Oyu Tolgoi Budget is Higher than Planned

The Standing Committee on Economy in parliament held an open forum to discuss operations at “Erdenes MGL”,LLC and “Erdenes OyuTolgoi”,LLC.

During the discussion Ya.Dolgorjav, executive director of “Erdenes MGL” LLC, D.Batbaatar, director of “Erdenes OyuTolgoi”LLC, and vice director G.Temuulen were questioned by MPs.

The MPs could not get the answers they wanted from them about related issues. The Minister for economic development, N.Batbayar stated “it is not because we do not have information; we want your presentation so that citizens will have the information. As Ya.Dolgorjav said,”Erdenes MGL”LLC transferred 1.7 billion MNT to the accounts of 1,700 citizens who preferred to have the cash of one million MNT instead of the 1,072 shares of the TavanTolgoi mining project. The Government had determined that 1,072 shares of the TavanTolgoimining project will be worth 1 million MNT. “Erdenes MGL” LLC has received applications from 1.5 million adults, 883 under age children, and 763,000 citizens who wanted to have the free 1,072 shares of TavanTolgoi.” MP N.Batbayar said that the OyuTolgoi budget exceeded what was first planned and it means that the Mongolian foreign debt has increased. There is still a pay difference between Mongolian and foreign staff members. He also wanted to know what problems might arise when OyuTolgoi production starts and he advised them to resolve power issues to avoid any furthers delays in the project. 

MP N.Batbayar questioned the advertisement that said Mongolians benefit 71 percent while investors earn 29 percent of OyuTolgoi. D.Batbaatar, director of “ErdenesOyuTolgoi” LLC replied to him “the OyuTolgoi project continues going well. Mongolians should be proud of it. It is true that the OyuTolgoi budget has exceeded plans and we will consider that. It is not good that the budget exceeded what was planned in the feasibility study and we will improve the feasibility study. A 2011 report by OyuTolgoi showed that the budget was exceeded by one billion and 50 million US dollar. MPs said that it is a serious problem. 

OyuTolgoi’s first production is supposed to start in the first quarter of 2013. The project was delayed because China was too stubborn about the power line agreement, supply, and ore price. Inner Mongolia insists on being the 100 percent importer for ore, but, Mongolia wants to supply 50 percent of the production to Bayannuur and other provinces of Inner Mongolia. Further, Mongolia is not supposed to buy power 100 percent from China. Vice director of “Erdenes OyuTolgoi” LLC G.Temuulen said the advertisement 71:29 indicates the best possible benefit for Mongolians and that Mongolia will benefit 59 percent from the project. He also said that 53 percent might be an asking price. D.Batbaatar, director of “Erdenes OyuTolgoi” LLC, said that the difference in salaries between Mongolian and foreign staff members is a company secret. However, there is a difference at levels. His answer was criticized by MP N.Batbayar. 

He said that it is wrong to cover anything as a company secret and that both Mongolian and foreign staff members should be paid equally. MP G.Bayarsaikhan noted that the OyuTolgoi advertisement 71:29 is a lie and false advertising should be forbidden. The reality is totally different and they should not foul Mongolians. He also warned that “herders are suffering from water shortages because underground water is disappearing. The project developers are illegally drawing the underground water under the name of water exploration. We should urgently implement a 57thprotocol by parliament.”

SOURCE OF THIS ARTICLE : News.mn

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