Russia drafts deal on power sales to Mongolia

08 February 2018, Week 05, Issue 896

The Russian Energy Ministry is understood to have drafted an intergovernmental agreement on power supplies from Siberia to Mongolia.

Alexei Tsydenov, the governor of Russia’s border region of Buryatia, confirmed that the document had been prepared at a meeting of a commission on conservation of Lake Baikal last week. He said the move was a response to Mongolia’s plans to erect a cascade of hydroelectric dams along the main river leading into Baikal, which Moscow has warned could have dire ecological consequences for the lake.

Mongolia imports roughly a quarter of its electricity, while almost 95% of its domestic output is derived from fossil fuels, namely coal. The government wants to raise power output in a way that does not exacerbate already high pollution levels in the Mongolian capital Ulaanbaatar and other cities.

As such, it has mooted plans to build three mid-sized hydroelectric plants (HPPs) along the River Selenga and its tributaries, with capacities of 315 MW, 245 MW and 100 MW respectively. But Moscow has suggested that a cheaper solution to Mongolia’s energy dilemma would be increased power deliveries from existing HPPs in eastern Siberia.

According to Tsydenov, this option was discussed during a business conference on investment in Buryatia held in Ulaanbaatar last month.

“We have worked with the Mongolian side. To date, there is no written decision [on electricity supplies],” he said at the meeting on February 2. “But we have reached an understanding that alternative energy supplies by Russia would solve most of the problems that the Mongolian side hopes to solve with the construction of HPPs.”

Mongolia already buys some power from Russia, with deliveries rising 21.2% to 288,000 MWh in the first nine months of last year. Tsydenov noted that the new agreement envisaged a long-term contract for greater volumes at a tariff 3.5 times lower than the expected price of power from Mongolia’s proposed dams.

Russian power grid operator Rosseti has suggested that a 500-kV cross-border power link could be built to transmit these extra supplies at a cost of 55 billion rubles (US$972 million). The company’s former head, Oleg Budargin, said last year that Russia, Mongolia and also China could take part in financing the project. Mongolia sought a US$1 billion Chinese loan for its HPP plans in 2016, but Beijing backed out because of opposition from Moscow.

In a statement last week, Rosseti said its subsidiary, transmission system operator (TSO) Federal Grid Co. (FGC), had started preparing an initial feasibility study for a Russia-Mongolia power bridge. The study’s results are expected to be published in the second quarter of this year.

Joseph Murphy

Edited by

Joseph Murphy


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