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

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

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MONGOLIAUrban Sector Operation

4 June 2014

Tuul Badarch, Senior Project Officer (Infrastructure)Mongolia Resident MissionAsian Development Bank

1Need for better strategic and long-term planning, infrastructure investment, financial sustainability of service provision, and land-use regulationDisparities in urban services: city core apartment areas vs. peripheral ger areas in Ulaanbaatar CityEnvironmental degradation in ger areas: sanitation, air pollution, poor access to water, lack of waste collection, and aging facilities

2Major Challenges in Urban Sector

2ADBs operations support government initiatives including economic growth and social inclusion.

Enhance basic urban service provision especially in water supply, wastewater, and heatingImprove urban sector management that encourages physical and investment planning, and maintenance of the assets3Sector 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 $3.7 million for assisting ger areas and remote rural communities were also implemented. ADBs urban sector program has sought to achieve (i) improved living conditions for the urban poor, (ii) improved access of the poor to basic services, (iii) better urban environmental conditions, and (iv) improved urban planning. 45Active and Proposed Lending ProgramProject NameAmount ($ mil)Fund typeDate of ApprovalDate of ClosingActiveL2301: Urban Development Sector (Original +Supplementary)35.23ADFDec 2006Nov 2009Jul 2015G0204: Southeast Gobi Urban and Border Town Development Project 15.00ADFApr 2010May 2015G0380/L3098/L3099: Ulaanbaatar Urban Services and Ger Area Development Investment Program - Tranche 150.00UEIF/ADF/OCRDec 2014Jun 2018PipelineDarkhan Wastewater Management Improvement Project18.00ADFSep 2014

Ulaanbaatar Urban Services and Ger Area Development Investment Program - Tranche 2 and 3113.00ADF/OCR

TOTAL231.23ADF = 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.5Key lessons from ADBs prior supportInstitutional 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.

67Potential Future Areas of Focus Support the governments new prioritiesStrengthening of institutional capacity to undertake reforms urban sectorIntroduction of innovative and affordable technologies and mechanisms in urban infrastructure developmentThank You8