Provision of a loan of up to USD 175 million (EUR 156 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 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.
The project will contribute to the "integrated" quality through the provision of new infrastructure between Ulaanbaatar and Darkhan, which are currently inadequately connected. The investment will improve road conditions and increase road capacity, supporting regional development. The project will also explore the introduction of the quality "resilient" on the back of envisaged policy dialogue aimed at improving road maintenance operations and contributing to the sustainability of road financing.
EBRD Finance Summary
Total Project Cost
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 68 km to be widened adjacent to the existing road and the remaining 134 km to be offline from the existing road by approximately 16-18 m from the centreline of the existing road.
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 will be addressed in the road's final detailed design.
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 will produce 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 and Project Coordinator engaged by the EBRD.
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 on 24 July 2019 and is also available.
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.
The Project is expected to benefit from the following Technical Co-operation assignments:
Pre Loan Signing
TC 1: 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") and Shareholder Special Fund ("SSF").
- TC 2: 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, proposed to be funded by the SSF.
Post Loan Signing
TC 3: 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, proposed to be funded by the SSF.
- TC 4: Policy dialogue TC. To provide legal and institutional support to improve budgeting procedures for the Road Fund, to improve the secondary legislation required for implementation of Road Fund legislation, to design a methodology to distribute funds for maintenance operations taking into account socio-economic needs, strategic orientations and Road Asset Management System (RAMS) outputs, and to develop the MRTD's human capital. The assignment's cost is estimated up to EUR 500,000, proposed to be funded by the international donors or the SSF.
Company Contact Information
Ms. SUGARMAA Chadraabal, Mr. Ganbagana Bat-Ochir
MINISTRY OF ROADS AND TRANSPORT DEVELOPMENT Government Building-13, Chinggis
Avenue-11, Sukhbaatar District 8, Ulaanbaatar , 14251, Mongolia
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Tel: +44 20 7338 7168
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