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New Energy Agreement between Mongolia and Russia May Eliminate Plans for Hydropower Plants in Selenge River Basin

4 December 2019 Topics:
Lake Baikal shore in winter (RwB)

December 3. Moscow. Mongolia and Russia have finally signed an agreement on cooperation in electric power, development of which was triggered by Mongolia’s plans to build hydropower plants in Lake Baikal basin to achieve self-sufficiency in energy sector. On the part of Mongolia, such desire was partly due to lack of long-term agreement with neighbors for reliable electricity supply at affordable price.

The necessity for such agreement has been discussed at least since 2014 and was always viewed in conjunction with difficult negotiations on several hydropower plants planned in transboundary Selenge river basin with support of ADB, World Bank and Chinese investors. Most scientists argued that Shuren, Egiin Gol and Orkhon-Gobi hydropower projects are likely to exert significant negative impacts on rivers which will extend all the way down to the Lake Baikal, a World Heritage Site.

The Rivers without Boundaries Coalition promoted energy integration between the two countries, based on justice and equality and aiming to ensure best social, environmental and economic outcomes. Our efforts have not been in vain. Signing of the new agreement which emphasizes such principles and sets forth shared vision for reliable energy system is a right step in this direction. According to Russian officials and news agencies such agreement also allows Russia to suggest inexpensive and reliable energy alternatives to any projects that may threaten common rivers and Lake Baikal. Although the Agreement explicitly says that it does not limit the Parties from any use of resources on their own territory, it may remove any need to seek expensive and less reliable “energy independence” by creating conditions for equitable sharing of already available energy resources.

The bilateral agreement is explicitly welcoming third-country involvement in energy cooperation, which envisions that it may serve both the development of China-Mongolia-Russia Economic Corridor and the North East Asia Energy Super-Grid.

Ahead of signing the bilateral agreement, “Russian grids” and “Erdenes Mongol” have signed in September 2019 an MOU that contains several specific measures to develop greater energy interconnection and reliable and equitable energy trade between countries.

We welcome this step and will closely monitor implementation of the Agreement that conforms with its spirit and principles as well as proper use of environmental safeguards clearly embedded into the Agreement.

Eugene Simonov, International Coordinator

Rivers without Boundaries

Below, we present unofficial excerpts from the text of the draft Agreement, as approved by Russian Government by decree #753-p on 24 April 2018

Selenge River Delta -subject to Ramsar and World Heritage conventions – is very sensitive to expected hydropower impacts (NASA)

Agreement between the Government of the Russian Federation and the Government of Mongolia on cooperation in the field of electric power (excerpts)

The Government of the Russian Federation and the Government of Mongolia, hereinafter referred to as the Parties,
Reaffirming the desire to maintain, strengthen and develop bilateral cooperation in the field of electric power on the principles of equality and mutual benefit,
Aspiring to expand, deepen and develop mutually beneficial economic and scientific and technical cooperation in the field of electric power industry, energy efficiency and taking into account international initiatives in this field, as well as taking into account international obligations of the Parties,
Considering the interest in the economic development and energy security of the Russian Federation and Mongolia to be inextricably linked with the availability, reliability and efficient use of electric energy,

Taking into account the requirements of ensuring safety and protecting the environment, based on the understanding of the integrity and indivisibility of the natural environment, the unity of interests in its conservation and sustainable development,

Have agreed as follows:

Article 1

The parties shall cooperate on the basis of the following basic principles:
encouraging and protecting investments, including making new investments in the electric power industry of the Russian Federation and Mongolia;
ensuring non-discriminatory access to energy technologies and participation in technology transfer on a reimbursable basis;
ensuring technological reliability of all elements of the electric power infrastructure, including transit;
assistance in the implementation of infrastructure projects that are important for ensuring global and regional electricity security;
compliance with international environmental requirements for projects for the construction of electric generation facilities, including protection  from possible negative environmental impacts as a result of economic activity.

Article2.  Cooperation in the framework of the implementation of this Agreement is carried out in the following forms:
joint study of issues of electric grid construction in the territory of the Russian Federation and Mongolia in order to meet the potential needs of energy systems for electric energy, taking into account the implementation of priority energy projects;
-implementation of joint projects for the reconstruction and modernization of electric power facilities of the Russian Federation and Mongolia, including for the electrification of transport infrastructure;
-implementation of joint projects in the field of electricity generation, export, import of electric energy to Mongolia (from Mongolia), development of the electric grid economy of Mongolia, including that used for the transit of electric energy to third countries;-implementation of joint projects in the field of electric power industry, including the construction of electric generation facilities and energy infrastructure, including in the field of creating highly maneuverable regulatory capacities and renewable energy sources;
-participation in investment projects for the construction of new generating facilities and the acquisition of shares in the framework of corporatization of electric power facilities in accordance with the legislation of each of the States of the Parties;
-assessment of the feasibility of creating a single market for electric energy and power in the Russian Federation and Mongolia, including as part of the integration of energy markets in Northeast Asia.

The parties, by agreement with each other and in accordance with the legislation of each of the states of the Parties, may attract interested organizations of third states to participate in joint projects under this Agreement.

Article 3   The parties shall take the necessary measures to ensure the parallel operation of the Unified Energy System of Russia and the energy system of Mongolia, including, inter alia:
-ensuring the proper technical condition and operation of electric grid facilities, data transmission systems and emergency automation, ensuring parallel operation of the energy systems of the states of the Parties, including the implementation of agreed decisions on the modernization of data transmission and emergency automation systems of the energy systems of the states of the Parties;
-purchase and sale of volumes of hourly deviations of the actual interstate balance of electric energy flows from the planned value under the agreements (contracts);
-mutual assistance in case of emergencies in the energy systems of the states of the Parties;

Article 10. The obligations of the Parties in accordance with this Agreement do not affect the sovereign rights of the states of the Parties that extend to their territory and natural resources in accordance with the laws of each of the states of the Parties and international law.

Signed by Ministers of Energy of Mongolia and Russia on December 3, 2019

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