The Government of Mongolia has cancelled a 2014 agreement signed with Oyu Tolgoi (OT) regarding the mine's energy needs. On February 20, Minister of Energy Ts. Davaasuren held a press conference and spoke to journalists about the government's decision to withdraw its energy cooperation agreement with Oyu Tolgoi.
Cabinet noted that it will commit to cooperating in the provision of energy for the mine from domestic sources, as well as in studying the possibility of building a Tavan Tolgoi thermal power station.
The cancellation of the agreement has left OT with finding alternatives to imported power as a source of energy. It is predicted that OT will explore the opportunity to build a thermal power station at the mine site. OT has stated that it will follow the articles of the 2009 investment agreement signed with the government in the future.
The minister noted, “According to section 7.3 of the investment agreement between the Government and OT, signed in 2009, OT has to procure its energy from three possible sources within four years of the start of OT’s operations, which are OT being responsible for the source itself, whether by establishing its own thermal station or from a thermal station built by a third party; or by utilizing the Mongolian energy system.
OT was required to get its energy from a domestic source by July 1, 2017, as stated in the investment agreement, but OT hasn't been able to do that due to the Power Sector Cooperation Agreement (PSCA), which was signed in 2014 by OT and the former Cabinet. The investment agreement was ratified by Parliament. When amending the agreement, it is necessary for it to be reviewed by Parliament. The PSCA violates section 7.3 of the investment agreement, and that’s why Cabinet cancelled the PSCA.” He continued, “Therefore, we do not believe that OT has violated or has failed to commit to the investment agreement, and we didn’t suspend OT's right to build a thermal power station.”
Director of the Tavan Tolgoi Thermal Station Project D. Batbileg said that technical and economic feasibility studies and other research for the power station project has been finished, and is ready to move forward. If Rio Tinto, the main purchaser, provides a guarantee, operations can begin in July.
The Government of Mongolia has cancelled a 2014 agreement signed with Oyu Tolgoi (OT) regarding the mine's energy needs. On February 20, Minister of Energy Ts. Davaasuren held a press conference and spoke to journalists about the government's decision to withdraw its energy cooperation agreement with Oyu Tolgoi.
Cabinet noted that it will commit to cooperating in the provision of energy for the mine from domestic sources, as well as in studying the possibility of building a Tavan Tolgoi thermal power station.
The cancellation of the agreement has left OT with finding alternatives to imported power as a source of energy. It is predicted that OT will explore the opportunity to build a thermal power station at the mine site. OT has stated that it will follow the articles of the 2009 investment agreement signed with the government in the future.
The minister noted, “According to section 7.3 of the investment agreement between the Government and OT, signed in 2009, OT has to procure its energy from three possible sources within four years of the start of OT’s operations, which are OT being responsible for the source itself, whether by establishing its own thermal station or from a thermal station built by a third party; or by utilizing the Mongolian energy system.
OT was required to get its energy from a domestic source by July 1, 2017, as stated in the investment agreement, but OT hasn't been able to do that due to the Power Sector Cooperation Agreement (PSCA), which was signed in 2014 by OT and the former Cabinet. The investment agreement was ratified by Parliament. When amending the agreement, it is necessary for it to be reviewed by Parliament. The PSCA violates section 7.3 of the investment agreement, and that’s why Cabinet cancelled the PSCA.” He continued, “Therefore, we do not believe that OT has violated or has failed to commit to the investment agreement, and we didn’t suspend OT's right to build a thermal power station.”
Director of the Tavan Tolgoi Thermal Station Project D. Batbileg said that technical and economic feasibility studies and other research for the power station project has been finished, and is ready to move forward. If Rio Tinto, the main purchaser, provides a guarantee, operations can begin in July.