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  • Closed Compact Report:  Closed Compact Report: Mongolia Compact
  • October 2015

Compact Changes

The Mongolia Compact included diverse projects that funded infrastructure and technical assistance. Because MCC compacts are a fixed amount implemented over five years, partner governments must focus on attaining compact results while balancing changes in costs, speed and feasibility of implementation.

  • The original compact contemplated funding up to $188,300,000 to modernize the critical but antiquated freight rail system, but only if certain conditions for transparency were fulfilled by the Mongolian rail company’s Russian partners.  On April 27, 2009, the Government of Mongolia notified MCC that it intended to withdraw the Rail Project from the compact due to an inability to fulfill those conditions (see below). Following Board approval in December 2009, MCC executed a formal compact amendment in January 2010 that reallocated approximately $180 million from the Rail Project toward the expansion of the Health (roughly $8 million), Property Rights (roughly $25 million) and Education Projects (roughly $25 million), as well as the addition of the new North-South Road (roughly $75 million) and Energy and Environment Projects (roughly $47 million). All projects resulting from this reallocation were completed on time and within budget at compact close.
  • The $79.7 million North-South Road Project was identified through close coordination with the government and other international financial institutions in Mongolia. As with the original compact development process, MCC worked closely with the government to consider the project’s suitability for MCC funding, including its impact on addressing constraints to economic growth. The project filled an important gap in the key north-south economic corridor of the country by constructing Mongolia’s first all-weather paved road running from its southern border with China to its northern border with Russia.
  • Development of the $47.2 million Energy and Environment Project was a result of a collaborative effort with the government and other stakeholders to address the growing problem of winter-time air pollution in the capital city of Ulaanbaatar. A number of project proposals having both health and economic dimensions were reviewed, taking into consideration past efforts of air pollution reduction. The Energy and Environment Project design was developed after undergoing MCC due diligence and economic analysis. In addition, the project included a small component to support the development of Mongolia’s first on-grid commercial wind farm—MCC’s first investment in wind energy.   
  • MCC’s fixed budgets and strict five year clock meant constant monitoring of compact programs’ status, progress and viability.  At the time the Mongolian Compact came to a close, $ 268,993,805.23 of the original budget of $284,911,363 had been expended, leaving approximately $15.9 million in funds returned to MCC to target new program funding.