• IBEC and UBTZ discuss financial support for the development of transport infrastructure in Mongolia

IBEC and UBTZ discuss financial support for the development of transport infrastructure in Mongolia

Negotiations with the management of the Joint Stock Company Ulaanbaatar Railway (URTZ), one of the largest infrastructure companies in Mongolia, took place at the headquarters of International Bank for Economic Co-operation. The meeting was dedicated to the participation of IBEC in financing the investment program of modernization of the UBTZ, which was also attended by representatives of PwC, financial adviser of the UBTZ.

UBTZ JSC was established in 1949 on the basis of the Agreement between the governments of the USSR and the Mongolian People's Republic, being the only railway company in Mongolia. Today, the Russian Federation represented by Russian Railways OJSC and Mongolia represented by the Ministry of Transport, Roads and Development are equal shareholders of the company. The company is a strategic enterprise in Mongolia, it accounts for about 80% of the total domestic freight turnover and up to 100% of export-import traffic. In recent years, due to the recovery of regional economic ties, there has been a growth in freight traffic, which increased by 1.5 times from 2010 to 2018. According to forecasts of the company and experts involved, by 2030 the company's freight traffic could increase by the same amount and reach 33.5-38.6 million tons. The volume of international cargo should double.

At the same time, the current state of the UBTZ railway infrastructure and its throughput capacity are currently a key constraint to the growth of traffic. At the meeting at IBEC, the Chairman of the UBTZ Damdinsuren Jigjidnyamaa presented a long-term investment program in the total amount of up to EUR 200 million, which the company launched last year. The action plan provides for the phased modernization of track infrastructure and the renewal of the locomotive fleet through the purchase of products from Russian manufacturers.

As Denis Ivanov, the Chairman of the IBEC Board, said during the negotiations, the support of the investment program of the UBTZ fully meets the goals of the bank to support the development of foreign economic relations between the IBEC member states.

Currently, the Bank is considering the possibility of providing financing aimed at updating the locomotive fleet, acquiring modern on-board security systems, and introducing new traffic control systems. In particular, the program involves the purchase of the Russian-made trunk locomotives that not only meet modern environmental and safety requirements, but also are produced as part of the import substitution program in the Russian Federation.