Ulaanbaatar /MONTSAME/. At its plenary session held on January 28, 2021, State Great Khural, parliament of Mongolia, approved amendments to the Banking Law of Mongolia. 90.9 percent of 55 members present at the meeting of the parliament’s autumn session voted in favor of the changes to the Banking Law.

Amendments to several laws, including the Law on Savings at Banks, Law on Central Bank, Banking Sector Stability Law and other regulations that accompany the amendments to the Banking Law were also approved at the parliament meeting.

Effective implementation of the latest amendments to the Banking Law will result in reducing the bank ownership concentration and ensure balance of ownership-management-control in the banking structure.

Risks associated with concentration on shareholders and executive management are expected to lower thanks to the amendments, and enhance public control and independence of banking supervision, bring more transparency and accountability with the help of public ownership in the banks.

In Mongolia, commercial banks’ ownership concentration is viewed as too high because up to 3 shareholders own more than 90 percent of total shares in commercial banks in the country. By the end of November 2020, total assets of the Mongolian banking sector were estimated at MNT 35.8 trillion and around 90 percent of them are public and over 10 percent are owned by bank shareholders, entailing the improvement of governance in the banking sector and strengthening of banks’ transparency.

According to the Bank of Mongolia - the central bank, the following four main principles were abided when developing amendments to the Banking Law:

Banks will be made publicly traded. There are a total of 12 banks operating within the country’s banking sector and 5 of them are considered as systemically influential or important. In compliance with the amendments, the five influential banks will have to transform into a public company through an initial public offering on stock market before June 30, 2022. Other banks can go public or remain as privately held company at their own discretion.

Ownership concentration will be reduced. The revised law allows each shareholder and their associates to own not more than 20 percent of total shares issued by a commercial bank. All banks in the country must fulfil this obligation before December 31, 2023.

The law amendments also provide provisions to make sure that the order for debt settlement are better delineated and the rights of bank customers are protected when banks go into liquidation. Citizens and household families who are deposit account holders in a liquidated bank get first priority to receive their money before the legal entities.

Characterizations of influential banks in the banking system are described in more details in the revised law. As per the Banking Sector Stability Law, an influential bank is defined as a bank which accounts for more than 5 percent in the total banking system in terms of assets. Now, the amendments rule that the banks’ influence is determined on the basis of their assets, their percentage in the transaction flow in the payment system, core activities, the state of their relevance, the number of their customers and other features, instead of their share in the banking system only.

As the banks now stand in need to be listed on stock market, more complex criteria will be laid down on their transparency, capital and earnings as well as corporate governance to conform to the revised Banking Law, reports the central bank.

Ulaanbaatar /MONTSAME/. It was reported during the press conference of the Bank of Mongolia held on January 29 that the total outstanding loans reached MNT 17 trillion as of the end of last year.

Of the total outstanding loans, MNT 8.5 trillion were individuals’ loans, while MNT 7.9 trillion were corporate loans. 11.8 percent of total loans were overdue and 7.4 percent were non-performing loans.

On February 1, 2021, Oyu Tolgoi released its latest performance scorecard, highlighting key 2020 performance metrics, providing an update on the underground development, and its ongoing COVID-19 mitigation measures. The updated 2020 Performance Scorecard can be viewed here.

Oyu Tolgoi has contributed US$11.6 billion of in-country spend between 2010 and 2020, and paid US$294 million in taxes, fees and other payments in 2020. Since 2010, Oyu Tolgoi has paid US$2.9 billion in taxes, fees and other payments, including VAT to Mongolian suppliers.

Oyu Tolgoi chief executive officer, Armando Torres, said, “Oyu Tolgoi has delivered strong results in 2020, building on a solid safety, environmental, and operational performance. We have also advanced the underground mine development, and exceeded our copper and gold production guidance. All these results were achieved while managing the challenging market conditions and COVID-19 pandemic. Oyu Tolgoi is proud to deliver these achievements together with our employees, communities, contractors, suppliers and shareholders”.

In 2019, Oyu Tolgoi’s open pit operations continued uninterrupted and partnered with 770 suppliers in 2020, including 499 national businesses, accounting for 72 per cent of the total operations procurement spend. The company maintained excellent water-conservation practices, achieving the highest water use efficiency rates per tonne of ore production, using 0.37 cubic meters of raw water per tonne of ore processed compared to our target of 0.55 cubic meters. Achieved an average water-recycling rate of 87.7 per cent, compared to a target of 80 per cent.

The underground lateral development has now reached 53,000 equivalent metres (eqm), with development for the first drawbell substantially complete. The project has now exceeded one million tonnes of material moved through Shaft 2 since commissioning. Scheduled annual maintenance of the shaft was successfully completed in October using remote technology.

Shaft 4 is now out of care and maintenance and the focus is on completing all construction and commissioning activities for load testing and verification, and for sinking to commence in early 2021. Shaft 3 remains on care and maintenance, with some minor construction.

On 16 December, Rio Tinto confirmed the definitive cost and schedule estimate for Panel 0 with first sustainable production expected to commence in October 2022, and development capital of US$6.75 billion, in line with previously announced ranges. At peak production, Oyu Tolgoi is expected to operate in the first quartile of the copper cash cost curve and, by 2030, is expected to be the fourth largest copper mine in the world.

It is expected to produce 480,000 tonnes of copper per year on average, from 2028 to 2036, from the open pit and underground. The underground Ore Reserve has an average copper grade of 1.52 per cent, which is more than three times higher than the open pit Ore Reserve, and contains 0.31 grammes of gold per tonne.

Rio Tinto reported it has been engaging with the Government and Turquoise Hill Resources (TRQ) in good faith on items raised in Resolution 92 passed by the Mongolian Parliament in December 2019, and remains open to improving the UDP to increase the benefits of Oyu Tolgoi for all shareholders.

In accordance with Mongolian regulation, the Government of Mongolia is required to review and register the updated Resources and Reserves submitted in February 2020, and accept the updated feasibility study (OTFS20) completed in July 2020.

The OTFS20, together with the updated definitive estimate, forms the basis for the uplift in the overall project budget that requires approval from all shareholder representatives on the Oyu Tolgoi Board prior to the depletion of the previous budget and the under-cut decision.

Rio Tinto reported it remains committed to implementation of the funding plan in the Memorandum of Understanding (MOU) agreed with TRQ in September 2020.

All parties continue to work together to achieve key power milestones including an extension of existing power supply arrangements by 1 March 2021, and the signing of a power purchase agreement (PPA) with the state-owned power company for domestic power supply by 31 March 2021. In October 2020, the Mongolian Ministry of Energy (MoE) established a Working Group to negotiate the PPA with Oyu Tolgoi, who will continue to work with the government and the MoE Working Group to agree on an outcome that will ensure secure, stable and reliable long-term power supply to the mine.

To see more details on the operational and production and underground development update, production data and other timely updates, visit Oyu Tolgoi's webpage here.

While the resignation of Khurelsukh’s cabinet on January 21st in response to anti-government protests elicited cheers from some commentators, more seasoned watchers of Mongolian politics read it as a “grand accountability gesture” to kick off a presidential campaign. Khurelsukh’s parting comments, in which he blamed President Kh.Battulga for inciting the protesters, give credence to this interpretation of events.

The stage now appears set for a showdown between Mongolia’s two most powerful politicians in June’s presidential elections, provided that Battulga can find a way to circumvent the one-term limit to presidential terms introduced by 2019’s constitutional amendments (something analysts believe he is likely to achieve) and see off other challengers from the faction-riven Democratic Party (DP). Khurelsukh, who remains chair of the Mongolian People’s Party (MPP), is favored to secure his party’s nomination.

The stage now appears set for a showdown between Mongolia’s two most powerful politicians in June’s presidential elections, provided that Battulga can find a way to circumvent the one-term limit to presidential terms introduced by 2019’s constitutional amendments (something analysts believe he is likely to achieve) and see off other challengers from the faction-riven Democratic Party (DP).

Khurelsukh, who remains chair of the Mongolian People’s Party (MPP), is favored to secure his party’s nomination.

Most concerning about this coming confrontation is the credible evidence that both men have amassed power through the use of anti-corruption investigations against political opponents. While this is by no means a new phenomenon in Mongolian politics, the increased weaponization of Mongolia’s Independent Authority Against Corruption (IAAC) and its judiciary are amplifying cycles of political retribution. The emergence of a winner-take-all style of politics in Mongolia and the continued erosion of rule of law bode ill for the future of the country’s democracy.

The rise of “anti-corruption” populists

Like many of its post-socialist peers, Mongolia suffers badly from corruption, which can be traced to the imposition almost overnight of market capitalism in the 1990s without the legal or social institutions to stop those with access to political and economic resources from rigging the system in their favor.

In many ways, Mongolia’s experience was similar to other post-socialist nations: the plundering of state assets and consequent concentration of wealth (and, with it, political power) during the “wild nineties” gave rise to patronage networks in government that do not serve the public interest.

And yet, Mongolia’s vibrant civil society, its largely free media, and its enshrinement of democratic norms have prevented it from being warped into the sort of illiberal, ersatz democracy common to large swathes of Eurasia.

However, the guardrails around Mongolian democracy are showing signs of severe wear.

The country’s failure to diversify its economy away from mining has shackled it to boom-bust commodity cycles that fuel inequality and undermine social cohesion.

Officials’ embezzlement of funds meant for small businesses (the SME Fund scandal) and the brazen attempt by proxies of the Trade & Development Bank to acquire 49% of the Erdenet copper mine with funds loaned from state coffers have been painful reminders of the country’s lack of progress in fighting corruption.

Oligarchic control of major media outlets has meant that the public is bombarded with sensationalist reporting about politicians and celebrities, while the much-needed work of independent investigative journalists necessary to hold the powerful to account is silenced or goes undone.

Desperate for solutions, Mongolians appear to have opted for a shortcut: the leadership of two populist politicians who, despite their own personal wealth, have each promised to rid the country of its corrupt elite in exchange for unchecked power.

Under the pretext of cleaning up corruption in the MPP, Khurelsukh in 2019 garnered enough support in parliament to remove then-speaker M.Enkhbold, setting in motion his own ascendence to party chair.

Soon after, corruption cases were opened against two other MPP heavyweights: N.Nomtoibayar and former prime minister J.Erdenebat, who were subsequently sentenced to lengthy prison terms. (Erdenebat’s case was recently returned to the prosecution.)

Battulga has been equally aggressive in sidelining opponents within his own DP. For the past few years, former president Elbegdorj has been under investigation for his role in the aforementioned Erdenet deal, as well as decisions around the Tavan Tolgoi coal mine.

Former prime minister Ch.Saikhanbileg, the architect of the so-called Dubai Agreement that allowed the underground phase of the Oyu Tolgoi mine to move forward, fled the country following his initial arrest in April 2018. Now a vocal critic of Battulga, Saikhanbileg is believed to be hiding in the U.S. In September, Mongolia’s prosecutor general announced that the government was seeking his extradition.

Two of the Dubai Agreement’s Mongolian signatories, B.Byambasaikhan and Da.Ganbold, have been sentenced to multi-year prison terms on the grounds that they failed to satisfactorily represent the commercial interests of the state and therefore deprived Mongolia of tax revenues.

The curious Batbold case

On November 23rd 2020—the eve of the Thanksgiving holiday in the U.S.—a case was filed in the Supreme Court of the State of New York by the law firm King & Spalding on behalf of Mongolia’s state-owned enterprises against the former prime minister Su.Batbold, members of Batbold’s family, and individuals alleged to be Batbold’s proxies in business dealings.

The plaintiff’s case was built largely on a highly detailed investigative report by the firm K2 Intelligence (now K2 Integrity). Alleging embezzlement and corruption relating to Erdenet and the commencement of Oyu Tolgoi’s development, it makes for a highly engrossing reading.

But not long after the case was filed, it was quietly dropped by the plaintiffs. Just prior to that, the defense’s attorney submitted a letter asserting that all three heads of the state-owned entities that were the case’s supposed plaintiffs had “confirmed that they neither authorized nor requested the filing of this action”.

The letter also obliquely speculated that the case had been initiated by the president’s office to sully the reputation of the former prime minister, who is “likely one of the [MPP’s] candidates for Mongolian President in 2021.”

The Batbold case is potentially significant for at least three reasons. First, it may or may not be entirely about Batbold: the timing of the allegations does point to a deliberate effort to smear a political rival ahead of this summer’s presidential race. But the inclusion of Oyu Tolgoi appears to be yet another attempt to undermine the legitimacy of the project’s legal foundation at a time when relations between the government and OT investors are problematic.

Second, as some observers have speculated, the negative reputational fallout may end up changing Batbold’s political calculus, encouraging him to throw his support behind Khurelsukh.

Finally, it represents a rare instance of Mongolia’s government using international courts to combat corruption, or—if the defense is to be believed—to harass political opponents.

What’s next, and what’s after that

Should a clash between Khurelsukh and Battulga indeed be on the cards, perhaps the most interesting aspect of the contest will be how each of the two men defines themselves in contrast to the other.

While the two have been rivals for some time, they have also declined to interfere as the other stripped rivals of power and influence. Differences may well come down to matters of style.

But the true test of Mongolian democracy will not come in June, but rather in the months that follow. Should Battulga prevail, he will still have to contend with an MPP-controlled parliament that, at the time of writing, is attempting to wrest control of the IAAC from the president’s office. That is probably of little comfort to Battulga’s DP adversaries, who would still be unlikely to see relief from further corruption investigations.

A Khurelsukh victory is a different matter, as it would give the MPP control of all levers of state power. Shortly before winning the presidency in 2017, Battulga and his associates were under investigation for misappropriation of funds from the Tavan Tolgoi railway.

It is not hard to imagine that this investigation will be reopened should Battulga lose. One can therefore reasonably expect him to approach the presidential race as an all-or-nothing contest—a dangerous prospect for the health of a country’s democracy.

Khurelsukh and Battulga each appear to be locked into their respective trajectories. It is perhaps too much to expect either of them to do anything but engage in rounds of escalating hostilities.

There is no telling how much further damage the country’s already-battered reputation will suffer among international investors as Oyu Tolgoi is again rhetorically taken hostage for the sake of political theater.

Perhaps this confrontation will not come to pass. Maybe—just maybe—Mongolians will reject all of this tough-guy posturing and elect former Culture Minister and MP Ts.Oyungerel as their country’s first female president (a highly unlikely scenario judging from the current environment).

Or perhaps the incoming government led by L.Oyun-Erdene will break with tradition by toning down the tired political stunts, articulating a coherent, farsighted agenda, and actually delivering on their promises.

But no matter what, there is still much hard work left to be done when it comes to combatting corruption in Mongolia, and it is too important to be left to politicians.

If the country is to sustainably grow its economy and ensure the survival of liberal democracy within its borders—an outcome its authoritarian neighbors will not encourage and may well seek to undermine—citizens need to demand elected officials put an end to politicized corruption investigations, declare a renewed commitment to rule of law, and pledge to restore the independence of the judiciary laid out in Article 49.1 of the Constitution of Mongolia.

Entrusting the law to any one party or person in a bid to salve the wounds of a country is a devil’s bargain.

BY: Jake Hartnett is an investment analyst and economic consultant based in Ulaanbaatar.

One year after the divorce with the EU, Britain announced plans to join one of the world’s largest free trade agreements. Known as the CPTPP, the deal includes 11 developed and emerging economies around the Pacific Rim.

The British government announced on Sunday its intention to formally apply to become a part of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). UK International Trade Secretary Liz Truss will discuss Britain’s intention with ministers in Japan and New Zealand, which are parties to the pact, on Monday, while formal talks are set to start this year.

UK strikes first major post-Brexit free trade deal with Japan

The trade pact stems from the Trans-Pacific Partnership agreement, talks of which were abandoned by the US. CPTPP members include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam, which together account for about 13 percent the world’s income.

According to the British government, the annual volume of trade between the UK and the members of the group grew by eight percent since 2016 to £111 billion (over $152 billion) in 2020. London says that that domestic manufacturers, including food and drink producers, as well as the automotive industry, will benefit from the deal, but the UK won’t have to cede control of its laws, borders, and money like under EU membership.

“One year after our departure from the EU we are forging new partnerships that will bring enormous economic benefits for the people of Britain,” Prime Minister Boris Johnson said. He noted that the UK will be the first nation to officially apply to join the agreement since it came into force in 2018, which “demonstrates our ambition to do business on the best terms” with partners across the globe.

While the intention was also welcomed by business groups, it still drew criticism. Labour’s trade policy chief, Emily Thornberry, said the UK’s “big decision” on membership in the mammoth agreement comes shortly after the country finally left a trade bloc with our closest neighbors, “only to join another one on the other side of the world with no public debate at all.” She called on the government to open public consultation on the matter, as most people even don’t know what the pact is.

The final stretch of a cross-border fiber optic cable is set to be laid by China in Pakistan to create the Digital Silk Road (DSR), Nikkei Asia reports. The DSR is part of the broader Chinese Belt and Road Initiative (BRI).

The fiber cable will link to the Pakistan East Africa Connecting Europe (PEACE) submarine cable in the Arabian Sea, to service countries participating in BRI, and Europe. It is currently being laid between Pakistan’s Rawalpindi city and the port cities of Karachi and Gwadar. The $240-million project, which is in partnership with China's Huawei Technologies, was approved by the government last week.

The laying of sea cable in Pakistan's territorial waters will begin in March, following government approval this month for Cybernet, a local internet service provider, to construct an Arabian Sea landing station in Karachi.

The Mediterranean section of the cable is already being laid, and runs from Egypt to France. The 15,000 kilometer-long cable is expected to go into service later this year.

The PEACE cable will provide the shortest direct internet route between participating countries, and will drastically reduce internet data transfer speeds. It is expected to help reduce Pakistan's exposure to internet outages from damaged submarine cables by providing an additional route for internet connectivity.

According to Eyck Freymann, author of ‘One Belt One Road: Chinese Power Meets the World,’ the BRI is evolving to place less emphasis on traditional heavy infrastructure, and more on high-tech cooperation and digital services.

He told Nikkei Asia that "Beijing wants to dominate the physical infrastructure underlying global communications, particularly the internet,” adding: "This will give it an advantage in internationalizing its tech sector and pursuing future tech-related deals with partner countries."

The ambitious multi-trillion-dollar BRI initiative (or the new Silk Road), announced by Chinese President Xi Jinping in 2013, aims to boost connectivity and cooperation between East Asia, Europe, and East Africa. It is expected to significantly boost global trade, cutting trading costs in half for the countries involved, according to expert estimates.

Mongolia added 37 more COVID-19 cases in the past 24 hours after 11,202 tests were conducted nationwide, bringing its caseload to 1,779, the National Center for Communicable Diseases (NCCD) said Sunday.

The new cases were locally transmitted or reported in the country's capital Ulan Bator, Amarjargal Ambaselmaa, head of the NCCD's surveillance department, told a press conference.

Meanwhile, 12 more patients have recovered from the disease, taking the total to 1,333.

The Asian country, with a population of around 3.3 million, has recorded two COVID-19-related deaths so far. Enditem

Ulaanbaatar /MONTSAME/ Ministers of the new cabinet have been just appointed by taking the oath of office to the parliament, after Prime Minister L.Oyun-Erdene issued the ordinance on the appointments. The Steering Committee of the ruling Mongolian People’s Party earlier today, January 29, approved the list of nominees for cabinet ministers, who were then presented to the President and the Parliament by the recently appointed Prime Minister L.Oyun-Erdene.

Eight of the 16 cabinet members namely, S.Amarsaikhan, Ts.Nyamdorj, B.Battsetseg, B.Javkhlan, L.Enkh-Amgalan, S.Enkhbold, N.Urtnasan, and Ch.Nomin have been newly appointed, while the rest who had been ministers of the previous government have been reappointed.

Newly appointed cabinet members:

Deputy Prime Minister – MP S.Amarsaikhan

Head of Cabinet Secretariat – Ts.Nyamdorj

Minister of Environment and Tourism – N.Urtnasan

Minister of Finance – MP B.Javkhlan

Minister of Foreign Affairs – B.Battsetseg

Minister of Culture – Ch.Nomin

Minister of Health – S.Enkhbold

Minister of Education and Science - MP L.Enkh-Amgalan

Reappointed cabinet members:

Minister of Justice and Internal Affairs - MP Kh.Nyambaatar

Minister of Labor and Social Protection - A.Ariunzaya

Minister of Construction and Urban Development - B.Munkhbaatar

Minister of Defense – G.Saikhanbayar

Minister of Road and Transport Development - L.Khaltar

Minister Mining and Heavy Industry - G.Yondon

Minister of Food, Agriculture and Light Industry - Z.Mendsaikhan

Minister of Energy - N.Tavinbekh

In accordance with the amendments to the Constitution of Mongolia, which were adopted on November 14, 2019, Prime Minister appoints ministers of the cabinet. Therefore, no voting has been conducted at the plenary session of the parliament.

It is noteworthy that half of the previous cabinet members have been reappointed and the new cabinet, for the first time has four women ministers, of which 3 have been newly appointed. Moreover, Ts.Nyamdorj, who served as the Minister of Justice and Internal Affairs for many years, has been appointed as the Chief of Cabinet Secretariat.

The appointments were made in light of the professional qualifications of the nominees. The Steering Committee of the Mongolian People’s Party concluded that certain ministers of the previous cabinet had to be reappointed as it had been stated that the new cabinet would continue with the major railroad, mining, and oil refinery projects launched by the previous cabinet of former Prime Minister U.Khurelsukh and that it is important to make balanced appointments rather than appointing only new faces at this critical time when the country is fighting COVID-19 outbreaks and facing economic challenges.

Ulaanbaatar /MONTSAME/. As part of the Utility Operations Sub-activity of the Bulk Water Supply Project under the Mongolian Water Compact, operations of Ulaanbaatar Water Supply and Sewerage Authority (USUG) and Ulaanbaatar Housing and Public Utilities Authority (OSNAAUG) was evaluated by the AquaRating. It is an international assessment and benchmarking tool for utility operations developed by the International Water Association (IWA). USUG and OSNAAUG AquaRating Certification Workshop was held virtually on January 26 and 27, 2021, respectfully.

The First Deputy Governor of the Capital city J.Sandagsuren, General Manager of Ulaanbaatar City and Head of the Governor's Office T.Gantumur, Head of USUG Ts.Turkhuu, Ambassador Extraordinary and Plenipotentiary of the United States of America to Mongolia Michael S. Klecheski, MCC Resident Country Director Alex Russin, Deputy Resident Country Director Eric Guetschoff, MCA-Mongolia Deputy Chief Executive Director S. Zorigt, and other officials participated in the event. IWA AquaRating Manager Kizito Masinde, co-author of AquaRating Francisco Cubillo and MCA-Mongolia Water Sector Sustainability Activity Director L.Unurjargal co-facilitated the virtual event and the certification ceremony.

In his opening remarks, Ambassador Michael Klecheski said he is delighted to be taking part in this important event and noted that “This performance assessment utilizing the AquaRating system lays a foundation for strengthening the operational and financial sustainability of water utilities”.

“I want to highlight here the $350 million MCC program among all of the other ongoing projects, which will change life in Ulaanbaatar a lot and contribute significantly to social and economic development of the Capital city of Mongolia. An important thing I should mention here is that this is a grant, but not a loan. The second thing is local ownership, which means a MCC provides an opportunity for grant receiving countries to make proposals about what to do with this grant for supporting their economic growth,” the Ambassador said.

“The MCC Compact is, first of all, funding major infrastructure projects, including the construction of new wellfields and two large plants, including Advanced Water Purification Plant and Wastewater Recycling Plant. In addition, the Compact will invest in policy measures to create a financially and environmentally sustainable future for the water sector of Ulaanbaatar. In other words, not just the major infrastructure improvement to the Ulaanbaatar water sector, it will bring good governance and best management practices into Mongolia. Today's event testifies to the fact that all this is happening from the beginning.”

Then, Ambassador Michael Klecheski presented the organization certificate of AquaRating assessment to Head of USUG Ts.Turkhuu.

Mr. Ts.Turkhuu, in his closing remarks, stated that “Over one year time starting from 2019, we worked quite intensively on this AquaRating exercise. And we are glad to receive this certificate today after all. It is essential for us to work according to certain standards. We have a noble responsibility to support the health and hygiene of our citizens by providing water services. Therefore, we will continue to work hard to take the quality and standards of our operations and services to a higher level and to bring them in line with international standards.”

MCA-Mongolia Deputy Chief Executive Director S.Zorigt extended his gratitude to all those who have contributed in this important and time-consuming work in the past two years and underlined that the current assessment rate UGUG has been obtained is quite close to the average rates of similar water utilities from the other countries. He also said that the MCA-Mongolia will continue to work together with USUG and U.S Embassy to Ulaanbaatar to improve the sustainability of the water sector based on this assessment.

Following the certification ceremony, the AquaRating assessment report was presented in detail to USUG management, engineers and technicians.

The AquaRating, a system based on an international standard for the evaluation and improvement of water and sanitation utilities, evaluates and analyzes the water and sanitation services in an integrated way through several assessment elements organized in eight operational areas, identifies areas for further improvement and provide support during the improvement process as briefed by Mr. Kizito Masinde.

As a part of the Utility Operations Sub-activity of the Bulk Water Supply Project under the Mongolian Water Compact, AquaRating performance assessment to operations of USUG and OSNAAUG started in May 2019. An internal audit was conducted in the first quarter of 2020, followed by an external audit from the IWA in the third quarter of 2020. An evaluation report was prepared in the fourth quarter of 2020.

Based on the assessment results, a comprehensive plan for further improvement will be developed and implemented, including a comprehensive partnership between USUG and an experienced water utility from a developed country that operates in similar conditions or deals with similar concerns.

The validity of the certification will last until 2024 and by then another assessment will be done.

Background

Millennium Challenge Account - Mongolia is a state-owned enterprise established by the decision of the Government of Mongolia on October 3, 2018, pursuant to Government Resolution No 297 in accordance with Section 3.2 of the Compact to implement the Program under the 350 million USD Mongolia Water Compact signed with the Millennium Challenge Corporation, a U.S. government foreign aid agency.