Mongolia signs PPA for $1.5bn CHP plant with Engie-led consortium

The Mongolian Government has signed a Power Purchase Agreement (PPA) for the power generated by the 450 MW electricity, 587 MW heat CHP 5 project owned by an Engie-led consortium.

Under the agreement, the project's development concession agreement holders, Engie (30%), Sojitz Corp (30%), POSCO Energy (30%) and Newcom Group (10%), will sell the plant's electricity and power at US$7 cents/kWh to the Mongolian Government for a period of 25 years.

With the agreement now signed, the consortium can move forward and seek financing for the project, which has a total investment cost of roughly US$1.5 billion.

To be located in Khuliin Valley, east of Ulaanbaatar city, the CHP 5 project is the first Public Private Partnership (PPP) in Mongolia, with a concession agreement duration of 25 years.

3 double combustion coal-fired stoves with a capacity of 150 MW each will be installed, giving the plant a total generating capacity of 450 MW electricity and 587 MW heat.

Construction of the site will commence in 2016 and is expected to take 4-5 years. Operation is scheduled for 2020.

D. Gankhuyag, Director of Energy and Infrastructure at Newcom Group, has commented:

"The successful implementation of the project requires signing of 4-5 important agreements. Today we have managed to sign the most important agreement of energy purchase with the Mongolian Government, which can can be said as 70 percent of the paper work has been done."

"Next step will be the agreement on heat supply, which is at its final stages. Coal and water agreement are in the negotiation stage and advancing quickly."

If the plant is built, the Mongolian Government will be responsible for the construction of the support infrastructure including railroads and transmission lines. Energy resources for the project will be sourced from the Shivee-Ovoo and Baganuur coal deposits.