Mongolia’s lack of infrastructure hinders its development and massive investment is needed to address this. Public-private partnership (PPP) has been identified as one of the key priorities in the National Development Strategy.
PPP for infrastructure is expected to decrease the fiscal burden on the government; lower the cost of providing infrastructure services by introducing competition and providing market-based incentives to encourage efficiency improvements; and help allocate and mitigate investment risks between the public and private sectors.
At present, there is no specific legislation that provides for PPP regulation and administration. As such, the legal authority for a private company to engage in public infrastructure services must be garnered from a number of laws that do not generally contemplate private sector participation.
Based on the outcome of initial legal due diligence on the Asian Development Bank’s (ADB) pilot private sector infrastructure projects, ADB requires a direct agreement — a tripartite agreement among ADB, project sponsors, and the government to address the curtail issues for private sector participation which are missing or unclear in the current legal framework. As this is the first time for the Government of Mongolia to enter into such arrangement, ADB offered a workshop for the key government officials on 7 September 2009.