Third Energy Sector Project

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The proposed project will consist of two components. Component 1: Transmission Line Construction and Aassociated Substations Expansion (in total US$ 45.84 million). This component will finance the construction of 188km one 220 kV double circuit transmission line and expansion of associated substations, which will strengthen the Mongolia core 220kV transmission system in the Central Energy System. The investment will enable the integration of large industrial loads as well as large-scale VREs to the Mongolia's national grid. The proposed project is a substantial part of a series of planned reinforcements of 220 kV transmission system running North-Southeast direction, which will enable the economic growth in South Govi region as well as attract private sector participation and investments in variable renewable (VRE) plants in the region. The existing Baganuur-Choir 220 kV line is only one circuit, which is insufficient to serve the rich potential of industrial load as well as the high wind and solar power resources in southeastern part of CES. This line will therefore, meet the following purposes: (i) increase the supply capacity of electricity; (ii) enhance renewable energy generation from the region; and (iii) improve system redundancy of the CES network. Component 2. Capacity Building and Implementation Support (US$ 1.16 million). This component will provide technical and operational assistance for: (a) strengthening the institutional and technical capacity, including in the areas of procurement and environmental and social policy, of MOE and relevant agencies; and (b) implementation support and project management, including financial management and disbursement, procurement, environmental and social risk and impact management, and monitoring, reporting and evaluation.