The draft protocol on privatization of state property between 2010 and 2012, discussed by Parliament on Thursday, says, according to Head of Government Office Ch.Khurelbaatar, that public companies and joint ventures based on Mongolian strategic deposits will be established and funds will be raised for them by selling their shares in international markets.

The more important provisions in the draft say:

–          A company to be called Mongol Erdes LC will be established after talks with Russia. This will own half the shares of Erdenet LLC, Mongolrostsvetment LLC, Oyutolgoi and other strategic mines and the other half will be sold in domestic and international markets

–          Another proposed company, Mongol Erchim LC, will own Mongolian uranium deposits. Half this company will be owned by the state and shares of the other half will be sold in the domestic and international markets

–          A third company. Mongol Infrastructure LC, will own all new railroads, and roads designated as having economic significance.  The shareholding pattern will be the same as in the previous two companies.

–          Thermal Power Station-3 will be owned by a new LC, whose shares will be owned by the Government and the company  bearing the costs of its upgrading.

–          The original terms governing the operation of UB Railway, set up in 1049, will be renegotiated with its Russian shareholders so that the joint venture better serves Mongolian interests.

–          More investment, both foreign and domestic, will be invited in the Khutul Cement and Chalk LC

Referring to the sale of shares, MPs wondered how Mongolia would suddenly be able to raise dollars in international markets.  The views of some who took part in the debate are given below.

N.Ganbyamba: We have so far privatized 200 state companies but are yet to see the benefits. We have been told MNT 200-300 billion was raised by this flurry of privatization but do not know how this money has been spent. Not a single factory has come up. I am worried that the same mistake will be made again. We are talking about selling our shares even though the companies have not been established. There is a lot of corruption in Thermal Power Station-4. Its management must be handed over to others by a Concession contract. If a new railway is built, it should be state owned.

Minister Ch.Khurelbaatar: The general directives for state property privatization are related to the Human Development Fund Law. The money from that Fund will come from four sources: income from strategic mines, income from selling shares, fees for exploiting natural resources, and advance payments for big projects.

It is not possible to privatize the UB Railway until the terms of the 1949 agreement are changed. There is no question of privatizing the Erdenet factory. Mongol Erdes will hold on to the State’s 51 percent ownership there.

N.Batbayar: Why is the Prime Minister not present when we are discussing sale of Mongolian resources to foreigners? Selling shares of 15 strategic mines is the equivalent of selling the country.

This comment was strongly criticized by Minister Khurelbaatar.

S.Oyun: What if Russians want to buy all the shares offered in international markets? Also, is the Mongolian Telecom Company to be sold to South Koreans?

Khurelbaatar: We may not have a choice if the Koreans offer a good price.