“MONGOLIAN RAILWAY ENGINEERING ASSOCIATION”

“Commencement of railway projects and exploitation preparedness”

PUREVBAATAR LUVSANDAGVA

President Railway Engineering Association

of Mongolia

Blue Sky convention center

Ulaanbaatar

20.06.2013

Part I

Commencement of

railway projects

Content

Legal environment for new railway

construction

State policy on railway

transportation

Organizations-participants in

railway transportation

Railway traffic regulation unified

center

Legal environment for new

railway construction

Parliament Resolution No. 14 on creation of the Railway

Authority-Government Implementing Agency in 2004 was the

starting point systematic and gradual implementation of the

State policy, separation of government and business activities.

Adoption of the Railway Transportation Law allowed:

1. Created a favorable environment for issuance of special

permits for railway transportation service and certification of

the railway activities / clause 16.1/

2. Financial separation of the activities of railway infrastructure

owners and transporters / clause 19.3/

3. Created an environment for independent control over railway

transportation and traffic control / clause10.3/

4. Created an opportunity for establishment of training and

research institutions / clause 10.4/

State policy on railway

transportation Was endorsed by Parliament RESOLUTION No. 32 ( June,

2010 )

Purpose of the State Policy on Railway Transportation:

is to increase the railway capacity to transport and carry,

broaden an Unified National network of efficient state railway

directed at satisfying the ever growing future transport demand

both effectively and reliably, and further, to improve the national

transit capability, advance the legal environment, structure and

organization of the sector, utilize the large mineral deposit,

expedite the national economic and social development

through exporting and exporting after processing, and ensure

sustainable development for the future.

State policy on railway transportation

Mongolian Railway State Owned Shareholding Company (MTZ) was issued the

concession right to “build-operate-transfer” railway infrastructures of the stages 1 and 2

as it had been indicated in “STATE POLICY ON RAILWAY TRANSPORTATION” by

Government Resolution No 28. (January 2013)

According to this resolution a state owned company was awarded the right to build and

operate approximately 2000 km of new railway line:

“3.2.2. To be started and built in the first stage (approximately 1100 km in total):

3.2.2.1. Dalanzadgad-Tavantolgoi-Tsagaan suvraga – Zuunbayan -400 km;

3.2.2.2. Sainshand – Baruun-Urt -350 km;

3.2.2.3. Baruun-Urt – Khuut – 140 km;

3.2.2.4. Khuut – Choibalsan – 150 km.

3.2.4. To be started and built in the second stage (approximately 900 km in total):

3.2.4.1.Nariinsukhait- Shiveekhuren- 45.5 km;

3.2.4.2. Ukhaa hudag –Gashuunsukhait – 267 km;

3.2.4.3. Khuut – Tamsagbulag- Numrug-380 km;

3.2.4.4. Khuut – Bichigt – 200 km.”

LOCATION OF THE MONGOLIA ON THE EUROASIAN SPACE AND

CONNECTION TO THE RAILROUTES OF NEIGHBOURING COUNTRIES

Ministry of road and transportation

Unified center of the Railway traffic regulation

Private companiesState-owned companies

“MTZ”

State owned shareholding

company

“UBTZ” joint venture

“Energy Resource” LLC

“BOLD TOMOR EROO GOL”

LLC

“MAK” corporation

Companies with special permits

to build railway infrastructure

Organizations-participants in railway

transportationwww.railway.gov.mn

Railway traffic regulation

unified center’s activity

Railway transportation law Article 10.3.

Railway transportation control

department and railway traffic

coordination center shall operate

under the state administration

organization.

Policy: Coordinating railway operations

company

Railway traffic regulation

unified center’s activity

The “Railway traffic regulation unified center”-state

budgeted enterprise was created according to

Government Resolution 91 in 2012.

The center will have 3 level tasks depending on activity:

1. Center of control and regulation of the railway traffic

within national railway network

2. Center of control and regulation of the regional railway

traffic

3. Center of management railway traffic within railway

infrastructure

Part II

New railway

exploitation

preparedness

New railway exploitation

preparedness

“New railways” Project’s financing

Licenses

Special permit

Summary

Advise

Action plan

“New railways” Project’s

financing.

According to Resolution No. 266 from 2011 issued byGovernment of Mongolia was permitted to the Board ofDirectors (Ch.Khashchuluun) of Development Bank to getresolved according to accepted regulations the issue of USD55.0 million financing within 2011 required for the first stagefor implementing of “New railways” Project.

According to Resolution No. 82 from 2013 issued byGovernment of Mongolia was assigned to N.Batbayar,Minister of Economic Development, task to get received fromthe sum of tugriks equal to USD 200 million of the total sumof tugrik equal to USD 400 million designated to finance “Newrailways” Project implementation and permitted to the Boardof Directors of Development Bank (B.Shinebayar) throughDevelopment Bank from the revenue asset received from thebonds issued by the government in 2013.

Licenses

Railway transportation law

Article 10.1.6 issue, extend,

suspend and annul licenses to

some objects and operations

related to railway transportation

safety;

licenses to some objects

Railroad and tracks

Railway stations and junctions, /towards ferrying/

Common use track and specific use

Artificial construction facilities (bridges, grudge facilities, culverts, tunnels and etc.),

Making Railway fixing, maintenance, technical diagnosing, survey;

Railway crossing

Station

Common use area and specific use area

Locomotive unit:

Locomotive:

Restoring, firefighting carriages:

Wagon unit:

All kinds of freight carriages,

All kinds of passenger carriages,

All kinds of containers.

Automatic, telemechanic devices

and communication signaling

Signaling, concentrating and

blocking networks facilities:

licenses to some operationsRailway transportation operations,

Constructions of specific use track and specific use area

Shipping and unloading,

Railway freight forwarder

Operation of infrastructure;

Railway station activities;

Inspection and maintenance service of locomotives and carriages;

Production and sale of instruments and tools requiring strict use

equipment and devices,

Working out Railway technical drawings and projects; /Pre-Feasibility,

Detailed Feasibility Study/

Fixing and maintenance of upper and base structures of railways

designated for specific uses,

Railways signaling, concentrating, inhibition and communication networks’

facilities fixing and technical maintenance,

Special permit

Railway transportation law Article 16.1. Special

permit for railway transportation services

/hereinafter “special permit”/ shall have the following

types:

16.1.1. Construction and Use of basic structure;

16.1.2. Manufacturing, assembling and maintenance

of basic structure and operations

16.1.3. Conducting railway transportation activity

Parts of Special permit

Д/д Part of Special permit

1

Basic structure

Construction

2 Use

3 Manufacturing

4 Assembling

5 Maintenance

6

Locomotive and

Wagons

Manufacturing

7 Assembling

8 Maintenance

9 Operations, transportation activity

Owned by special permit

organzations To founded by the Intergovernmental agreement in 1949 of

Mongolian-Russian “Ulaanbaatar railways” Shareholding Society, -

by the Special permit of construction, use and other

Was endorsed by Government RESOLUTION No. 134 ( 2008 ) “Bol

Tumur Euruu Gol” LLC by the Special permit of construction

Was endorsed by Government RESOLUTION No. 121 ( 2012 )

“Mongolian railways” State Owned Share Holding Company by the

Special permit of construction

“Policy to be observed by Government on railway transport” approved by

Odred No. 28 from 2013 issued by the Government Concession for

constructing the railroad base structure “construction-exploitation-

transferring” in the 1st and 2nd stage of implementing the Project is

granted on to “Mongolian railways” State Owned Share Holding

Company.

Owned by basic structure

Railway transportation law Article 6.2. Basic structure of

national economic and social high importance can be

owned by the state or legal body where the dominating

share is owned by the state or it can be used for certain

period of time to be later shifted back to the ownership of

state. The Government shall determine guidelines for such

basic structure and railway lines.

Railway transportation law Article 19.3. If basic structure

owner conducts railway transportation activity financial

settlements shall be kept separately for basic structure and

transportation activities.

This case can be implement ting 51% State owned and 49%

privately owned railway company

Төмөр замын суурь бүтэц эзэмших аж ахуйн нэгж

байгууллагыг төрийн 51%, хувийн 49%-ийн

өмчлөлтэйгээр байгуулах

Transporter 18.1.“Stakeholders in transportation activity” include economic

entities, organizations and individuals, who are owners of

basic structure, common and specified use tracks and areas,

and transporters responsible for conducting transportation

activities in compliance to railway transportation safety

regulations, railway transportation legislations and railway

transportation general set of rules respectively.

18.2. Stakeholders in transportation activity shall make a

contract with other organizations engaged in transportation

activity as stated in provision 15.1.15 of this law and separate

and determine scopes of operation and duties in accordance

to railway transportation general set of rules.

This case can be implementing new railway operation

company by the shareholder Төмөр замын тээвэрлэлтийн

үйл ажиллагаа эрхлэх аж ахуйн нэгж байгууллагыг

төрийн оролцоогүйгээр хувьцаат компани хэлбэрээр

байгуулах

Summary

CATEGORY OF RAILTRACK AND CONSRUCTION PHASE

DIRECTION of RAILROADS KM Axle

load tn

Capacity

bln tn

Standarts

Sukhbaatar-Zamiin-Uud 1111 23.5 21.0 \19.0

Choibalsan-Ereentsav 238 23 2.0\0.1

Nariin suhait-Shivee huren 50 27 15.0 Heavy haul standart Wagon 80 tn

Nariin suhait-Tavantolgoi 500 25 20.0

Uhaakhudag-Gashuun suhait 267 27 30.0 Heavy haul standart Wagon 80 tn

Tavantolgoi-Tsagaan suvarga 250 25 30.0

Tsagaan suvarga-Zuunbayan 150 25 30.0

Sainshand-Baruun-Urt 350 25 30.0

Baruun-Urt-Hoot 140 25 30.0

Hoot-Choibalsan 150 25 15.0

Hoot-Bichigt 200 27 15.0 Heavy haul standart Wagon 80 tn

Hoot-Nomrog 380 25 15.0

Total 2437

MULTINET OF TRANSORTATION IN EAST ASIA AND PACIFIC

Төмөр замын тээврийн аж нэгж, байгууллага

компани байгуулхад анхаарах зүйлс

conforming to relevant Mongolian legislations;

Being provided by appropriate competent

personnel;

Getting arranged by foreign investment or share

holding company forms;

Adopting progressive new techniques and

technology conforming to further development

tendencies;

Adopt the standard norm where allocated 2 km

per person for railroad fixing and maintenance;

Advise

Locomotive and carriage rent

assessment values,

Selecting one transport service provider

jointly by participants of business,

Selection of locomotives and rolling

stocks (carriages),

Technical fixing and maintenance

service system,

Supervision and approval of safety,

ТӨМӨР ЗАМЫН ЦОГЦОЛБОРЫН

ТООЦООЛСОН БАЙРЛАЛ

Action plan

1. Founding of company, /share holder,

ownership/

2. Pre-Feasibility Study,

3. Resolve the issue of Land Permission,

4. Detailed Feasibility Study/Establish Board of

Director in its final state,

5. Obtain all necessary Licenses of Special

Permission,

6. Arrange IPO/attract investors.

THANK YOU FOR

ATTENTION