Mongolian energy sector development and its future trends, and long term feature of regional cooperation in energy sector

Legal framework of energy sector will increase involvement of private sector and establish favorable condition of investment

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Legal framework of energy sector will increase involvement of private sector and establish favorable condition of investment

It was a significant base of change the Mongolian Energy Sector legal framework as Energy Law of Mongolia was approved firstly in 2001. In other words, ratification of this law was a substantial step of energy sector into market economy.

According to the Energy Law enacted 2001, it was regulated that energy prices and tariffs should be identified based only recent years expenditure of power production.

The difference between previous Energy Law and the Energy Law Amendment which was elaborated by our Ministry and ratified 09 December 2011, is a new regulation of energy prices and tariffs which will consists of expenditures of power production and plus investment return with required profit.

One of the changes in the Law, fuel supply amount, price and tariffs for electricity and heating production will be regulated long term and energy prices and tariffs were indexed.

All of those actions are increasing private sector participation into energy sector and giving more opportunity of investments and business which can be actually developed in the sector according to the market mechanism. Energy sector development will be enhanced with the raised business interest, and increased participation of private sector into energy sector.

The Concession Law of Mongolia approved by the Parliament in 2010 has created legal possibilities to increase the private sector’s participation into the state property dominated energy sector, to expand and promote the collaboration of public and private partnership, to give the state and local properties to the investors according to concession agreements.

Moreover, we consider that the Concession Law is becoming the main driver in finding the necessary funding for the implementation of development goals and planning that are reflected in the energy sector policy documents out of the local private sector and foreign fund resources.

Therefore, it is possible to conclude that the newly approved Concession Law of Mongolia and the amendment made to the existing Energy Law of Mongolia actually driving the development of the sector in creating the investment environment that meets with the international standards, in introducing and localizing new technique and technologies, in getting local and foreign investments into the energy sector, and in increasing the private sector’s participation into the energy sector. Thus, creating the main condition for the transition of the energy sector into the market oriented economic relation.

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