A joint meeting of the Standing Committees on the Economy and  on the Budget on January 19 to discuss amendments to the appendix of the Millennium Challenge Contract signed between the Governments of Mongolia and the USA was marked by a heated debate to fix responsibility for the decision to reject the USD188-million grant  from the Millennium Challenge Fund meant for UB Railway.

The USA has since agreed to divert the money to other programs and S.Bayarbaatar, Executive Director of the Mongolian Millennium Challenge Fund, said the revised agreement allows Mongolia to implement USD285 million worth of projects and programs. Of this, USD127 million will be spent for roads and clean air projects and USD50 million in the health and education sectors. Vice Minister for Finance T.Ochirkhuu and Minister for Road, Transportation and City Development Kh.Battulga were then asked why the USD188 million had been diverted to these sectors.

Ts.Bayarsaikhan wanted the Government to explain how and why it could change on its own Parliament’s decision to accept the USD188 million to upgrade the railway.

T.Ochirkhuu said the whole thing began when the Millennium Challenge authorities wanted an audit of the UB Railway accounts. The railway is a joint venture and the Russian representatives on its board refused to allow the audit. The Government of Mongolia repeatedly pleaded with them to agree but the Russians did not relent. “Thus the decision was changed against the interests of the Mongolian Government and also the MCC program,” he said.

S.Byambatsogt: Is the Government powerless to control an organization registered in Mongolia? How could it be allowed to ignore Mongolia’s interests?

T.Ochirkhuu: The UB Railway is a joint venture between Russia and Mongolia. The Russian side has since offered to invest USD250 million in the railway in place of the rejected MCC grant.

Kh.Battulga: The Government did not act in haste. Parliament had taken a doubtful decision. The MCC grant is for developing countries and was not be used for a joint venture. The Government met the ambassadors of the USA and Russia to discuss the issue. We then proposed to establish a Mongolian Railway Company which will be 100 percent state property and accept the grant but the MCC said this was not possible because the new company would not have any assets and would not own the tracks to be upgraded. Thanks to the urgent measures taken by the Government, the money will be used for roads, and in the health and education sectors. We could’ve ended up without the money.

R.Rash: The MCC grant for the railway was an excellent opportunity. Unfortunately, the Government failed to convince Russia about its importance for us. Once before also, the Russians were not keen on taking a USD71-million loan from Japan for the same joint venture, but we were able to make them see reason. This time the Mongolian side was not able to come up with good arguments. The Mongolian Millennium Challenge Fund did not try hard enough. I am also surprised that the money has been diverted to so many sectors, instead of being used for a big project.

Kh.Battulga: Our Ministry proposed to use the whole money for UB roads and for roads connecting cities. But this was not accepted by the Government. Every ministry has financial problems and wanted something.