The Government of Mongolia has established a Road Development Plan for 2012-2016 to connect all major cities and towns to the capital by paved road; meaning nearly 5000km of road and an investment of 1.2 billion dollars. In your opinion, what are the main economic and social benefits of this ambitious project?
Mongolia’s populations consist mainly in nomads and live stock herders who are spread out in the whole territory of the country. Thus, the main objective of the current project, implemented by the current Government is to connect the two Mongolia’s: the rural, traditional, one with the urban one.
Its realization began this year and the current Government, also called as the Reform Government, pays specific attention to its implementation and it strives to connect 6 provincial centers with Ulaanbaatar through paved freeways just within in 2013. In the framework of this project the Government has started to cooperate with 9 road construction companies since spring of this year. There were some complications with the project financing, but thanks to the successful trade of State owned Chinggis Bonds and efficient disbursement of funded capital the project was able to be financed. At the moment, from 3 to 4 provincial towns are ready to be connected with Ulaanbaatar, and this fantastic project has just began.
With development of the roads comes also the development of the infrastructure. In this relation, the construction of roads is the number one objective for Mongolia’s economy and infrastructure. I want to say it again – the current Reform Government has included this project in its Master Plan and, as road constructors, we are very happy about its successful realization.
At this point, I would like to introduce you a little bit about our company. Based on the direct agreement concluded this year with the Government of Mongolia our company was selected as contractor to build the paved road between Undurkhaan and Choibalsan (regional towns of the Khentii province in the East of Mongolia) with a length of 27, 75 km and our staff, of course, is very happy about it.
Regarding this laudable mission, what do you think will be the proper balance between keeping the cost per kilometer affordable and maintaining the quality and durability of the roads?
Well, in terms of specific technological methods and techniques we have started this year to use a special cement reinforced concrete foundation layer with a thickness of 20 cm under the paving surface of the roads, because due to the harsh weather and radical discrepancy of temperature these kind of road foundations are inevitable in Mongolia. We are one of the pioneer companies who have started to use this technique for the first time in Mongolia.
Before we used to utilize crushed rocks and small stones as a foundation layer for our construction works. Considering the short lifetime of our roads and periodic damage caused due to the specific climatic conditions of the country, Mongolian road construction engineers decided to change this method using this new technique with a reinforced concrete foundation.
Continuing with the many plans that Mongolia has ahead, new pedestrian’s bridges and passageways are planned to be build in Ulaanbaatar, where resides nearly the 50% of the population. In your opinion, what are the priorities in terms of overpasses and underpasses and moving traffic out of the centre?
In my opinion, it is a little bit over hasted to speak today about these things. Ulaanbaatar is expanding in all 4 directions at the moment, but unfortunately this development concerns only some construction buildings and new settlement areas without any infrastructure and appropriate roads.
Usually, the roads need to be built first and then the new settlement can proceed, which is, as you have surely noticed, not the case in Ulaanbaatar. Today we speak a lot about the expansion of our capital city and we all hope that this development will follow an appropriate and well-calculated Master Plan of the city development, which includes not only building construction plans, but also necessary road schemes. Today we are not able to build extra new roads in unsettled territories – firstly, there is no funding for these kinds of projects and secondly, the city administration is not able to determine exactly how this expansion shall go on like, for example, “The expansion of the western part of the city shall continue from Tolgoit (district of Ulaanbaatar), but should not exceed the 22nd checkpoint” (western city border of Ulaanbaatar) or in a similar way. This will be, of course, the most optimal solution of this problem. However, currently we are managing the expansion of our capital city within all possibilities and capacities that we have. There are surely exact plans and schemes of the city development brought on paper, but I’m not well informed and familiar with them, because I don’t belong to the city administration.
There are currently many development programs and projects which implementation has already started on, also concerning those “Ger districts” of the city (Ger – Mongolian traditional tent). All these construction projects are being realized very successfully and their final stages are planned to be accomplished by 2016 – 2020. As I’ve said – today, we are managing our development within all possibilities and capacities that we have
Anyway, Ulaanbaatar has the capacity to expand in all 4 directions, because outside of the city there is enough empty space in perfect ecologically clean condition. Maybe, with enough foreign investment our city will be able to expand twice as much compared to today, especially here in Mongolia.
Regarding local infrastructure, what is the current situation and which opportunity of business can foreign investors find in this market?
An international conference of foreign investors was recently held here, in Ulaanbaatar. In my opinion, for Mongolia, especially at the present time, foreign investments for infrastructure projects, road and building constructions and mining sector are inevitable and essential.
The current situation is critical: there are too many ongoing projects and developments, which had to be stopped or cancelled due to the lack of necessary investment. Even if a company wins a tender bid and starts the related construction works, it can happen that the funding are stopped or cancelled. It happens often that projects financed from the State Budget are cancelled or stopped in the middle of their implementation period. Today we are talking a lot about giant projects to connect all 21 province centers and 3 other big cities with each other and all necessary funding will be reflected in the State Budget. But, I’m sorry for being so straight, who knows what will happen with these financing plans in the future? To be honest, the future the future is quite unclear to me. We all know how much safety and pleasure a car trip on asphalt road can give someone but, at the moment, infrastructures are inadequate in many parts of the country. I’m talking now more specifically about roads and freeways, because I’m first of all a representative of the sector. If you were to go to Darkhan and Erdenet (industrial cities, situated within 350 km from Ulaanbaatar) they are already connected with asphalt roads and Zamii-Uud (municipal center on the southern border to China) is being connected now. But if you were to go to Choibalsan today, the provincial center in the East of Mongolia, you will not find any paved roads out there, or Murun (municipal center in the South of Mongolia) or even Uvs province (the most remote province in the West of Mongolia) you will spend at least two days on the road. These examples shall bring to attention the significance and importance of new roads and freeways, which will connect all provincial centers, and municipal towns of the country. There are companies able to provide all necessary equipment, machinery and manpower to implement road construction plans, but the funding of those projects remains the biggest issue. Generally speaking, financing stays on top.
As per our company, all projects depend directly and solely on the State Budget. Our road construction sector is one of the few industrial sectors of Mongolia without any foreign investment.
I was in Beijing and did some research about American asphalt bitumen facilities there. One of them costs about 3 million USD, unfortunately I’ve forgotten the name – it was something like “Astgen” or something similar. So, and I was really perplexed and excited! This facility is amazing. To be frank, 4 or 5 facilities of this kind in Mongolia will easily solve all problems related with roads. In addition, this facility is mobile! The price for this American facility is 3 million USD and it is mobile. I can just imagine how productive and efficient our work will be with this facility. But unfortunately we don't have any of this kind of technology in Mongolia.
Generally speaking, nearly 95% of road’s construction works is done with machines and special equipment. We would massively benefit from American technology. In the US, they are manufacturing all kind of rock crushing machines, among which Caterpillars. We even have “Cat’s” official distributor (Wagner Asia LLC) here in Mongolia. But we can’t afford it. Only from time to time we can rent some of the machines for our road works. If we could import all these high quality machinery in Mongolia with the help of foreign investors, the current situation of the road construction sector will improve radically. I’ve heard that all these American facilities and machines supply over 90% of asphalt and bitumen for domestic needs and demands. America is a very high-developed country.
Mongolia can offer many profitable business opportunities to foreign companies. They can provide their high-developed technology needed for the infrastructure development of the country.
This year Gashuuni Gol worked on more than 27 kilometers of roads. What are the new objectives for this company in terms of technology and construction projects?
I have a lot of plans for the future. As a female exponent and after many years in this sector, I can say that there is still much to grow and to develop. Our sector is very unique: you cannot achieve something if you do not invest enough. In Mongolia it is very difficult, if not impossible, to say in advance how many roads you are going to build in the future. Since I started this business, almost 6 years ago, our company has built about 45–46 km of paved roads. If we also consider our recent project, it should be over 70 km by now. My intention is to build at least 100 km of asphalt roads or even more within the next 5 years. Our company has grown very rapidly in these past 2 years. If you are active in a particular business sector, you get to work with specific machines and equipment. With time you learn more and more, you try all available machinery and you strive to get the best of all. There are several stages and requirements to fulfill if one company wants to participate in a tender bid selection. In the road construction sector, for instance, it is the lowest minimum of accomplished roads as requirement. Maybe the Government will raise this minimum within the next 5 years and 100 km will become obligatory.
Our company has currently over 80 workers. They are all insured and officially registered. Compared to other countries it is not much, but during high season of construction works we are able to employ up to 200 workers. It also depends on the work volume of the current project. This year, for example, we had in total over 150-160 employees.
Our company is fulfilling all technical requirements and conditions, which are used today in Mongolia. And I’m quite confident that we have all potential and capacity to grow and to develop.
We use a lot of effort and diligence to achieve our goals and objectives. This year the staff of our company worked in 2 teams and 2 sub teams each day 24 hours to accomplish these 27, 75 km of roads.
Concerning the machinery and equipment our company has all necessary machines in good technical condition. In total there are about 40 road equipment and heavy machines, like asphalt bitumen facility and 2 crushing machines. The business activity is quite constant and regular.
Our company is implementing all related works according to effective road construction standards and norms followed in Mongolia. For instance, during the road construction works between Murun and Khatgal (both are small administrative units in the Khuvsgul province) our company has built 2 bridges, all by itself, and completely according to technical drawings.
In other words, we are one of those companies with a stable development and the potential to grow although in the road sector our company is relatively young.