OYU TOLGOI AND MONGOLIA TO TACKLE POWER ISSUES IN SOUTH GOBI
Oyu Tolgoi LLC signed a power sector cooperation agreement (PSCA) with the government for energy supply in the southern region of the country last week.
The agreement lays out a framework for long-term strategic cooperation between the Mongolian government and Oyu Tolgoi to deliver a comprehensive energy plan for the South Gobi region. The main objective of the agreement is an international tender process to identify and select an independent power provider to privately fund, construct, own, and operate a power plant to supply electricity, with Oyu Tolgoi as the primary consumer.
Minister M.Sonompil said, “Successful implementation of the PSCA will add significant domestic power capacity, strengthening Mongolia’s energy supply network. It will also encourage investment and jobs – both during construction and in operation.”
The government said on its website that Oyu Tolgoi will provide support in finding financial backers for the southern region energy project from international banks and financial organizations.
Prime Minister N.Altankhuyag participated in the official signing ceremony at the State House, where Minister of Energy M.Sonompil and Head of the Energy Regulatory Commission S.Otgonbayar, on behalf of the government, and Chairman of the Oyu Tolgoi board G.Batsukh and President and CEO Craig Kinnell, on behalf of Oyu Tolgoi LLC, signed the PSCA.
The agreement was signed amid a tax dispute between the government and Oyu Tolgoi. The Tax Authority of Mongolia made a claim for 130 million USD in unpaid taxes earlier this year, which put a stop to Oyu Tolgoi’s four billion USD underground development phase, which was set to start this year. The parties said that they are still in discussions regarding the issues and hope to reach a solution before the deadline for commitments from underground development financiers.
“The PSCA is a positive development for Oyu Tolgoi. It demonstrates how we and the government can work together to achieve shared objectives-in this case, developing a long-term, economically competitive, and reliable power supply in the South Gobi,” said Jean-Sebastien Jacques, chief executive of Rio Tinto Copper, which owns 66 percent of Oyu Tolgoi through its unit, Turquoise Hill Resources.
Full evaluation of the independent power producer option is expected to take nine to 12 months.
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