MONGOLIA MONGOLIA Urban Sector Operation 4 June 2014 Tuul Badarch, Senior Project Officer (Infrastructure) Mongolia Resident Mission Asian Development Bank

Need for better strategic and long-term planning, infrastructure investment, financial sustainability of service provision, and land-use regulation Disparities in urban services: city core apartment areas vs. peripheral ger areas in Ulaanbaatar City Environmental degradation in ger areas: sanitation, air pollution, poor access to water, lack of waste collection, and aging facilities 2 Major Challenges in Urban Sector

 ADB’s operations support government initiatives including economic growth and social inclusion. Enhance basic urban service provision especially in water supply, wastewater, and heating Improve urban sector management that encourages physical and investment planning, and maintenance of the assets 3 Sector Objectives and Operational Priorities

ADB Sector experience ADB has been a leading agency in funding both technical assistance and loan projects in the urban sector with a primary objective of supporting the government in achieving the MDGs Since 1997, ADB had approved grant and loan-financed investment projects amounting to $92.1 million, one mulitranche financing facility of $163 million, 14 technical assistance projects amounting to $10.0 million. Two grants from the Japan Fund for Poverty Reduction amounting to $3.7 million for assisting ger areas and remote rural communities were also implemented. ADB’s urban sector program has sought to achieve (i) improved living conditions for the urban poor, (ii) improved access of the poor to basic services, (iii) better urban environmental conditions, and (iv) improved urban planning. 4

5 Active and Proposed Lending Program Project Name Amount ($ mil) Fund type Date of Approval Date of Closing ActiveL2301: Urban Development Sector (Original +Supplementary) 35.23ADFDec 2006 Nov 2009 Jul 2015 G0204: Southeast Gobi Urban and Border Town Development Project 15.00ADFApr 2010May 2015 G0380/L3098/L3099: Ulaanbaatar Urban Services and Ger Area Development Investment Program - Tranche UEIF/ ADF/ OCR Dec 2014Jun 2018 PipelineDarkhan Wastewater Management Improvement Project 18.00ADFSep 2014 Ulaanbaatar Urban Services and Ger Area Development Investment Program - Tranche 2 and ADF/ OCR TOTAL ADF = Asian Development Fund, MFF = multitranche financing facility, MNRM = Mongolia Resident Mission, OCR = ordinary capital resources, UEIF = Urban Environmental Infrastructure Fund, UFPF = Urban Financing Partnership Facility.

Key lessons from ADB’s prior support Institutional weakness is a key constrain; Local governments are unable to borrow from international financial institutions and other lenders limiting their access to funds for urban development; lack of project management and procurement capacity should be addressed during project preparation; short construction period needs to be a factor when the implementation schedule is formulated; projects have had only limited and variable success in raising tariffs for urban services, resulting in underfunding of operation and maintenance. 6

7 Potential Future Areas of Focus Support the government’s new priorities Strengthening of institutional capacity to undertake reforms urban sector Introduction of innovative and affordable technologies and mechanisms in urban infrastructure development

Thank You