИЙН АЖ АХУЙН САЛБАРТ ГАДААДЫН ЗЭЭЛ, ТУСЛАМЖИЙН САНХҮҮЖИЛТЭЭР ХЭРЭГЖИЖ БАЙГАА ТӨСЛҮҮДИЙН ХЭРЭГЖИЛТЭД 2019 ОНЫ ЖИЛИЙН ЭЦСИЙН БАЙДЛААР ХЯНАЛТ-ШИНЖИЛГЭЭ, ҮНЭЛГЭЭ ХИЙСЭН ТАЙЛАНГИЙН НЭГДСЭН ТАНИЛЦУУЛГА, ЗАСГИЙН ГАЗРЫН ГАДААДЫН ЗЭЭЛ, ТУСЛАМЖИЙН ХӨРӨНГӨӨР 2018 ОНЫ ТӨСВИЙН ЖИЛД ХЭРЭГЖҮҮЛЭХЭЭР ТӨЛӨВЛӨЖ БУЙ ТӨСӨЛ, АРГА ХЭМЖЭЭ, ЗАСГИЙН ГАЗРЫН ГАДААДЫН ЗЭЭЛ, ТУСЛАМЖИЙН ХӨРӨНГӨӨР 2018 ОНЫ ТӨСВИЙН ЖИЛД ХЭРЭГЖҮҮЛЭХЭЭРТӨЛӨВЛӨЖ БУЙ ТӨСӨЛ, АРГА ХЭМЖЭЭ, Монгол Улс БНХАУ-тай хамтран ажиллах 15 баримт бичгийг баталгаажуулав, МОНГОЛ УЛСЫН 2018-2021 ОНЫ ХӨРӨНГӨ ОРУУЛАЛТЫН ХӨТӨЛБӨРИЙН ШАЛГУУР ҮЗҮҮЛЭЛТ, МОНГОЛ УЛСЫН ЗАСГИЙН ГАЗАР, БҮГД НАЙРАМДАХ ХЯТАД АРД УЛСЫН ЗАСГИЙН ГАЗАР ХООРОНДЫН ХАМТЫН АЖИЛЛАГААНЫ ТУХАЙ, МОНГОЛ УЛСЫН ҮНДЭСНИЙ АУДИТЫН ГАЗАР, ОРОН СУУЦНЫ ХОРООЛОЛ, ДЭД БҮТЭЦ ТӨСӨЛ, Сайжруулсан зуухны татаасанд $37.5 сая, 32.2 тэрбум төгрөг зарцуулсан ч ердийн зуухтай ижил байна, ТӨСВИЙН ШУУД ЗАХИРАГЧИЙН 2019 ОНЫ САНХҮҮГИЙН ТАЙЛАН, ТӨСВИЙН ГҮЙЦЭТГЭЛД ХИЙСЭН САНХҮҮГИЙН ТАЙЛАНГИЙН АУДИТ, УЛААНБААТАР ХОТЫН VII
XIV, МҮОНРТ-ИЙН ХОРООЛЛЫН ОРОН СУУЦ, ДЭД БҮТЦИЙН ТӨСӨЛ, УЛААНБААТАР ХОТЫН VII
XIV, МҮОНРТ-ИЙН ХОРООЛЛЫН ОРОН СУУЦ, ДЭД БҮТЦИЙН ТӨСӨЛ, УЛААНБААТАР ХОТЫН VII
XIV, МҮОНРТ-ИЙН ХОРООЛЛЫН ОРОН СУУЦ, ДЭД БҮТЦИЙН ТӨСӨЛ, Улсын Их Хурлын хэлэлцүүлэгт, Цаг хугацаа бол энэ хорвоогийн цорын ганц дарангуйлагч бас хэмжээгүй эрхт засаглал юм Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.