It is estimated that 1,251 people from more than 270 households in Bayannuur, Bayan-Ulgii, Uvs and Umnugovi provinces live in the reservoir area of ​​the Erdeneburen Hydropower Plant, which is planned to be built in Erdeneburen and Myangad soums of Khovd Province. These residents have been resisting the construction of the power plant for a long time, complaining that they have been living in the vicinity for many generations and that the plant could destroy the land and pollute the water.

The government has decided to pay 9.2 billion MNT in compensation to only households living in the region in accordance with the law and regulations to expedite the project to meet the country’s growing energy needs. But other residents complained, “The government shouldn’t discriminate against people. We should all be paid the same amount.” As a result, the government made a “compassionate” decision to compensate every citizen living in the area.

Expert of the Erdeneburen Hydropower Plant Project team under the Ministry of Energy P.Byambatseren said last April, “In addition to providing 9.2 billion MNT to households settled in the impact area of the project, we are talking about offering a one-time compensation of 15.1 million MNT per person as compensation for intangible damages. The emotional damage to the affected people was estimated in monetary terms and the amount of compensation was assessed. There is no such regulation in the current law. However, the relevant laws and regulations will be changed soon.”

Just last week, he updated, “The government discussed and supported the initiative to provide a one-time compensation to citizens of Bayannuur and Umnugovi soums. It decided to distribute 18.1 billion MNT in compensation, or 15.1 million MNT per person.”

At its regular meeting on June 15, the government discussed issues related to major projects planned to be implemented in the energy sector and made certain decisions. After the meeting, Minister of Energy N.Tavinbekh said, “Some problematic issues have been resolved today. We are ready to start the construction of the Erdeneburen Hydropower Plant. Preparations have been completed, except for the relocation work. Chinese loans amounting to more than 250 million USD are being discussed at Cabinet meetings. Accordingly, a special loan agreement is being concluded right now.”

Prior to this announcement, the minister used to stress that the project was facing obstacles to relocate families in the impact area and that the issue of compensation needs to be resolved immediately. It seems these issues have been settled to some extent.

In essence, the government has found the “key” to unlocking the biggest chain of the Erdeneburen Hydropower Plant Project. So why didn’t the government and the Ministry of Energy announce this decision to the public? What is the reason for not reporting about the issues discussed and decisions made at the regular meeting immediately? Why are the authorities of Bayannuur soum of Bayan-Ulgii Province and Umnugovi soum of Uvs Province not aware of the fact that more than 1,200 people are about to receive compensation from the state? Many uncertainties are arising from this decision.

According to the Law on Land, compensation must be paid in case of relocation or confiscation of land in connection with the acquisition of lands for the special needs of the state. The price of a building, structure or immovable property is determined on the basis of one of the prices specified in the state registration or insurance price according to the law. Based on this, the research team of the project estimated that 9.2 billion MNT needs to be allocated to eligible households (with land certificates, fences and immovable property). However, it is not clear on what grounds and how the government plans to compensate nearly double of this money. The Ministry of Energy and the project team could not answer this question.

The project’s specialist P.Byambatseren said that the current Land Law does not contain such regulations. No amendments have been proposed to the law in connection with this decision. The Ministry of Justice and Internal Affairs is working to create a legal environment for giving monetary compensation for moral damages. However, State Secretary of the Ministry of Justice and Internal Affairs P.Sainzorig said that this only applies to “non-pecuniary damages caused by crime”. Compensation for victims of crime has previously been regulated by the Civil Code under the Section on Elimination of Intangible Damages, with up to 10 million MNT payable in compensation, but this was not implemented.

The Agency of Land Administration and Management, Geodesy and Cartography, on the other hand, denied that the government has ever decided to distribute large sums of money to 1,200 or even 120 citizens as “compensation”.

The government has made great efforts to accelerate the Erdeneburen Hydropower Plant Project. In doing so, it made a “compassionate” decision outside the law and regulations. At a time when discussions are underway on the revised Law on Forensic Science, lawyers and researchers warn that Mongolia has no experience in assessing psychological harm and advised prudence when grading and choosing methods of calculating such damage. The maximum amount of compensation for non-pecuniary damage caused by crime was set at 10 million MNT, but the government has decided to give 5 million MNT extra to the people slowing down the project. Even the project team’s specialist could not explain how they came up with the number 15.1 million MNT.

Mongolia has long set a goal to transform from an energy importer to an exporter. However, it remains unable to meet its domestic needs. In fact, the country has the full potential to stop being reliant on others when it comes to energy consumption. It has domestic energy resources, such as coal, solar and wind, which are viewed as “sufficient” to supply Central Asia entirely but the country still buys electricity from its two neighbors due to its under-developed infrastructure. Therefore, there is an urgent need to implement large energy projects, such as hydropower plant projects.

The successful implementation of the long-discussed Erdeneburen Hydropower Plant Project, which aims to fully satisfy the energy demands of the western region domestically, is expected to take Mongolia a number of steps further in terms of energy independence. In other words, western provinces will no longer need to rely on imported electricity after they obtain a reliable source of renewable energy able to cover their energy consumption domestically.

The construction of the long-delayed Erdeneburen Hydropower Plant was originally planned to start in April this year as part of the New Revival Policy. The construction was estimated to last for 61 months. The Ministry of Energy signed a turnkey contract with the project’s contractor last September to ensure the timely construction of the 90 MW hydropower plant.

The western region where more than 390,000 people reside imports 75 percent of its energy needs from Russia and China, which means it uses five or six times more expensive energy than those produced by Durgun Hydropower Plant. The establishment of the new hydropower plant is anticipated to make the country’s western region fully self-sufficient in terms of energy.

Mongolia built its first hydropower plant, Guulin, and commissioned it in 1997 in Delger soum of Govi-Altai Province through a Mongolian-Chinese joint venture. Since then, two of the largest energy projects in Mongolia, Taishir and Durgun hydropower plants, were built and put into operation along with Bogdyn Gol, Tosontsengel, Khungui and Galuutain hydropower plants, satisfying the domestic energy consumption to some extent. However, the country now needs to realize its full energy potential.