Ex-post Evaluation

1. Outline of the Project

Country:

Mongolia

Project title:

Rehabilitation Project for the Improvement of the 4th Thermal Power Station in Ulaanbaatar (Phase2)

Issue/Sector:

Electricity

Cooperation Scheme:

Grant Aid

Division in Charge:

Grant Aid Management Department

Total Cost:

1,173 million yen

Period of Cooperation

FY 1996

Partner Country’s Implementing Organization:

Ministry of Infrastructure Development
The 4th Thermal Power Station in Ulaanbaatar

Supporting Organization in Japan:

Related Cooperation:

1-1 Background of the Project

Since the outside air temperature falls to minus 20 degrees or lower during mid-winter in Mongolia, the maintenance of the hot water supply is a crucial issue in Ulaanbaatar, as it directly influences the health conditions of the residents. The hot water supply mainly depends on electricity. The 4th Thermal Power Station (4th TPS) in Ulaanbaatar is the most important electric power plant in Mongolia. This plant’s capacity accounts for approximately 70% of its entire energy system. After the disintegration of the former Soviet Union, due to the economic confusion, financial and technical support for Mongolia were ceased, and the 4th TPS was operating without the necessary maintenance, which resulted in an increasing number of accidents. In order to resolve this problem, the government of Japan decided to extend its support through Grant Aid in 1992. With this, repairs were carried out on a pulverized-coal supply system, an ash treatment system, a flue gas treatment system, and a vital part of the boiler plant system. These repairs have moderately improved the boiler, and the frequency of breakdowns has been reduced. Even after this repair, the power station faced many difficulties due to the natural aging of the plant equipment, which was used over many years, and the lack of necessary funds for repairs. Under such circumstances, the Japanese government had implemented a project to renew the coal combustion systems and the control system for the Nos. 1, 2, 3, & 4 boiler units of the 4th TPS, through an ODA loan by former OECF (Overseas Economic Cooperation Fund. Current JBIC: Japan Bank or International Cooperation.), which was started in 1995.

In addition, the hot water supply system valves had been worn out to the degree that the ability to provide a consistent supply of hot water had been severely reduced. In order to resolve this problem, the Mongolian government requested Grant Aid from the Japanese government.

1-2 Project Overview

The Japanese government provided Grant Aid aiming at the revitalization of hot water supply capacity for Ulaanbaatar city, through rehabilitation of facilities related to hot water supply, mainly conversion of valves in the steam system at the 4th TPS.

(1) Overall Goal
1) The citizens of Ulaanbaatar can utilize an adequate quantity and quality of hot water for heating.
2) The 4th TPS can operate more efficiently by reducing shutdowns required for doing maintenance work.

(2) Project Purpose
To improve the hot water supply system of the 4th TPS.

(3) Outputs
1) The hot water supply system properly functions.
2) Maintenance activities are adequately conducted.
3) Technical skills of engineers are improved.

(4) Inputs

Japanese Side:

1,173 million yen

Mongolian Side:

Land and Facilities

2. Evaluation Team

Members of Evaluation Team

Baatar Tumenbayar, BEMM Co. LTD

Period of Evaluation

November 28 - December 15, 2002

Ex-Post Evaluation by Overseas Office

3. Results of Evaluation

3-1 Summary of Evaluation Results

(1) Impact
Being able to maintain the temperature at 18 degrees centigrade in houses in Ulaanbaatar in the winter is one indication that an adequate supply of hot water is being provided. In an interview study conducted at a school and at a hospital, the improvement of the hot water supply has been confirmed since 1998. And the water heating capacity of the 4th TPS available for Transmission Heating Company (THC), which is in charge of the management of hot water supply, has increased every year since 1998 (up to 2. 45 million Gcal in 2000, from 2 million Gcal in 1997). The supply shortage has been kept at a low level. These facts demonstrate the improvement of the hot water supply of the 4th TPS.

Before 1998, to repair one of the boilers, it had to stop the operation of the entire system of boilers. In particular, during an overhaul of the hot water supply system in the summer, all functions had to be kept at a standstill for 4 or 5 days. But since the project replaced the boilers’ valves, which did not function due to their obsolescence, the periodic checking and repairs of one boiler can be done without stopping the operation of other boilers. Therefore, the whole power plant has not had to be suspended either for breakdowns or checking since 1999.

It reduced the cost of imported electric power from Russia which was necessary during the suspension, resulting in reduction of payments in foreign currency made by the Mongolian government (before 1998 the cost was more than 12 million dollars, but has hovered at about 3. 9 million dollars since 1999). In addition, stable and increased income of THC due to the steady hot water supply it receives enabled the supply network to be repaired efficiently.

(2) Sustainability
The 4th TPS is the most important electric energy and hot water supply station in Mongolia. The station accounts for 69% of total electric power generating capacity of Central Energy System (CES). That means 62% of the total electric power generating capacity for the whole of Mongolia. Compared to 1998, the total number of staff members working at the 4th TPS has been reduced in order to cut expenses. The number of engineers, however, is the same as before. In terms of building and repairing, skilled maintenance engineers with 5-15 years of experience work continuously.

The 4th TPS became a self-supporting national company in January 2002. It had been operated through government funds till 2001. A new tariff system was also implemented in 2002 and approved by the Energy Regulatory Authority (ERA), which was established as a state enterprise in 2001. ERA sets payment methods under various principles. ERA purchased electricity from other stations setting cheaper prices, and this would influence financial condition of the 4th TPS.

ERA foresees the future stability of revenue and expenditures of the 4th TPS, based on following factors. (1) Due to its shift to a self-supporting national system, it is possible to reduce costs. (2) The price for power from the station is set based on its revenue and expenditures over the last three years. Therefore, the ERA can adjust the price adequately. (3) The electricity production costs of the 4th TPS are low and production volume is high, particularly compared to other power stations. Therefore, there should be no problems in the management of 4th TPS.

In terms of maintenance, the criteria for periodic inspections and yearly inspections, which were set by the project, have been carried out with the exception of those for valves, due to the personnel’s lack of knowledge on how to disassemble them. Since 1998, the temperature of hot water has been maintained at higher than 120 degrees centigrade, and the quantity has also been increased with time. In particular, the number of days that the supply of hot water could not meet the demand sharply decreased to three days in 2000/2001, from 35 days before 1998.

Although there are also other problems with repair and maintenance costs, problematic equipment parts are substituted with products made in Russia.

3-2 Factors that Promoted the Realization of Effects

(1) Factors Concerning the Planning
N/A

(2) Factors Concerning the Implementation Process
The Danish International Development Agency (DANIDA) project replaced the main hot water pipes in 1997. After that, the hot water supply system at the 4th TPS was improved using an ODA loan through a JICA project in 1998. Therefore, the implementation of several types of international cooperation has benefited Ulaanbaatar citizens a great deal.

3-3 Factors that Impeded the Realization of Effects

(1) Factors Concerning the Planning
N/A

(2) Factors Concerning the Implementation Process
1) At the point which the equipment was provided, the engineers of the maintenance section had not received enough technical guidance on how to repair and conduct maintenance inspection for the new equipment. Some of the equipment pieces have not been inspected regularly.
2) Some spare parts are substituted with products made in Russia due to their price.
3) The blockage of small pipes inhibits enough supply of hot water from reaching some houses. To heighten the maximum effect of hot water heating, a measure to prevent such blockage is necessary.

3-4 Conclusion

The quality and quantity of hot water supplied from the 4th TPS has been greatly improved by this project, resulting in providing a more comfortable life for the people in Ulaanbaatar. In addition, the boilers were made more efficient, which contributed to the stability of power supply and reduction of imported electricity. With the loan from JBIC, complementary effects of the cooperation appear in both the hot water supply system and electricity supply. Furthermore, the pipe laying work done by DANIDA helped to maximize the positive effects of these projects.

3-5 Recommendations

(1) To prevent the blockage of the pipes, it is recommended that the quality of water be treated. The city of Ulaanbaatar should provide support in the maintenance of the small pipes.

(2) Efforts should be made to reduce operating costs, so that the balance of revenue and expenditures in the next fiscal year would yield a surplus.

(3) A Japanese senior volunteer is working for the station. It is advisable to utilize his/her technical skills and experience, to learn how to inspect the equipments which are difficult to disassemble.

3-6 Lessons Learned

In addition to Grant Aid, technical transfer to the recipient country through technical cooperation is very important in order to have the staff in recipient country obtain a sufficient level of maintenance knowledge, skill and autonomy to effectively repair their own equipment and to operate the equipment independently.

3-7 Follow-up Situation

N/A