Ulaanbaatar Darkhan Road

Location:

Mongolia

Project number:

50766

Business sector:

Transport

Notice type:

State

Environmental category:

A

Approval date:

23 Feb 2022

Status:

Approved

PSD disclosed:

01 Aug 2019

Project Description

Provision of a loan of up to USD 157 million (EUR 137.7 million) to the state of Mongolia to finance the expansion of a 202 km road in the north of Mongolia from Ulaanbaatar to Darkhan, the country's second-largest city. The road from Ulaanbaatar to Darkhan is an important artery of the Mongolian road network and also part of the China-Mongolia-Russia economic corridor. The current road is narrow, patchy and does not allow for the necessary traffic throughput. It is also dangerous, with at least 10 accident black spots seeing 20-150 accidents each per annum. In addition, some sections of the road were damaged by flooding in 2018. The new project forms Phase II of the reconstruction works and covers the widening of the road to 4 lanes. Phase I works, funded by a loan from the Asian Development Bank's (ADB), comprises the reconstruction of the existing 2-lane road.

The original loan of up to USD 137 million was approved by the Board on 11 December 2019.

The additional loan of up to USD 20 million to be approved by the Board on 23 February 2022 and is purported to finance the additional costs, stemming from the need to structurally align Phase I and Phase II.

Project Objectives

The goal is to increase the road capacity to be able to accomodate demand for both domestic and international journeys. Road safety and climate resilience will be improved substantially.

Transition Impact

ETI score: 70

The project will contribute to the "integrated" quality through the improvement of connectivity between regional cities and second-tier towns, which are currently inadequately connected. The investment will improve road conditions and increase road capacity, supporting regional development.

The project will also contribute to the quality "resilient" as it will help the Client develop its asset management capacity through (i) design of a methodology to distribute maintenance funds taking into account socio-economic needs, strategic orientations and Road Asset Management System outputs, (ii) development of performance monitoring and audit procedures, (iii) amendment of the pending secondary legislations required for implementation of Road Fund legislation and (iv) development of human capital to facilitate the sector wide changes.

Client Information

MONGOLIA SOVEREIGN

EBRD Finance Summary

USD 157,000,000.00

Total Project Cost

USD 170,700,000.00

Additionality

The Bank provides long-term financing, which is presently not available from local commercial banks.

Environmental and Social Summary

Categorised A (2014 ESP).

The expansion of an existing 2-lane road by adding two new lanes over the 202 km from Ulaanbaatar to Darkhan requires a comprehensive Environmental and Social Impact Assessment (ESIA), including public consultation and EBRD disclosure 120 days prior to Board approval.

The Project will include: construction of a new 2-lane road, including roundabouts, U-turns and stopping areas; provision of road furniture (barriers, lights, pedestrian crossings, etc.); construction of crossings over eight railways; construction and rehabilitation of bridges and culverts; and rehabilitation of toll booths. The road will be widened both "on-line" and "off-line", with approximately 70 km to be widened adjacent to the existing road (Phase I) and the remaining 132 km to be "off-line" from the existing road (Phase I).

An independent consultant has been engaged to prepare an overall ESIA disclosure package consistent with EBRD requirements, based on the available information and additional studies.

The Project E&S assessment included a detailed review of the national DEIA, a gap analysis of the DEIA and EBRD E&S requirements, supplementary baseline studies, site visits and consultations with various stakeholders. A Road Safety Audit has also been carried out for the entire road and its recommendations are being addressed.

The main potential impacts during construction and operation will be associated with air quality as a result of dust and gaseous emissions, noise and vibration, disturbance and loss of soils, consumption of materials and waste generation, land take and economic displacement, construction and public health and safety, management of the workforce, road and traffic safety and some impacts on cultural heritage.

No protected sites are located in or immediately adjacent to the Project footprint and no rare or endangered flora species. Some wildlife species of concern are present in the road corridor area, including an endangered species of marmot, but the impacts on biodiversity were assessed to be low.

The land required for the road is immediately adjacent to the existing road and therefore no major permanent land use changes as a result of the Project are anticipated. Some areas of pasture land in the vicinity of the existing road will be lost to the expanded road footprint. Some pasture access restrictions are possible during the construction period. The Project activities will result in some economic displacement and loss of structures, for which asset owners have been engaged by Ministry of Road Transportation and Development ("MRTD") in order to agree compensation procedures for relocation of structures. No residential properties will be affected by the Project footprint. A separate Land Acquisition and Resettlement Framework (LARF) has been prepared to manage any land and livelihood impacts, and will be included into the ESIA disclosure package.

A number of health, safety and security risks and impacts for both the contractor's employees and the public need to be considered during construction. It is assumed that the contractor selected will have sufficient workforce and equipment to deliver the Project and will also be required to develop management arrangements and procedures to remove hazards or to reduce risks to workforce health and safety.

Realisation of the Project will bring a number of positive national, regional and local economic and employment benefits, including improved road and community safety, lighting and signage, strengthened and rehabilitated bridges and flood protection structures etc.

A comprehensive Environmental and Social Action Plan (ESAP) for the Project has been developed and agreed upon to ensure the Project is structured to meet EBRD PRs. Some elements of the ESAP (mainly related to road safety, development of E&S management systems, stakeholder engagement and monitoring during construction stage) will be also addressed through Technical Cooperation activities supporting the Project. The ESAP includes, inter alia: development and implementation of a robust Environmental, Social and Health and Safety Management System, supply chain and contractor management, improvements to safety practices, prevention and control of pollution, development of a Livelihood Restoration Plan (LRP), development of the formal HR policy and grievance mechanisms for both workers and other stakeholders, community health and safety, traffic and road safety, conservation of biodiversity and protection of cultural heritage.

To manage all the environmental and social impacts during construction and as part of the ESIA, a detailed Environmental and Social Management and Monitoring Plan (ESMMP) has been developed.

Based on this, the Contractor produced a Construction Environmental & Social Management Plan (CESMP) to address these requirements as part of good construction practice, implementation of which will be monitored by a Project Implementation Unit (PIU) and Project Coordinator engaged by the EBRD.

The Project Implementation Support Consultant has been mobilized and supporting PIU in ensuring that the Project is implemented in line with the requirements set forth by the ESAP, as well as by other relevant environmental and social documents including EBRD's procedures and policies.

Further details on environmental and social issues are included in the Non-Technical Summary of the Project, which was disclosed to the public alongside the SEP and LARF on the MRTD's website (www.mrtd.gov.mn/) on 24 July 2019 and is also available at the following link: http://www.ebrd.com/work-with-us/projects/esia/ulaanbaatar-darkhan-road-project.html

The Bank will closely monitor implementation of the project through annual E&S reporting, ESAP implementation progress and monitoring visits to the Project, if necessary.

Technical Cooperation and Grant Financing

The Project is expected to benefit from the following Technical Co-operation assignments:

Pre Loan Signing

TC1: ESIA gap analysis and disclosure pack to include identification of any gaps between the existing documentation and processes and the EBRD's requirements, development of a work plan to close these gaps before and post disclosure, preparation of ESAP, SEP and NTS. The assignment's cost is estimated at EUR 300,000, funded by the Infrastructure Project Preparation Facility ("IPPF").

TC2: Support in the implementation of Environmental & Social Management Systems to facilitate the timely and effective implementation of the Project by providing short-term assistance to the Client in implementing priority measures under ESAP, required prior to the start of the construction works and ensure compliance with EBRD Environmental and Social Policy (ESP) requirements.

The assignment's cost is estimated at EUR 55,535, to be funded by the Shareholder Special Fund ("SSF").

TC3: Project Coordinator to support the Client with Project management and acting as a focal point for coordination between the Bank, MRTD and other relevant stakeholders. The assignment's cost is estimated at EUR 74,530, to be funded by the SSF.

Post Loan Signing

TC4: Project Implementation Support at the MRTD to support tenders and ensure appropriate contracting, plus implementation of an Environmental and Social Action Plan ("ESAP"). The assignment's cost is estimated at up to EUR 600,000, funded by the SSF.

TC5: Institutional Support TC. To provide legal and institutional support to improve road maintenance operations in the country. The components will include (i) designing a methodology to distribute funds for maintenance operations taking into account socio-economic needs, (ii) developing an audit function for the RFB and associated performance criteria, (iii) drafting the secondary legislation required for efficient implementation of Road Fund legislation, and (iv) developing MRTD's human capital. The assignment's cost is estimated up to EUR 499,178, funded by the SSF.

Company Contact Information

Bayanzul Luvsandonoi
bayanzul@mrtd.gov.mn
976-51263208
www.mrtd.gov.mn
MINISTRY OF ROADS AND TRANSPORT DEVELOPMENT Government Building 13, Chinggis Avenue 11, Sukhbaatar District 8, Ulaanbaatar , 14251, Mongolia

PSD last updated

23 Feb 2022

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.

 

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