E. Bolormaa: our goal is to become an economically independent aimag

The Mongolian Mining Journal /Feb.2023/

Interviewed by J. Saruul

E. Bolormaa, Governor of Khovd aimag, discussed local development issues, challenges, solutions, and planned activities.

What is the current situation and future plans for energy supply in the western region?

     Khovd is an aimag with abundant resources of renewable energy. For example, Khovd has two energy sources: the Durgun hydropower plant (HPP) and the Myangad solar power plant. The construction of the Erdeneburen HPP is currently being discussed at the government level and is expected to begin soon. The Durgun hydropower plant has a capacity of 9 MW. The capacity of the solar power plant in Myangad is 10 MW. Together, the two plants produce a total of 19 MW of electricity. The annual consumption of the Khovd aimag is 17 MW on average. However, since these investments and construction works are financed from the state budget, we have to supply the energy we generate to the power system of the western region and share the losses and profits.

    The Western Regional Power System receives power from China and Russia. The cost of electricity from Russia is 204.9 MNT, and 286.8 MNT from China. But the average price of electricity for households is 172 MNT. The difference or deficit is covered by budget subsidies of about 23 billion MNT. Thus, the real cost of electricity is 322 MNT. Our country imports more than 20% of its total electricity needs from Russia. To increase our economic benefit, we must supply 100% of our energy from domestic sources.

What is the progress onconstruction of the hydropower plant in Erdeneburen soum? How long will it take to gointo operation?

    One of the major projects under the New Revival Policy is the Erdeneburen hydropower plant. When this becomes operational, all the aimags of the western region will be connected reliable energy and we willachieve energy independence. The project will be implemented over five years and is expected to be a major strategic development to provide the western region with a reliable source of electricity.

What is the strategy for the mining industry under the New Revival Policy?

    The New Revival Policy does not specifically focus on the mining industry. Overall, it seeks to expand the economy by supporting recovery and developing border crossings. Achieving energy independence is one of the key strategies of western aimags under this New Revival Policy. Our aimag has many advantages as a western regional center. Khovd aimag can become the center for regional development in the border area. For example, our aimag is strategically located in the Altai region, which can influence the regional development of four countries: Russia, China, Kazakhstan, and Mongolia.

    Compared to other aimags, Khovd has a well-developed infrastructure. It is the vertical axis highway hub. There is need to strengthen the capacity of the border crossing point to develop international transit traffic and cross-border tourism in the region. The National Council of Border Checkpoints recently discussed and supported the expansion of the Bulgan border crossing.

    Bulgan is one of the main international export-import border crossing points. This has important impact on the livelihood of the local population. Last year, Bulgan handled 4% of Mongolia’s total cargo turnover. In addition, the crossing point collected 66 billion MNT in tax revenues for the state budget last year. In recent years, due to the Covid pandemic, only exports and imports of goods took place.

    However, as the pandemic situation improves, border traffic is expected to increase. It is necessary to expand the capacity of the border checkpoint for the development of international transit traffic and cross-border tourism in the region. That includes working on weekends. The issue of Bulgan’s expansion was discussed last November at a meeting with the governor of the Altai province of Xinjiang Uygur Autonomous Region of China, Jenis Hadis, and representatives of other relevant agencies. I am grateful that this matter will be resolved at government level. Expanding the capacity of the Bulgan checkpoint will make an important contribution to the economic growth of the country and region.

Khovd is one of the aimags where mining activity has been relatively stable. What do you think are the main mining sector policies in your aimag?

   Mining activities in any country must be conducted in accordance with prevailing laws and standards. I believe that no matter who is in charge of the aimag, it should be governed by the same rules, procedures, and policies. I believe that responsible mining is very important. In addition, I would like to emphasize that it is important that mining contributes to the development of the aimag and the region, does not have a negative impact on the environment, and is accepted by local residents. Minerals are a non[1]renewable resource. Therefore, the benefits of mining must be accessible to the population and contribute to the longer-term development of the country.

   Since taking office, I have changed the operating procedures of the Khushuut Development Fund and, together with the aimag Citizens Representative Khural decided to keep the fund’s capital in the Local Development Fund (LDF), to spend in accordance with LDF rules. I also made sure that coal at a discounted price, which had been provided to residents of affected soums, was distributed equally among all soums of the aimag, and the amount of coal increased. For example, it was decided to distribute 2 tons of coal to each household living in the urban center and 1 ton of coal to the households of shepherds. Previously, coal was delivered only to the households of a few affected soums and the aimag center.

Khovd aimag budget receives subsidies from the state. How are you going to form the budget of your aimag in the future?

   The goal of the aimag governor’s action program is to achieve economic independence. Our aimag is almost ready to meet these criteria. We are trying to achieve this goal next year. According to a government decree, incentives have been given to the five or six aimags that form their budgets. This is seen as a kind of motivation. We must attract businesses and investors to our aimag. An environment for investment must be created for them.

   The government has reduced mortgage interest rates, approved tax incentives for businesses, and is providing practical support at the policy level in rural areas. But we, the aimags, are responsible for implementing these decisions on the ground. In this context, we organized the “Invest Khovd” conference in our aimag this January. Many new activities are planned. One of them is the creation of a “one-stop shop” for investors and entrepreneurs. We are focusing on providing opportunities for anyone to come, live and do business in Khovd. The center will be open shortly.

What are the other major results of this investment conference?

   It is currently too early to talk about results. However, during the investment conference, large Mongolian enterprises and investors who came to Khovd aimag stated that they would invest in Khovd as follows:

• Mobicom will create 40 jobs and open a customer service center or Call Center in Khovd aimag
• Nomin Holding is investing MNT 8 billion in Khovd aimag this year and will build a shopping center with a warehouse six times larger than the current one. They will also buy vegetables directly from local farmers and sell them through their chain stores.
• Aero Mongolia LL has announced that it can take over the management of Khovd airport.
• Trade and Development Bank will establish its first western regional branch in Khovd aimag
• Mongol Post JSC announced that it is preparing to establish a logistics center for the western region in Khovd aimag.

  The direct results of the investment conference include the issuance of the first local bond to support the market sector. There are other long-term results as well. Thus, the two-day forum did not just talk about the Khovd aimag issues but discussed rural revival and development under the New Revival Policy.

What tasks are you focusing on now to solve the problems of the aimag?

  We are focusing on further improving the heat supply, urban landscaping, and the activities of homeowners’ associations, the most criticized by citizens. We will also work to resolve land distribution issues, establish justice, improve government productivity, and improve the quality of life for citizens at the aimag, soum, and bagh levels. Overall, the planned activities and key issues to be addressed are consistent with the policies of the New Revival Policy. When I came to this job, my priority was preparedness for winter.

  We faced many pressing issues, such as preparing the livestock sector and urban areas for winter. As a result of thorough research and identification of key issues related to winter preparation with stakeholders, we were able to get support from the State Emergency Commission and the government. This winter, I visited all soums 2-3 times each and talked to the herders. Now the biggest challenge is to overcome this spring with as little damage as possible.

  Another important problem for herders was the sale of livestock and meat. This year, for the first time, meat sales were organized without budgetary support in cooperation with commercial banks and licensed local meat businesses. This event had some impact on increasing livestock and meat sales and maintaining a stable meat price. In the future, we plan to address this problem early, at a critical time for the market, and seek to export livestock and meat to neighboring countries.