Parliament agreed on Friday to further discuss a draft resolution
on the energy sector  and returned it to
the Standing Committee on the Economy for processing. The draft was
submitted  in the name of 12 MPs,
including A.Tleikhan and N.Batbayar.

It seeks to improve the financial capacity of the sector
by giving it more independence. The sector has been facing rising losses in
recent years. The draft seeks state aid to neutralize  prsent losses and then and then more financial
independence for the sector.
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Losses reached MNT24.4 billion in 2008, a sixfold rise from 2007. The situation
became worse in 2009, which ended with a loss of MNT69.6 billion. Regional
factories like the one in Erdenet make advance payments to help keep
electricity price low, enjoying power at less than the cost of production.

Several MPs felt the loss was the result of ineffiiciency spread over the
sector. N.Ganbyamba urged its quick privatization to allow more investment
which would stop people from being burdened with energy price increase. Minister
of Mineral Resources and Energy D.Zorigt noted that  the budget allocates MNT11 billion to the
energy sector and said that debt repayment was getting quicker.

Power station No. IV is slated for privatization in 2011.
The energy sector has been kept under state control to keep electricity price low.
The generation cost per unit is between MNT96 and MNT97 but consumers pay MNT79
for it. The plan now is for phased privatization by  2013 without, however, raising rates for small
consumers. Households at present account for  20% of electricity users and 64% of them are
connected to the central grid and use less than 150 units monthly. They will
continue to be charged MNT79 until 2013. Households and economic entities that
use more than 150 units will have to pay at higher rates.

Ts.Davaasuren said there has been talk of building the 5^th
electricity plant for 20 years now, and some equipment was bought in 1990.
There has also been no progress in developing  wind and solar energy resources. Many members criticized
poor management of the sector and felt it spends money unwisely and without proper
accounting. They urged the Government to take responsibility for paying off all
debts of the present power plants,  to fix
phased prices, and to run the energy sector in a fully commercial manner after
2013.  

Minister Zorigt said the private sector has shown
little  interest in the 5th power station
if the state continued to fix prices. The total debts of the energy sector,
which covers the  power plants and coal
mining companies, have reached USD400 million since 1990. Much foreign aid and
loans were taken between 1990 and 2000 when USD1 cost MNT400 and now the rate
is MNT1300. It would be more profitable if the 5th station generated both
heating and electricity.