Mongolia

Ministry of Finance, Mongolia

Ref: WB/MOF/MINIS/CS/QCBS/1.1.1 (c)/2015

Project Name: Mining Infrastructure Investment Support Project (MINIS) Credit# 4888-MN

Terms of Reference

for the Feasibility Study of

FLOW REGULATION OF THE ORKHON RIVER AND CONSTRUCTION OF RESERVOIR COMPLEX PROJECT

Quality and Cost Based Selection (QCBS)

Funded by: International Development Association

September 2016

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TABLE OF CONTENTS

A. GENERAL INFORMATION ...... 5 1 Introduction ...... 5 1.1 Preface ...... 5 1.2 The Government Policy of Mongolia ...... 5 1.3 Conducted Initial Screening ...... 7 1.4 Related MINIS Projects ...... 8 1.5 Project Regions ...... 8 2 The Scope of Work ...... 11 2.1 The Purpose of Feasibility Study ...... 11 2.2 Structure of preparatory studies ...... 11 2.3 International Panel of Experts ...... 14 B. STUDY TASKS ...... 15 3. Pre-Feasibility Study ...... 15 3.1 Engineering and Technical Pre-Feasibility Study ...... 16 3.1.1 Data Collection and Conclusion on Inventory Data and Information...... 16 3.1.2 Site Visits ...... 16 3.1.3 Water Resources Management Studies ...... 16 3.1.4 Water Consumptions in the Project Region ...... 16 3.1.4 Hydrometeorological Data Compilation and Analyses ...... 17 3.1.5 Orkhon River Basin Hydrological Study ...... 18 3.1.6 Selection of Dam Sites and Water Transmission Alternatives...... 18 3.1.7 Orkhon River Water Balance Study ...... 19 3.1.8 Preliminary Study on Geology, Engineering Geology and Hydrogeology ...... 20 3.1.9 Preliminary Study on Engineering Geodesy (Topographic) Survey ...... 20 3.1.10 Electricity Demand and Hydropower Potential ...... 21 3.1.12 Conceptual Engineering Design of Alternatives ...... 21 3.2 Preliminary Financial and Economic Study ...... 22 3.2.1 Definition of financial and economic criteria for selection of best options ...... 22 3.2.2 Total Cost Estimation of Project ...... 22 3.2.4 Preliminary financial analysis ...... 22 3.2.4 Description of economic benefits and costs...... 23 3.3 Ranking of Alternatives ...... 23

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4 Feasibility Study ...... 24 4.1 Introduction ...... 24 4.2 Engineering technical survey and investigation ...... 24 4.2.2 Engineering Geodesy (Topographic) Survey and Mapping ...... 24 4.2.3 Engineering-Geological Survey and Investigation ...... 25 4.2.4 Construction Material Survey and Investigation ...... 26 4.3 Engineering technical studies and design ...... 26 4.3.1 Seismicity Study ...... 26 4.3.2 Hydrological Study ...... 27 4.3.3 Reservoir Siltation Study ...... 27 4.3.4 Reservoir Operation Study ...... 27 4.3.6 Dam Design and Stability Analysis ...... 27 4.3.3 Hydraulic Study and Waterways ...... 28 4.3.4 Hydraulic Calculation for the Water Transmission Pipeline ...... 28 4.3.5 Pipe Material and Booster Pump Stations ...... 28 4.3.6 Water Treatment Facility ...... 29 4.3.7 Energy Demand and Power Supply ...... 29 4.3.8 Hydropower Station ...... 29 4.3.9 Power line to the Central Electricity System ...... 29 4.3.10 Access Roads ...... 29 4.3.11 Associated Infrastructure ...... 30 4.3.12 Communication, Data and Telemetry...... 30 4.3.13 Preliminary Engineering Design and Drawings ...... 30 4. 3.14 Bill of Quantity ...... 31 4.4 Planning and organization ...... 31 4.4.1 Project Operating Organization ...... 31 4.4.2 Procurement Planning ...... 31 4.4.3 Safety of Dam ...... 31 4.4.4 Health and Safety at Work Place ...... 31 4.4.5 Implementation Schedule ...... 32 5 Financial and Economic Studies ...... 32 5.1 Introduction ...... 32 5.2 Financial and Economic Risks of Project ...... 33 5.3 Main Studies ...... 34

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5.3.1 Results of “With-Project” versus the “Without-Project” Alternative ...... 34 5.3.2 Laws, Regulations and Water Tariff ...... 34 5.3.3 Management Alternatives for Assets of the Project ...... 35 5.3.4 Estimations of Water Consumption and Water Tariff ...... 36 5.3.5 Project Cost Estimation ...... 36 5.3.6 Estimates of Revenue and Operating Expenses ...... 36 5.3.7 Direct and Indirect Benefits ...... 36 5.3.8 Potential Risks in the Environmental and Social Sectors ...... 37 5.3.9 Socioeconomic Study of Project ...... 37 5.3.10 Evaluation of Project Risks ...... 38 5.3.11 Project Benefit Estimation ...... 38 5.3.12 Financial and Economic Analysis ...... 39 C. DELIVERABLES BY THE CONSULTANT ...... 40 6. Work Results ...... 40 6.1 Introduction ...... 40 6.2 Deliverables ...... 40 6.2.1 Progress Reporting ...... 40 6.2.2 Pre-Feasibility Study ...... 40 6.2.4 Feasibility Study ...... 40 6.2.5 Finance and Economic Studies ...... 41 6.2.6 Workshops ...... 41 D. PROJECT MANAGEMENT AND REQUIREMENTS ...... 43 7 Management of the Feasibility Study ...... 43 7.1 Roles and Responsibilities ...... 43 7.2 Consultant Time Schedule ...... 43 7.3 Ownership and Control of Information, Data and Documents ...... 43 8. Requirements for the Consultant Team ...... 45 9. Payment Schedule...... 51 10. Bibliography ...... 51

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A. GENERAL INFORMATION

1 Introduction 1.1 Preface The Mining Infrastructure Investment Support Project (MINIS) financed by the World Bank aims to facilitate investments in infrastructure to support mining related activities and downstream value-added processes (regardless of funding source) and to build local capacity to prepare and transact infrastructure projects. In the scope of “Flow Regulation of Orkhon River and Construction of Reservoir Complex Project” (“Project”), a Feasibility Study will be done. Mongolia is becoming one of important global centers for mining. Most of the mineral resources, such as Oyu Tolgoi’s (Turquoise Hill) copper and gold mine, that are under the exploration and newly discovered deposits that have a strategic importance are located in the Gobi Region of Mongolia. One of the important issues of infrastructure in this region is to meet the increasing water demands of the developing mining industry, and it is necessary to evaluate the feasibility of continuing the use of the limited groundwater resources in the region. It is also becoming a necessity to consider augmenting local water resources from sources located some distance from the Southern Gobi. The proposed project could be both technically and economically feasible, however it cannot be considered further without taking into account direct environmental and social impacts. The Project has been classified as Category “A” according to the World Bank Environmental Assessment Operational Policy 4.01, and therefore the proposed project must be reviewed by conducting a Detailed Environmental and Social Impact Assessment (EISA) with public consultation. The work to be done under this TOR is the Feasibility Study. The detailed ESIA will be done in parallel with the Feasibility Study. Although the ESIA is required to be contracted separately it is necessary to coordinate the ESIA activities and deliverables and integrate these into the Feasibility Study work. The proposed project has been defined in the “Report on Initial Economic, Financial, Environmental and Social Screening” for the “Flow Regulation of Orkhon River and Construction of Reservoir Complex Project” that was prepared as a basis for the development of the Feasibility Study TORs. 1.2 The Government Policy of Mongolia The proposed project is in line with policies of the State Great Khural (the Parliament) and the Government of Mongolia, as expressed in the following documents: Policy Documents on the Use of Groundwater: The State Central Administrative Agency in charge of Environmental Issues (the Ministry of Environment and Green Development) has been tasked to receive, on regular basis, reports on use of water from the industry, business entities and institutions, and has the right to cancel licenses for use of water if serious failures and problems are observed. Analysis of observations and research conducted by the State and operating institutions, show there is sharp decline of water levels in the Gobi Region groundwater resources within the last few years.

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1. Item 3.2.3 of Water National Program – “Establish a new State Groundwater Monitoring and Testing Network and drill and equip not less than 200 boreholes for groundwater monitoring and testing in the areas covering mining’s monitoring wells and the water resources in the capital city and province centers in order to connect with the state network”; 2. Item 6.1, Laws on Water – “The State Central Administrative Agency in charge of Environmental Issues shall responsible for regulating the main water monitoring and testing network for the purpose of observation, measurement, monitoring and testing, evaluation and providing information”; 3. Item 10.1.24, Laws on Water – “In case of desertification, dry climatic conditions, shortage of water and or water contamination, to temporarily prohibit the use of water for certain period of time in the territory of basin in order to allocate or limit the water consumptions and recharge water and its environment”; 4. Item 22.7, Laws on Water – “River, large river, lake, water resource and groundwater resources will be included in specially protected areas of the state and local towns”. 5. Groundwater tariff is 2-3 times higher than surface water tariff according to the estimations done in compliance with Resolution Nos. 326 and 327 by the Government dated 21 September 2013 on “Fixing Rate of Water Resources Tariffs”.

Policy Documents on the Use of Surface Water: Construction of dams and reservoirs on large rivers in Mongolia has been implemented successfully in recent years. A reservoir complex with a compacted concrete dam (Taishir Water Power Station) was built over the Zavkhan River and reservoir complex with dam (Durgun Water Power Station) constructed on the Chono Kharaikh River. Flow regulation of the Orkhon River can create opportunities for long-term, positive benefits to urban settlements, pasture lands, agriculture, industrial water supply, tourism, fish habitats, and electric power generation. Bringing water to the industrial zones of Gobi Region and generating electricity by using water flow of the reservoir will have direct economic benefits. The State Great Khural (Parliament) and the Government of Mongolia are highly attentive of these concepts and have mentioned them in the policy documents listed below: 1. Strategic goal 3 in the 5 priority orientation specified in the Millennium Development Goals based on Comprehensive National Development Strategy as endorsed by the Parliament of Mongolia in its resolution No. 12 of 31 January 2008 - “Solution of Water Supply to Population and Industries using Certain Part of the Surface Water”; 2. Item 3.5 of “Plan of Action for 2009-2012 by the Government of Mongolia” approved by the Resolution No. 35 of the State Great Khural dated 21 November 2008– “Objectives for development of infrastructure including i) implementing integrated state policy on water, ii) regulating flow of rivers, and iii) transferring collected water resources for water consumptions”; 3. Item 3.5.1.7 of Mongolian National Security Concept approved by Resolution No.48 by the Parliament of Mongolia, dated 15 July, 2010 - “Regulate flow of large rivers and construct a reservoir in order to improve usage of surface water in Mongolia”; 4. Item 3.3.2 of Water National Program approved by Resolution No. 24 by the Parliament of Mongolia dated 20 May 2010 - “Regulate flow of some rivers and

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construct a reservoir, transmit water in order to Improve usage of surface water in Mongolia”; 5. Item 3.2 of the Resolution No. 304 on Action Plan towards implementation of “Water” National Program as approved by the Government of Mongolia on 23 November 2010 – “regarding to conduct Feasibility Study on Orkhon Gobi Project during 2011-2015 to supply water in the region where there is shortage of water resources”; 6. Listed at 15 out of 26 large Projects indicated in the Attachment of the Government Resolution No. 320 “Approval on List of Projects to be implemented at the first stage”, dated 14 October 2009 – “Water Supply Project from the Orkhon River to the Water Demand in the Gobi Region“; 7. Item 3.1.3.3 of the “Program for development of Southern Gobi” approved by the Government of Mongolia by its Resolution No. 151 on 16 June 2010 - “regarding to focus on policy of using groundwater, surface water or combined method of using both groundwater and surface water resources, and decide water supply alternatives through implementing “Orkhon Gobi Project”. 8. Item 109 in the attachment of the Resolution No. 198 on “Approval of Concession List” by the Government of Mongolia on 21 July 2010 - “Construction of the Orkhon- Gobi Reservoir”; 9. Item 4 of the “Plan of Action during 2012-2016 by the Government of Mongolia” approved by the Resolution No. 37 of the State Great Khural on 18 September 2012 - “regarding to construct reservoir in a way of regulating flow of large rivers to satisfy water demands of the region”; and 10. Resolutions from the meetings held by the National Water Commission in 2012 and 2013. 1.3 Conducted Initial Screening An initial screening was conducted 2013-14 for the different possibilities to supply water to the Southern Gobi Region. The objective of the initial screening was to i) identify water supply alternatives for Future Water Demand Trends in the Southern Gobi Region, and ii) select the most relevant alternatives based on the comparison of Engineering, Financial, Economic, Environmental and Social Impacts aspects. A separate report, “Report on Initial Economic, Financial, Environmental and Social Screening” provides full details of the initial screening process. The result of the initial screening indicated that the alternative to utilize a combination of both surface water from the Orkhon River Basin transported by pipeline to major demand points and groundwater from local sources in the Gobi was the most feasible in terms of availability of water resources, technological availability, financial and economic conditions, and comparisons of environmental and social impacts. The initial screening indicated that the location of a potential flow regulation and source of surface water from the Orkhon River will likely be in the Bulgan Province. The feasibility study will determine the optimal location and time of implementation of the surface water transfer. The initial screening suggested the scope of work for the feasibility study, which this

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ToR is based on. The initial screening also suggested the scope of work for the detailed ESIA. 1.4 Related MINIS Projects The Feasibility Study shall incorporate progress and interim outcomes of the groundwater projects under MINIS: • Establishment of Monitoring Network in the Southern Gobi Region • Water Resources Management in the 3 Basins in the Gobi Region (Eastern Gobi guveet- Halhiin Dundad Taliin Basin, Galba-Oosh-Doloodiin Gobi Basin and Altai Southern Gobi Basin) • South Gobi Water Supply System Development in Balgas Ulaan Lake. (In accordance with the FS for the Tavan Tolgoi Coal Mine Water Supply). • Development of Terms of Reference for a Feasibility Study on Domestic and Industrial Water Supply in South Gobi Region • Environmental and Social Safeguards Arrangements for a Feasibility Study of South Gobi in the Naimdain Valley Area in the Manlai, Tsogt Ovoo, Tsogttsetsii Soums of the Umnugobi Aimag and around the Zuunmod Deposit Area in the Altain Tsaad Gobi Water Supply System Development • Recycling of Water Pollution from Mineral Processing, Pollution Classification and Study of Investigation Methods. MINIS will provide the available data, information and reports to the FS consultant.

1.5 Project Regions Approximately 90 percent of Mongolia’s territory is characterized as arid or semi-arid or in general with low moisture, due to its geographic location and continental climate. The Gobi desert comprises 40 percent of Mongolia or about 650 thousand square km area [and increasing] influencing bordering steppe areas and constraining sustainable socio-economic development of the region. Newly discovered deposits that have strategic importance to Mongolia are located in the Southern Gobi Region and resource exploitation and processing industries will be established in this region. Presently there are major projects being developed, including Oyu Tolgoi copper and gold mine, Tavan Tolgoi coaking coals mine and others that are in planning and development stages. Therefore Mongolia is faced with the challenge to meet increasing water demand with minimum environmental impacts in this region. Supplying water to the Gobi Region via transmission pipelines may create many opportunities of solving various water supply issues, such as supply to growing urban areas, agricultural industry, environmental protection, in addition to the mining industry. Moreover, there are opportunities to use some of the new water source to re-establish green areas and other environment enhancements to mitigate the effects of human activity. The concept of transferring water from the rivers in the Selenge River Basin to the Gobi region, where there is scarcity of good quality water resources, has existed for some time. A workshop on the feasibility of this idea was initially organized in 1986 and a proposal for this project was brought to the attention of foreign and domestic firms in 2008. A formal Feasibility Study has, however, not yet been conducted for this concept.

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This Feasibility Study, and parallel ESIA, will assess the proposed construction of a dam and reservoir on the Orkhon River that will regulate flow and retain surface water, and the potential transfer of part of this water to Gobi desert. The study shall consider protection and proper use of surface water benefits to the eastern Khangai Economic Region and the central and southern portions of Central Region, the majority of which is dry territory. The study shall assess if lands in the vicinity of the dam and pipeline route will also be able to benefit from the project, adding 3 soums (sub-province) of Bulgan Province and 2 soums of Tuv Province to the potential beneficiaries in the “Gobi” area consisting of 2 soums of Dundgobi Province and 4 soums of Umnugobi Province. The general area to be covered by the proposed project is shown in Figure 1.1.

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Figure 1.1: Area of the proposed project

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2 The Scope of Work 2.1 The Purpose of Feasibility Study The purpose of Feasibility Study is to analyze the possibility of regulating the Orkhon River, and divert parts of the river flow to the Southern Gobi Region, in terms of technical, economic, financial, environmental and social factors. The Feasibility Study shall satisfy the following requirements: • Perform an analysis of all relevant technical, economic, financial factors at high professional standards, incorporating findings on environmental and social factors from the parallel ESIA; • Identify implementation phases of water supply program for Southern Gobi Region of a combined approach of surface water and groundwater in order to meet increasing water demand trends; • Prepare preliminary engineering designs at the Feasibility Study Level and develop a Draft Implementation Plan, for the flow regulation of Orkhon River and the water transfer scheme to the Southern Gobi region; • Calculate required capital investment and operational costs for each project stage of the flow regulation and water transfer and prove the viability of the investment from Technical, Economic, Environmental and Social aspects. The Feasibility Study must be carried out in compliance with Mongolian laws, construction norms and regulations of BNbD, and international standards, and must incorporate findings of the parallel Environmental and Social Impact Assessment, in compliance with the World Bank’s Operations Safeguard Policy. The detail and quality of the Feasibility Study shall be sufficiently high to support approvals and financing decisions at an international level. The views and opinions of project stakeholders, civil society, and NGOs must be considered for the decision making process during the Feasibility Study. 2.2 Structure of preparatory studies The Feasibility Study and Detailed ESIA with public consultation for the Flow Regulation of Orkhon River and Construction of Reservoir Complex Project will be performed by separate Consultants, in compliance with the World Bank’s Requirements, Mongolian and International Standards and Regulations. However the two studies should be coordinated so that the work for each is done as efficiently as possible, following the Stages outlined.

1. The Pre-Feasibility Study. The objective of this first phase of the Feasibility Study is to decide on the optimal alternative and timing of a surface water augmentation from Orkhon River to Southern Gobi, which will include: a. Review the initial screening study; b. Conduct technical/financial/environmental/social data gathering and analyses; c. Review the previous groundwater and water supply studies and identify amount and tariff to be applied for water demand;

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d. Develop alternatives for flow regulation and water transfer from Orkhon River based on previous studies and above conducted reviews; e. Create preliminary technical, financial and economic models at pre- feasibility level; f. Evaluate alternatives through a multi-criteria analysis, taking into account technical, financial, economic, environmental and social factors, and recommend the best options. g. Identify all studies required to prepare and implement the feasibility study for the best options. This stage will be performed concurrently with the Regional Environmental Assessment, described below, sourcing data and analyses on environmental and social factors from this study.

2. Regional Environmental Assessment (REA). Based on the results of the Initial Screening and with input from the ongoing Pre-Feasibility Study, the REA will follow World Bank Guidelines and procedures suggested in the World Bank Environmental Sourcebook to assess the impacts of flow regulation and partial diversion on the Orkhon/Selenge River Basin and the introduction of a large new water source to the semi-arid South Gobi. The objectives of the REA are: a. Assess the policy, legal and administrative framework at the national and regional levels; b. Survey and characterize the baseline conditions of the region; c. Description of development plan and inventory of related projects d. Projections of Cumulative Impacts e. Analysis of Alternatives f. Recommendations for Regional Investment Plan g. Environmental Management Strategy h. Mitigation concerns i. Monitoring Strategy j. Institutional Strengthening Requirements k. Programming for detailed ESIAs The REA will focus on broad issues and concerns the proposed project, but also initiate specific baseline data gathering programs that will support the subsequent Detailed ESIAs.

3. Feasibility Study (FS): The most promising options identified during the Pre- Feasibility Study, taking into account results from the REA, will be refined by further detailed studies. The components of the FS are to: a. Define technical design criteria for all components; b. Finalize facility locations and land use requirements; c. Finalize technical data gathering (geotechnical, topographic, etc.);

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d. Refine engineering calculations for all project components (dam, water transfer, hydropower and transmission) and produce preliminary designs at feasibility level; e. Refine implementation schedule and produce a preliminary BoQ; f. Finalize cost estimates; g. Establish requirements for Detailed Design; The FS will be performed concurrently with the Detailed ESIA, and the Economic and Financial Analyses, described below, sourcing relevant inputs from these studies.

4. Detailed Environmental and Social Impact Assessment with Public Consultation Plan. The objectives of this task are, based on the results of the REA and the outputs of the Pre-Feasibility Study, and the parallel Feasibility Study, to conduct all Environmental and Social assessments needed to support final decisions on implementation of all major project components: • Flow regulation structures and reservoir; • Water transmission pipelines and pump stations; • Hydropower facilities and electrical transmission lines. The detailed ESIA will build on the REA with focus on the specific project components, covering the following areas: a. Legal and policy framework analysis; b. Baseline conditions assessment; c. Environmental Impacts assessment; d. Physical/Cultural Resources; e. Involuntary Resettlement; f. Indigenous Peoples; g. Resettlement action plan and livelihood improvement programs; h. Environmental management plan; i. Public participation and consultations. The Detailed ESIA will source information on technical design alternatives from the parallel Feasibility Study.

5. Economic and Financial Analyses. The Economic and financial analyses will assess possible funding alternatives, and their associated conditions, and will: a. Assess the financial and economic viability of the selected alternative, including financial, economic, legal, political, and environmental/social aspects; b. Develop financial and economic models to identify sensitivities and analyze risks; c. Develop recommendations for a financing plan.

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The Economic and Financial Analyses will source information on costs and implementation timing and duration from the parallel Feasibility Study and Detailed ESIA.

The services under this TOR cover the Pre-feasibility study, the Feasibility Study, and the Economic and Finance Study. The Regional Environmental Assessment, and the Detailed ESIA will be conducted in a separate parallel contract. All work under this TOR must be carried out efficiently and at a highly professional level based on previous studies but with the principle of adapting the program and recommended actions to the best available information and current practice and conditions to ensure the optimum results for the proposed project. The Consultant’s services will be concluded upon completing the Feasibility Study in accordance with relative regulations and requirements of the World Bank and the Government of Mongolia, and handing over the work performance to the Client for approval. Detailed requirements for the tasks under this TOR are described in Section B.

2.3 Advisory Committee The Consultant’s work and output will be reviewed by an Advisory Committee assigned by the Client. The committee will include renowned hydropower experts in the technical, environmental and social fields, and will review the results of both the feasibility study and the ESIA. The committee will review main outputs, such as the draft inception report, pre- feasibility report and feasibility report. The Consultant shall respond to the committee’s comments and recommendation, incorporate these in the final reports, or clearly motivate if not following the recommendations.

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B. STUDY TASKS 3. Pre-Feasibility Study The focus of this stage is to refine the concept for bringing water from the Orkhon River Basin to the Southern Gobi; however it must be done within the context of how this new water source will best compliment the continued use of local groundwater in the Southern Gobi. The Pre-feasibility Study will use information developed by other studies and projects under implementation to identify where Orkhon River Basin water can be delivered for the optimum benefit, identify technical and regulatory issues that must be considered to structure the allocation of water resources in the project area and make recommendations for Government policies and regulations that will assure a stable financing and operating environment for the project. This work will be done concurrently with the REA, and it is imperative that there be good communications and exchange of information between the two consultant teams so that, to the extent possible, the findings of each team are incorporated into the work of the other as they are developed and that there is a common definition of the project and task objectives for subsequent stages in their respective reports. During this stage, the Consultant shall offer several options for the dam’s location considering geomorphology characteristics, Orkhon River flow amount, land elevation for construction of dam, locations of main water consumers and make comparisons. This stage of study shall gather information on Financial, Economic, Environmental and Social Impacts and shall conduct a Comparison Analysis. The following studies must be included in the Pre-Feasibility Study: • Initial Engineering and Technical Study • Initial Financial and Economic Study • Initial Environmental and Social Impact Study (sourced from REA)

The following constructions and plants must be included in the scope of Pre-Feasibility Study: • Dam and other plants • Hydropower station • Water transmission pipeline • Booster pump stations • Water reservoir • Electric transmission line • Associated infrastructure constructions The Consultant needs to estimate water consumption for the region upon consultation with Project stakeholders, including an identification of amount of groundwater to be used during each of the project alternatives and stages. These results will provide input to the analysis of the surface water usage. The best alternative will be selected on the basis of a multi-criteria evaluation on technical model and cost and benefits estimation of each alternative, including environmental and social impacts. Selection shall be made after evaluating at least three options for dam construction and not less than two options for the water transmission pipeline. The output shall be the best option for 15 location of dam with water reservoir and water transmission pipeline. If the Pre-Feasibility study cannot distinguish between the best options, more than one alternative may be taken forward to the Feasibility Study. Investigation and survey works to be carried out during the Feasibility Study will be determined by the end of Pre-Feasibility Study. Relevant reports and results will be completed and submitted in accordance with the requirements listed in Section 6.

3.1 Engineering and Technical Pre-Feasibility Study This Engineering and Technical Pre-Feasibility Study shall be carried out in the areas along the Orkhon River Basin and the project’s water transmission pipeline alignment. Analyses should be made of previous study documents and other necessary information gathered from Mongolian agencies and concerned institutions. The Engineering and Technical Pre-Feasibility Study must be conducted in accordance with the Construction Laws and other applicable and effective construction norms, regulations, standards of Mongolia and the requirements of the World Bank. 3.1.1 Data Collection and Conclusion on Inventory Data and Information Collect and summarize survey and investigation reports previously done related to scope of work for the Project. The Consultant shall work closely with a qualified Mongolian partner for this work, and produce an organized database of documents and information that can be used to support development of the Project. 3.1.2 Site Visits The Consultant shall travel to Mongolia to meet with the Client and relevant stakeholders. The Consultant shall conduct site visits to familiarize itself with the project area, and meet project beneficiaries and other stakeholders. The site visits shall also conduct a first visual technical evaluation of the previously proposed alternatives, as well as a general evaluation of geological, hydrological and morphological characteristics of the region.

3.1.3 Water Resources Management Studies

The importance and management of using groundwater resources in the proposed project region and utilizing surface water resources from the Orkhon River Basin in Northern Mongolia shall be illustrated. The Consultant shall be familiar with the Integrated Water Resources Management of Mongolia, and Integrated Water Resources Management Plan and Policy Documents of Orkhon River Basin, and shall identify current and future actions planned for the Project implementing region.

The Consultant shall identify actual groundwater consumptions of large consumers in the territory of proposed project and diagnose problems and difficulties in connection with use of these existing water resources. The study shall include comments and concerns from those water consumers.

3.1.4 Water Consumptions in the Project Region The purpose of this task is to identify technical conditions and current and future water consumptions of towns, factories, mining and agricultural industries along the Orkhon River and the alternative water transmission pipeline alignments. The Consultant shall make projections for water supply using groundwater and surface water for cities and settlement areas in the project area and identify time schedule for supply with surface water to the consumers. Estimations of water demand for year 2030 must be based on water

16 consumption increase of all sectors including towns, rural settlement, industry, mining, agriculture and environment. The Consultants shall review and make conclusions on the previous study documents for the water consumptions of Oyu Tolgoi Mine, Tavan Tolgoi Mine, other mines and thermal power stations to identify the current and future water consumption trends in detail. The Consultant should become familiar with the selections of locations of irrigated fields identified in previous studies and perform soil tests and investigations on potential sites of irrigated agricultural fields. The following items shall be identified by this study: • Study master plan towards future development trends of provinces, soums and towns in the Project region; • Identify locations, designation, capacity and permanent and temporary utilization conditions of mines, industries and irrigated fields; • Current utilizations of mineral resources, forests and other natural resources and their future trends; and • Identify current water consumptions of towns, mines, factories, agriculture and the environment to estimate future trends There should be a preliminary analysis of the conditions at each major demand location that will: • determine the capacity and condition of existing water supply infrastructure and identify seasonal and long term availability and amount of existing groundwater resources to be used in future; • support a preliminary design of the technical facilities (pipelines, reservoirs, control stations) that will be required for water from the project to be used; • produce a preliminary estimate of capital costs, both to the Project and the user, to connect to the project, and • determine a timeframe for implementation of the connection and anticipated water consumption over the life of the Project, based on technical constraints and a preliminary determination of the user’s capability and willingness to utilize water from the Project. • determine limitation for use of groundwater, possibility to receive water from a project and identify current and future water consumers towards developing schedule for water connection and determining water consumption trends in future. Increasing Water Consumption Trends must be estimated in three levels – “main”, “high” and “low”, and the timing and identify amount of ground- and surface water. 3.1.4 Hydrometeorological Data Compilation and Analyses Meteorological and hydrological studies and investigations will be carried out in the scope of Project. In this scope the climate and hydrological regime, and its possible future change, should be analyzed and assessed based on the latest data. The following data compilation and analyses shall be undertaken by the Consultant: • Develop location map of existing meteorological and hydrometrical stations or network at the Orkhon River Basin and assess monitoring data system and quality; • Assess the operation of hydrological stations in the Project region and make recommendation for future monitoring; • Collect data from stations in the Project region, create a database, and process and quality analyze meteorological and hydrological data.

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• Compile water quality data of the Orkhon River and determine water pollution rate and its source in the Orkhon River. • Compile global climate change projections for Mongolia, and any available previous studies of climate change in the region. 3.1.5 Orkhon River Basin Hydrological Study The Orkhon River Hydrological Study shall be conducted from the source of the river to the Orkhon-Tuul basin. The study shall identify river flow regime and its future trends, and water resource capacity at the potential dam locations. The study shall be conducted in accordance with internationally accepted methods based on the Orkhon River Basin’s multi-year observation database obtained from the hydrometeorological stations. The following work shall be performed in the scope of this study: • Review previous hydrological assessments for the Orkhon River basin; • Conduct hydrological modelling, based on the compiled hydrometeorological data, to determine long series of river flows at key points along the Orkhon River. The time step shall be determined by the requirement of the water balance study (see below). • Perform flow distribution and transmission loss assessment along the Orkhon river, and analyze interrelation between groundwater and surface water; • Estimate reservoir evaporation; • Conduct flood estimation for relevant return periods for key points along the Orkhon River to support design of spillway and river diversion during construction; • Analyze sediment runoff and volume, and potential dam siltation rates; • Perform river frost and water temperature regime study; and their projections • Conduct Climate Change Impact Assessment on water regime and resource. The hydrological study shall include an estimation of water quality of the Orkhon River, and assess morphological features of the river, relevant for the Project. The Consultant shall produce a Climate and Hydrological Study Report incorporating analysis, estimation and conclusions. The consultant shall develop maps in the report by using geographical information software. 3.1.6 Selection of Dam Sites and Water Transmission Alternatives The Consultant shall carefully review the Initial Screening study, and other relevant previous studies of the Orkhon River basin, to identify possible dam sites. The Consultant shall propose the location of dam sites based on the estimations of hydrological, topographical and geological, characteristics, as well as on potential environmental and social impacts (sourced from the parallel REA). The Consultant shall compare not less than 3 alternatives of the dam sites during the 1st Phase of the Feasibility Study. The followings are the location alternatives of dam were identified during previous studies (see Figure 4.1): 1. Dulaankhar Dam -located at 35km southwest of Bulgan City near the border of Mogod Orkhon Soum. 2. Khishig-Undur Dam –located at 30km southwest of Bulgan City near the border of Khishig- Undur Soum and Orkhon Soum. 3. Ulaan-Ovoo Dam – located at 20km from the Southern Part of Bulgan City and 6 km from the Southern Part of Soum Center.

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4. Berkh Dam -located at 40km from the Southern Part of Erdenet City and at 40km from the Eastern Part of Bulgan City. 5. Ulaankhunkh Dam - located at 45km from the Eastern Part of Erdenet City near the border of Buregkhangai and Orkhon Soums in Bulgan Province.

Figure 4.1 Scheme for the alternatives of dam over the Orkhon River previously suggested

Based on the above assessment of water demand in the project area, and based on topographical and geological characterizes, the Consultants shall propose alternative routes for transmission of the water from the proposed dam sites, including both main and secondary pipelines. At least 2 alternatives of alignment for the main transmission pipeline must be identified. For each of the alternative alignment an estimated water demand, current and future, shall be estimated. 3.1.7 Orkhon River Water Balance Study The Consultant shall conduct a water balance study to assess the relation between available water resources and the water usage from the source of the Orkhon River to the Orkhon-Tuul basin including; agriculture and other water consumers in the river valley, and the proposed transfer to Gobi. The water balance calculation shall be made without any dams, and for each option of the proposed dam reservoirs. The water balance model shall cover sufficient number of years to cover extreme low and high flow years, and extreme warm and cold seasons. The time step of the water balance model shall be sufficient to assess the assurance of supply to the main users of water. The water balance shall be conducted for the current situation and future trends for water availability and consumption. The consultant shall from a water balance perspective confirm the selection of alternative dam locations and assess the technical feasibility of flow regulation on multiyear, annual and quarterly basis to supply water users with water at acceptable assurance for these alternatives. The result of the water balance studies should provide an estimate of the suitable amount of 19 water to be taken from the regulated reservoir to meet water demand under the Project “Flow Regulation of Orkhon River and Construction of Reservoir Complex” and determine its impact on downstream river flows.

3.1.8 Preliminary Study on Geology, Engineering Geology and Hydrogeology

The Consultant shall review previous survey and investigation reports on hydrogeology, engineering geology and seismicity.

The Consultant shall • Collect geological maps and data for the Project area; • Collect data and information of previously conducted engineering geology surveys and investigations; • Process aerial and satellite imagery for geological mapping; • Conduct site visits by geological expertise. Based on this material the Consultant shall make a first desk review of the geological and geotechnical characteristics of the project area, which will be used as an input to the above first selection of alternative dam sites and water transfer pipeline. The Consultant shall also conduct a review of hydrogeological maps, data, and previous groundwater studies, and describe the hydrogeology of the project area, including main aquifers and their estimated resource and recharge period. This analysis will form inputs to the above assessment of water demand in the project area, and the potential need for augmentation of surface water to the Gobi region. For the gross list of proposed dam sites and transfer alignments, the Consultant shall conduct surveys and investigations to a level that it enables a conceptual design for the alternatives, and a comparison at pre-feasibility level. This part of engineering geological works may include, as appropriate, geophysical investigations, test pits, drilling, soil penetration, permeability and seepage investigations, laboratory analyses, etc. The investigations shall, as relevant, be conducted both for the construction sites and the potential quarries for construction material.

3.1.9 Preliminary Study on Engineering Geodesy (Topographic) Survey

The Consultant shall collect existing topographical maps of the project area. The Consultant shall also compile relevant global data (e.g. SRTM) and build up a Digital Elevation Model for the project area. Previous topographical survey and investigation documents shall be compiled and reviewed.

The Consultant shall conduct mapping to identify the locations of roads, settlements, cultural sites, pasture and agricultural lands, power lines and other significant features of the project area. All of this information should be compiled into a GIS database in a format that is compatible with systems used by the MEGD.

This topographical and mapping information will be used as an input to the above first selection of alternative dam sites and water transfer pipeline alignments, and to calculate reservoir volumes for the water balance studies.

For the gross list of proposed dam sites and transfer alignments, the Consultant shall conduct topographical surveys, or acquire detailed satellite data, to a level that enables a conceptual design for the alternatives, and a comparison at pre-feasibility level. The Consultant shall confirm the global data at key construction points through site measurements, and conduct additional topographical surveys, if found needed for this stage of the study. 20

The Consultant shall produce topographical maps covering each of the dam sites and transfer alignments at appropriate scales. The geodesy mapping and produced maps must be compatible with the geographical coordinate systems of Mongolia.

3.1.10 Electricity Demand and Hydropower Potential

One of the multiple uses of a reservoir and embankment on the Orkhon River is to produce energy by a hydroelectric generator powered by the accumulated water from the reservoir. A hydropower station may potentially be established as part of this project, and the produced energy be distributed to the customers and for operating the pump stations and other support functions of the water transfer.

The Consultant shall estimate the power demand for the operation of the project, especially the required pumping for the water transfer, and the available sources for this power. The Consultant shall also assess the local demand of electricity in the vicinity of the dam and pipeline alignment, as well as the possibility to augment the central power grid of Mongolia from the proposed dams.

The Consultant shall review the recently updated energy master plan for Mongolia, familiarize itself with current situation of energy supply in the Central and Gobi Regions, and meet relevant operating authorities to gather data and information on capacity, operation and future planning in the power sector.

The Consultant shall assess the potential hydropower production for each of the dam alternatives. This work shall be closely coordinated with the Orkhon River water balance study to ensure that power production does not impact on the assurance of supply for the main water users supplied by the dam.

3.1.12 Conceptual Engineering Design of Alternatives

The Consultant shall conduct conceptual engineering design, at Pre-Feasibility level, for all dam alternatives and water transmission alignments. This conceptual design will include major components such as:

• Dam type, height, and volume • Confirmation of dam stability • Required excavation, rock and earthwork, and seepage prevention measures • Spillway type and size • River diversion solution during construction • Bottom outlet gates (if needed) • Intakes for water transfer and hydropower station • Water transmission pipeline and booster pump stations • Water treatment plant • Power house, electro-mechanical equipment, tailrace and switchyard for hydropower station • Power transmission line • Access roads, quarries and associated infrastructure for construction and operation • Construction period, labor and equipment need.

The conceptual design shall be conducted based on the data and preliminary analyses conducted during the Pre-Feasibility Study. Data and results from the parallel REA shall inform the conceptual design to minimize as far as possible negative environmental and social impacts. 21

Based on the conceptual design the Consultant shall estimate safe water yield, firm and secondary power production, as well as total capital and operating costs, for the different combinations of dam and transmission pipeline alternatives.

3.2 Preliminary Financial and Economic Study 3.2.1 Definition of financial and economic criteria for selection of best options Since the different combinations of dam site, size and transmission alignment have not just different costs, but also significantly different benefits, a preliminary cost-benefit analysis may be needed already in the pre-feasibility stage. Moreover, because of its multi-purpose character, and link to overall development of the Gobi region, the financial and economic benefits may be very different for the alternatives. The economic benefits can be very high, e.g. from saving fossil groundwater, while financially it can be difficult to apply sufficient water tariffs to cover the cost of the surface water transfer scheme. Financial and economic results will also vary with different water demand scenarios (main, large, low). Since the outcome of the Pre-Feasibility study is not a final go/no go but a selection of the best option(s) to study more in detail, it may not be needed to conduct full cost-benefit analyses for both financial and economic return for all demand scenarios in the pre-feasibility stage. The Consultant shall, therefore, suggest and agree with the Client, on how the costs, financial and economic benefits should be taken into account in the multi-criteria analysis of the different alternatives. The Consultant shall in their proposal indicate the method to be applied, which will be refined in the Inception Phase and agreed with the Client before the Pre-Feasibility stage. It is, however, anticipated that the Consultant at least conducts the following tasks as part of the Pre-Feasibility Stage to provide inputs to the multi-criteria analysis (described in Section 3.3).

3.2.2 Total Cost Estimation of Project The Consultant shall, based on the conceptual design and the water demand assessment, estimate the total cost of the different alternatives, including both capital and operational costs. The capital and operating costs should be calculated for not only construction and operation of the engineering structures, but also estimated environmental and social programs and impact mitigation expenses to be identified by the REA. The capital and operating costs shall be estimated for all parts of the project, including the dam, hydropower station, water transfer, and water treatment plant. Both capital and operating costs shall be depreciated, according to the timing of their construction. The water demand and power demand scenarios studied in the Pre-Feasibility stage will give input to exactly when in the future the project is needed, and whether parts of the water transfer system can be built in stages reflecting the increased water demand. The time needed for the construction will be taken from the engineering study. The output on the total cost estimation should be at least one total depreciated cost estimate for each alternative selected in Section 3.1.6 above, assuming the same water demand projection and the same life span for all alternatives.

3.2.4 Preliminary financial analysis The Consultant shall conduct a financial analysis at the level of preliminary study by adopting relevant financial methodologies for all alternatives chosen under section 3.1.6. To enable this the consultant shall project a reasonable future tariff for water (for different users) and power, which will enable an estimation of the Financial Internal Rate of Return (FIRR), or similar outputs, for the life span of the project. Alternatively, the estimated parameter for financial performance for the different alternatives can be the required average water tariff to give an acceptable financial rate of return, assuming a projected tariff for power. 22

3.2.4 Description of economic benefits and costs Considering the complexity of the project a full economic cost-benefit analysis is not required in the pre-feasibility stage for the studied alternatives. However, the Consultant shall illustrate the monetary economic benefits, either as a monetary value (if possible) or a qualitative measure, for the different alternatives to allow a relative comparison. The economic benefits that shall be attributed to each alternative should e.g. cover the aspects of required use of non-renewable groundwater as supplementary source, number of beneficiaries that are allowed increased livelihood due to secured water supply, potential industrial growth and job creation, saved alternative power production costs, reduced GHG emissions, etc. Also potential negative externalities as a result of the construction of the alternatives shall be transparently included in the economic analysis. The exact methodology to be applied shall be generally suggested in the tender, and refined and agreed with the Client during the Inception Phase.

3.3 Ranking of Alternatives The ranking of the selected alternatives in Section 3.1.6 must be based on engineering, environmental, social, financial and economic factors. The ranking shall be conducted as a multi-criteria analysis. The detailed methodology to use shall be suggested in the tender, and refined and agreed with the Client during the Inception Phase. The Consultant shall summarize the results from the conducted Engineering and Technical Pre- Feasibility Study and the Preliminary Financial and Economic Study into suitable input measures to the multi-criteria analysis. The Consultant shall coordinate and seek input from the parallel REA, and similarly summarize these findings into suitable input measures to enable inclusion of environmental and social aspects into the multi-criteria analysis. The multi-criteria analysis shall be conducted and presented in a transparent way, so the reader can clearly see how the different criteria have been calculated and weighted. The consultant shall also conduct sensitivity analysis, through applying different weights of the different criteria, to illustrate the robustness of the ranking. The ranking of all alternative shall be presented, and the best option shall be recommended for further studies. Should the ranking of the best alternatives be very close, the Consultant may recommend that more than one alternative, or variants of the alternatives, are taken forward for feasibility studies. The results and recommendation from the Pre-Feasibility study and the recommendations for further studies at feasibility level shall be presented to the Client in a workshop. Based on the feedback from the Client and Panel of Experts, the Consultant shall update the results of the work and the recommendations. With the input of these recommendations a final decision on the way forward for the Feasibility Study will be taken by the Client.

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4 Feasibility Study 4.1 Introduction

In the Feasibility Study, the Consultant shall conduct additional detailed investigations, analyses, and calculations of the selected option in the Pre-Feasibility Study, refine and update the design to feasibility level. If more than one option, or variants of the chosen alternative, were taken forward to the Feasibility stage, the additional investigations and analyses shall be used to finalize the best choice. The feasibility design shall take into account the findings of the parallel detailed ESIA to as far as possible minimize negative environmental and social impacts. The Consultant shall coordinate closely with the ESIA consultant to share data and results from the Feasibility Study and obtain results and recommendations from the ESIA. The Feasibility Study must be conducted in accordance with the Construction Laws and other applicable and effective construction norms, regulations, standards of Mongolia and the requirements of the World Bank. Relevant reports and results shall be completed and submitted in accordance with the requirements listed in Section 6.

4.2 Engineering technical survey and investigation Within the framework of the Feasibility Study complete engineering surveys and geotechnical investigations shall be performed on the area of the proposed dam, water transmission pipeline, transmission line and other associated infrastructure, buildings and facilities. The engineering surveys and investigations to be executed during the Feasibility Study shall follow Construction Law of Mongolia, current BNbD standards in Mongolia and BP and OP policies of the World Bank. The Consultant should return the investigated areas to their original state upon completion of investigations.

4.2.2 Engineering Geodesy (Topographic) Survey and Mapping The main purpose of this study is to update and develop complete mapping for all construction areas of the project. Engineering geodesy works for the Feasibility Study shall include the following: • Conduct topographical surveys for all construction areas at appropriate level of detail for feasibility design; • If necessary, expand geodesy reference network and establish geodesy network for special purposes;

• Make an elevation tie to the geodesy network; • Develop digital elevation models and maps for the total length of water transmission pipeline, reservoir complex, construction camps, material storage areas, pump stations, hydropower station, water treatment facility, pipeline, water intake facility and power line. The Consultant shall perform topo-geodesy mapping work at suitable scale and accuracy using GIS software and AutoCAD software. In addition to the digital elevation models, the Consultant shall also develop overview maps that indicates the large water consumers, water pipeline segments, pump stations, and water reservoirs. The current water supply system shall be included to the map. The Consultant shall include roads to the mapping and prepare a cross section and longitudinal section where these

24 cross the water transmission pipeline, power line, communication line, fiber-optic cable and other pipelines to the geodesy map. All results from the survey and investigation including estimations, schemes and mapping shall be included in a Topographic Survey Report.

4.2.3 Engineering-Geological Survey and Investigation For the geotechnical investigation the Consultant shall summarize information from the previously conducted geological, hydro-geological, engineering geological, seismological studies and list them by name and type, scope, duration for execution, study method and methodology and their results. The Consultant shall identify engineering geological conditions at the project area, and develop geological maps and reports. The Engineering-Geological Survey and Investigation for the Feasibility Study shall include to: • Collect data and information of engineering geology previously conducted for the areas of the proposed Project and process them; • Process aerial and satellite imagery and the best processed geological mapping; • Conduct geological investigations, through appropriate methods including geophysics, drilling, test pits/adits, etc.; • Conduct appropriate rock and soil tests and analyses; • Test and analyze sand and aggregates to be used for the construction of the dam, road and other associated facilities; • Process results from investigations and testing, and develop geotechnical reports. Since the Project covers a large amount of territory, the Consultant should study the engineering geological condition, engineering geological phenomenon, boundaries and intensity of geological process. Identify origin of Quaternary deposit systems, their type and distribution boundaries, fractures and boundary of rock soil cracks, locations and their replenishment accumulation zones. The Consultant shall visit the site and make a program for surveys and investigations. The Consultant shall develop data to describe the engineering geological conditions and develop methodology for their geotechnical surveys. Engineering geological assessments shall be conducted at appropriate levels for the following components of the project: • Water accumulating reservoir (water proofing of the reservoir, any water loss and slope stabilization); • Embankment; • Other hydro-technical buildings and facilities; • Sub-stations; • Construction material quarry and borrow pit sites; • Associated infrastructure; • Water transmission pipeline; • Booster pump stations; • Water treatment facility. Detailed geophysical surveys and geotechnical investigations shall cover the dam area. Under the Feasibility Study, the Consultant shall identify depth of rock, soil and permafrost soil and their boundaries, thickness and fracture, crack boundaries and establish the level of soil water and deep water in the river valley and flow direction. The Consultant shall carry out detailed drilling at the dam area and take necessary samples which will be basis for the dam design. Depth of

25 boreholes need to penetrate base rock and conduct pumping and cast in place work to determine rock cracks. Depth of boreholes should penetrate up to 20 m in the base rock. Engineering geological drilling shall be conducted at each kilometer along the transmission main pipeline and the depth of drilling is 1-2 m below depth of pipeline installation. It is allowed to increase or decrease distance for drilling depending on engineering geological condition. The Consultant shall drill 1-2 boreholes at the proposed area for pump station, reservoir and other buildings and facilities, and drill boreholes of 5-6 m deep at every 3 km along the proposed power supply line and road. The Consultant shall conduct appropriate sampling and site testing during the surveys and investigations. The selected sample and kern from drilling shall be tested at a laboratory to determine characteristics, quality and analyze to confirm suitability for foundations or use for construction material. The Consultant shall collect the sorted kerns from drilling and store in a safe location. Upon receiving the results from the engineering geology, the Consultant shall develop engineering geological mapping of 1:5000 for the dam area, 1:10 000 for the reservoir area, 1:25 000 for the water and power transmission pipeline alignment and cross and longitudinal sections of necessary amount and attach them to the report. Within the hydrogeology study at the reservoir area the Consultant shall establish quantitative indicators of soil water and deep water as well as water chemical content, rusting and mordant quality per each water strata and include recommendations on soil water regime change, methods of observation for the regime and methods to make measurements during the operation period. Consultant shall assess the water transmission pipeline to identify soil water near to ground surface. The Consultant shall summarize all findings from the Engineering-Geological Survey and Investigation in a Geotechnical Baseline Report. Include results from the survey and investigation and estimations from the geology, geophysics, hydrogeology and engineering geology studies. The Consultant shall determine difficult engineering geological conditions and risks and transparently describe these.

4.2.4 Construction Material Survey and Investigation The Consultant shall carry out studies for clay, sand, gravel and rock materials necessary for construction of the dam, hydro-technical buildings and facilities. The Consultant shall include studies of gravel and sand deposits to be used for concrete production. The Construction Material Survey and Investigation should provide necessary information on resources, location, quantity, quality and geological and chemical conditions. The Consultant shall, in addition, identify resources of cement, steel, wooden material and foreign and local material procurement sources. The Consultant shall conduct a study for sourcing water to be used for construction. The Consultant must follow norms, standards and regulation requirements of the Mineral Resources Authority in Mongolia based on regulation for protection of nature and environment and usage of natural resources for earth material investigation.

4.3 Engineering technical studies and design 4.3.1 Seismicity Study The Consultant shall summarize quality and quantity data used in the previously conducted seismic studies analyzing by name and type of works, coverage, executed timeframe, methodology and result and provide a conclusion.

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The Consultant shall assess seismic impacts and describe seismicity for the region and assess seismic risks. Determine seismic impact zones, seismic sources, estimated maximum earthquake, anticipated maximum earthquake during project operation, estimated earthquake speed, earthquake grades for construction of dam, etc. The Consultant shall review the current seismic network in the region, project area and make suggestions for improving monitoring seismic activity. The results of the seismicity study shall be incorporated into the Geotechnical Baseline Report.

4.3.2 Hydrological Study The Consultant shall conduct additional studies on hydrology, in addition to the previous study undertaken during the Pre-feasibility stage, if it is required for the Feasibility Study, and develop a revised study report accordingly. Special attention shall be given to confirm design floods.

4.3.3 Reservoir Siltation Study The Consultant shall conduct reservoir sedimentation studies including sediment characteristics, sediment volume, sediment accumulation profile in the reservoir, profile/elevation of sediment at the upstream pool of the dam, determination of reduction of the dead and useful reservoir, live storage, volume as a function of time (years, e.g. 50 years) after commencing the operation of the reservoir, and the dynamic change of volume curves versus reservoir elevation. If necessary, the Consultant shall assess possible sediment management options, such as upstream watershed management, reservoir flushing, etc.

4.3.4 Reservoir Operation Study The Consultant shall develop reservoir modeling, based on the updated hydrological and reservoir siltation results, to optimize the operating reservoir levels (minimum, normal and maximum), calculate anticipated safe yields for the water transfer, calculate the potential power production, and to identify impacts on water resource and regime of the Orkhon River. The Consultant shall provide simulation of analysis of possible operating regimes of reservoir over a long period, preferably 50-60 years. As part of the reservoir operation study, the Consultant shall calculate reservoir evaporation and seepage. The Consultant shall also evaluate ice and icing regimes affecting the reservoir, intakes and tailrace, and take these findings into account on how to operate the dam. The Consultant shall use the reservoir model to analyze the filling progress, to estimate the required duration of filling. The Consultant shall prepare a phased reservoir filling schedule in accordance with the construction stages. The reservoir operation and simulation studies for the water and power analyses shall be presented in a report along with the model, methodology, criteria and data used and the analysis of the results.

4.3.6 Dam Design and Stability Analysis The Consultant shall determine, in detail, the structure of the main body of the dam, size and calculation of the seepage, settling and stabilization of the main body. Calculate connection of the dam embankment to the river bottom or bedrock under the channel and calculate required prevention measures against seepage through foundation or bedrock and plan the necessary structures. The Consultant shall conduct a stability analysis of the proposed dam. The structural analysis is intended to determine the integrity of the dam and structures under standard loadings and other loadings. These include: dead load, maximum reservoir water level, downstream water levels, internal pressures, foundation up lift, backfill/sedimentation, earthquakes, etc. 27

The analysis shall be presented in a report, including findings, design memoranda, calculations, analysis, and optimization of Project components.

4.3.3 Hydraulic Study and Waterways The Consultant shall carry out complementary hydraulic studies necessary for the Feasibility Study. The updated calculations shall be used to design and optimize the hydraulic structures such as coffer dams, dam, spillway, bottom outlets, and river diversion during construction, etc. The Consultant shall study flood routing of the probable maximum flood through the reservoir to establish the discharge capacity of the spillway, operating rule of the reservoir, and water levels downstream of the dam/spillway. The Consultant shall provide the model, methodology, criteria and calibration used in the flood routing. The Consultant shall conduct backwater studies to determine maximum water level at full reservoir level and its location, and maximum distance from the axis of the dam. The Consultant shall make calculations for the structures to accommodate spring thawing flood and precipitation water flood passage and potential measures to remove accumulated sediments. The Consultant shall plan for passage of river ecological flow and water intake structure for the water transfer and hydropower (intake, penstock and tailrace). Consider options for the water intake structures and recommend the optimum solution for reliable operation in Mongolian conditions, especially considering icing conditions. Consider options for fish protection and passage.

4.3.4 Hydraulic Calculation for the Water Transmission Pipeline The Consultant shall conduct hydraulic calculation of the pipeline and determine, pipe diameter, the number of required pump stations, their capacity, location, and other important criteria. Pipeline diameter, sectional length, material selection shall be identified in connection with hydraulic surge (water hammer) calculations. The Consultant shall develop an optimization option for surge protection and plan necessary measures and recommendations for equipment. The Consultant shall incorporate Mongolian and cold climate conditions in selecting of pipe material and diameter.

4.3.5 Pipe Material and Booster Pump Stations The Consultant shall make recommendations for pipe material based on physical indicators, usage and condition for transportation, installation and operating conditions. Select pipe of modern technology, corrosion resistance, high pressure capacity, and low hydraulic resistance. The Consultant shall incorporate Mongolian and cold climate conditions for calculations of depth of pipeline installation and sizing. Also, calculate earthwork quantities for pipeline installation and develop method for assembly and installation of the pipeline. The Consultant shall select pump type, quantity and capacity to be used at pump stations and include both duty cycle and reserve pumps. Plan water tanks at the suction side of each pump station with purpose to stabilize hydraulic conditions of pump stations and pipeline. The size of water tanks shall be calculated taking into account minimizing the risk of damage to the pipeline and required time for repair and maintenance. The structure and material of water tanks should be selected accounting for the cold climatic conditions and technological requirements of Mongolia. Plan diesel standby power generation at each pump station to assure and provide reliable operation. Configuration and size of pump stations, equipment and instruments shall be recommended depending on the proposed location. The recommended building structure shall be the most suitable for Mongolian conditions and the remoteness of the facilities. Each pump station shall have suitable working conditions for the operators and have a security fence and guard house. 28

Pump station operation shall be fully automatic with possibility to operate manually when necessary.

4.3.6 Water Treatment Facility Water from the reservoir at the Orkhon River transmission pipeline for supply for human consumption shall be treated and disinfected to meet potable water standards. It is necessary to consider the modern methods and technology for selecting disinfecting method. The Consultant shall select the location, capacity of water treatment, and disinfecting facilities. Present overviews of these options, technological conclusions, design requirements and preliminary planning, budget expense and implementation schedule.

4.3.7 Energy Demand and Power Supply The Consultant shall determine anticipated electric power required for operation of the project. Calculate the number of electrical equipment items to be planned at the dam and other hydro- technical facilities. There should be a listing of all major electrical loads for operation, such as: lighting and heating etc. The Consultant shall calculate power demand for each pump station, including pumping equipment, and other necessary functions. Power demand shall as far as possible be provided from the power generated at the hydropower station. The Consultant shall, however, consider options to connect the booster pump stations located far from the Orkhon River to nearby local energy networks. Select power line capacity and voltage depending on connection distance and to minimize the size and cost of transmission lines and substations.

4.3.8 Hydropower Station The Consultant shall determine type, capacity and number of the turbine generators at the hydropower station. The Consultant shall determine solutions for cooling water, filtering system, pressure and air system and operating conditions of the turbines. The Consultant shall determine the optimum location, and size of the power house and the subsidiary electro-mechanical equipment.

4.3.9 Power line to the Central Electricity System The Consultant shall study power line to transmit power from the hydropower station and its capacity and alignment. Determine work regime of the proposed hydropower station and connect to the Central Electricity System. Estimate energy system regime calculation through potential alternatives and make an analysis and conclusion. Also carry out static stability calculation for the energy system.

4.3.10 Access Roads The Consultant shall develop requirements and planning of roads for the project facilities that will be needed during construction and operation. Develop a plan for transport of oversize and overweight equipment to the project sites. Identify bridges and/or flood protection culverts at necessary locations. Consider possibilities to use the road during construction period for operation and if necessary plan a new road for operation. The Consultant shall study road routes for transporting construction materials. If necessary, the Consultant shall plan an alignment and location selection for roads to be used during the construction period as well as operation period. The Consultant shall plan a temporary road necessary during construction of water transmission pipeline and booster pump stations for transporting equipment and materials in accordance with

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Mongolian Construction Norms and regulations, standards and appropriate environment regulations. Plan a road along the transmission main to be utilized during operation.

4.3.11 Associated Infrastructure The Consultant shall determine preliminary designs for year-round accommodation and access to project sites, and the location and requirements for offices, workshops, housing facilities, electric power, recreation areas and temporary installations such as: construction camps, contractor’s plants, borrow pit areas, etc.

4.3.12 Communication, Data and Telemetry The Consultant shall identify communication and data systems necessary for the project that include an automatic control system, remote customer water metering, and site security. The Orkhon River Complex and all booster pump stations shall be connected by communication system to a central control center located at the dam site. Study and evaluate communication system alternatives and recommend the most reliable system. Include all required sensors, meters, and telemetry components and recommend locations and quantities for a complete and reliable system using modern technology appropriate for Mongolian conditions. Dam facility and booster pump station operation shall be regulated by automatic regime with manual operation option that is regulated from the central system. Dam embankment and booster pump stations shall have an automatic operation and shall be controlled from the control center at the Orkhon Complex. The Consultant shall study modern methods needed to diagnose damage of the water transmission pipeline from a far distance. The Consultant shall plan measuring instruments and equipment for monitoring dam embankment setting, transferring, seepage and sedimentation situation and also plan a constant station for climate and hydrological monitoring.

4.3.13 Preliminary Engineering Design and Drawings Based on the additional data collection, analyses and studies, the Consultant shall confirm the technical solutions proposed during the Pre-Feasibility Study, for the dam, reservoir, hydro- technical building and facilities to be constructed at the Orkhon River, and the water transfer. This will include the final selection of the most optimum location for construction of the proposed reservoir, type of dam embankment, water intake, overflow passage structure, hydropower station, etc. It will also include the final selection of alignment for the water transmission pipeline, and the power transmission line. The Consultant shall carry out preliminary engineering design at Feasibility Level of all components of the project with design criteria and drawings. An optimization of the layout and of its various components shall be carried out. Optimizations shall include, among others, reservoir size, dam height, development stages, spillway design capacity and size, waterways (intake type and size, headrace pressure tunnel length and cross-sectional area, surge chamber, pressure shaft, penstocks, valves, major mechanical (turbine capacity and number of turbines), electrical equipment (generators, transformers), gross and net operating heads, power house cavern, tailrace, etc. Preliminary design and drawings of the building and structures shall include all components of a dam, spillway structure, intake structure, bottom outlets tunnels, penstocks, river diversion during construction, power station, installed capacity and number and size of generating units, electrical and mechanical equipment, etc. The design and drawings of the water transmission pipeline for long distance water conveyance shall cover pump stations, their types and size, capacity, water transmission pipeline, water storage reservoirs, water outlet structure, etc.

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4. 3.14 Bill of Quantity The Consultant shall estimate a detailed Bill of Quantity for civil works and equipment of the various components of the project, taking into account that they may be used in bidding documents. The corresponding report shall be presented accompanied by explanations and sources of the estimate and drawings used.

4.4 Planning and organization 4.4.1 Project Operating Organization The Consultant shall estimate management structure and number of employees of the operating organization and requirements for their working environment and living accommodations. The Consultant shall make recommendations for the location of the central control and administration center. Plan work places for the operating organization that meet functional requirements and include necessary furniture, vehicles, tools, equipment and instruments, and estimate the required investment and job descriptions for key personnel for each site. The Consultant shall plan buildings and facilities for the organization, operation, employee accommodations and security purpose for operation of the reservoir, dam and other hydro- technical facilities. Include a visitor facility near the Orkhon Complex for receiving visitors and providing public information. The Consultant shall plan measures to involve local communities during operation of the buildings and facilities and introduce to the local administrations and communities and for recruiting and vocational training local workers.

4.4.2 Procurement Planning The Consultant shall prepare a procurement strategy to define the contract lots/packages for civil works and for the electrical and mechanical equipment accompanied by the justification thereof. Pre-qualification shall be taken into account for major contracts for civil works and electrical and mechanical equipment. Procurement planning should be done for each stage--as required. Develop a separate report for procurement criteria, alternative analysis, justification for the selected alternative and procurement planning.

4.4.3 Safety of Dam The World Bank Policy on Dam Safety should be observed, required documents produced and procedures undertaken regularly under BP4.37, such as e.g. the Emergency Preparedness Plan. The Borrower should ensure preparation of the plans for construction supervision and quality assurance, instrumentation, operation and maintenance, and emergency preparedness in according to the OP 4.37 and BP 4.37. A qualified expert should confirm that the ESIA for the project has determined that there would be no risk or negligible risk of significant adverse impacts due to potential failure of the structure to local communities and assets, including assets to be financed as part of the proposed project.

4.4.4 Health and Safety at Work Place The objective of this task is to prepare an Occupational Health and Safety Plan to minimize health and safety risks to permanent and temporary employees of Contractors, and Sub- Contractors, during the construction phase, to the staff during the operational phase. 31

The Consultant shall prepare an Occupational Health and Safety Plan as a mechanism to reduce health and safety risks to the workers. This plan should present in table form a description of the actions to be taken, identify the organizations responsible for the action and specify the costs for the program during the planning and implementation phases.

4.4.5 Implementation Schedule The Consultant shall prepare an implementation schedule based on the lots/packages resulting from the procurement strategy so that a cash flow projection calculation can be developed for consideration in the economic and financial analysis. This schedule shall define the preconstruction activities, including access and transportation routes and methods, locations of borrow pit areas for construction materials, construction methodologies, construction equipment, construction labor force requirements, construction camps and site infrastructure, office facilities, ecological requirements and population resettlement activities. The critical activities and the critical path of activities in the schedule shall be illustrated in the schedule. The Consultant shall develop construction schedule for a dam defining its phases and for each stage.

5 Financial and Economic Studies 5.1 Introduction The purpose of this task is to provide detailed economic and financial assessment for the selected alternative. The Consultants shall: • Evaluate in detail the selected alternative’s economic and financial issues, including water demand dynamics, water and energy tariff structures, risks, and timing variables. • Estimate the economic cost of domestic and cross-boundary externalities (environmental, social, political) and • Conduct a detailed assessment of whether the project creates more net benefits to the economy than other mutually exclusive options for the use of the resources in question in accordance with requirements of the WB, Economic Evaluation of Investment Operations). Donor organizations, investors, state authorities and monitoring authorities are interested in the economic benefits of a project. Therefore, economic and financial analyses shall be performed to identify the economic basis of the project. A Financial and Economic Study has its own significant characteristics as it illustrates direct and indirect results that can be expressed in quantitative and qualitative data, and contains broader issues in detail based on actual data. Hence, the Consultant’s Financial and Economic Study and Analysis will be a significantly important and an independent part of the Feasibility Study in terms of detailed study and actual results. The Consultant must not necessarily express all the results of study in currency terms only. However, the Consultant shall strive to identify the quantitative results of vital information as much as possible. Especially, regarding direct expenses such as the Reservoir Complex, pipelines and construction works that are directly related to project activity must be included in the Economic and Financial Study. Nevertheless, to present the project benefits as a whole, the Consultant shall discuss in the sub-section of the Economic and Financial Study how expected benefits of project will positively impact development of tourism, food and agricultural industries and the mining sector. Not only quantitative benefits but also indirect social, economic and environmental qualitative benefits of the project shall be analyzed.

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5.2 Financial and Economic Risks of Project Major programs are transformative initiatives that are implemented by temporary organizations during a pre-defined timeframe (schedule), managed by diverse stakeholders, comprise pre- defined CAPEX in excess of USD 1 billion (cost) and deliver pre-defined, economic quantifiable benefits. Major programs often experience failure across the globe, with cost overruns of 50% - 100% being common (Flyvbjerg, 2009, Flyvbjerg, et al., 2009). The economic cost of failed major programs can be substantial, in addition to the CAPEX invested in the major program itself. For example, Flyvbjerg et al. (2009) noted that one study estimated the Net Present Value (NPV) of the Chunnel Tunnel to the UK economy at negative USD 17.8 billion. Major programs are transformative, by definition (Flyvbjerg, et al., 2003); however, their relative scale in frontier markets can result in a much larger impact. Indeed, the relative impact in frontier markets (pre-emerging markets) is so much larger that failed major programs can precipitate economic failure, since capital flows can be highly volatile and reversible, thereby generating high costs for frontier markets. (Ocampo, et al., 2007) For example, the Oyu Tolgoi Copper Mine Development Program (OT) may incur USD 14 billion CAPEX and could transform Mongolia by generating 1/3 of GDP (currently USD 10 billion). OT Phase I (surface) delivered basic mine infrastructure for USD 6.6 billion; however, suspension of OT Phase 2 (underground), 80% of value (AMC Consultants Pty Ltd, 2012), derailed delivery of full economic benefits on time and has impaired the Mongolian economy. A developed economy may absorb such massive cost overruns or other symptoms of major program failure. However, such results may stunt economic growth in frontier markets for years or even decades, by severely affecting political, economic, financial, social and other key country variables. Cost overruns and benefit shortfalls are two leading causes of major program failure. (Flyvbjerg, et al., 2003). Schedule delays can also result in cost and benefit shortfalls, since time is equivalent to money.

Figure 5.1 3Q 2013 Daily FX Rates MNT/USD (source: www.mongolbank.mn)

In the context of the major project / program risk factors discussed, and the potential negative impact on the Mongolian economy should the Reservoir Complex Project (“Project”) fail to achieve its Cost-Benefit target. It is imperative that the Natural Resource Economist ensures the cost; schedule and economic benefit estimates of the irrigation project are feasible and achievable.

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The greatest opportunity to impact major project / program success through financial engineering, value engineering, trade studies, and other foundational occurs during the study and planning stages (Front End Engineering Design), thus particular attention should be given to validating the Cost-Benefit profile of the Project during the study phase--is critical. In addition to expertise in Economics and Finance in a Natural Resources context, the Natural Resource Economist must also have extensive knowledge of the design and management of major programs gained through hands-on experience.

5.3 Main Studies The Reservoir Complex Project is greatly different from other projects as it heavily focuses on social characteristics. It will become a one-sided view if cost-recovery, revenue and benefits of the Project are analyzed from only economic point of view. Therefore, the Economic, Social and Financial Assessment must be done at the same time to ensure national security, public health and sustainable development.

5.3.1 Results of “With-Project” versus the “Without-Project” Alternative Comparing studies between “with-project” and “without-project” will be another method to identify benefits of the project. Economic benefits of each project alternative will be analyzed by using financial and economic models. Other possible alternative of using water resources for different purpose - “without-project” alternative shall also be examined to maintain and protect the natural environment. According to worldwide requirements on protecting natural environments, it is viewed that protecting the natural environment could bring more benefits than implementing any project. Hence, implementing a project from one side and without implementing project from another side must be considered. Therefore, it is important consider all possible alternatives for protecting the environment and assuring the wellbeing of society and developing other sectors of the economy instead of regulating the flow of river and transferring water. In the case of “with-project” alternative, all possible alternatives of water resources must be considered as well. The aim of the project is to satisfy future water demand trends of the Southern Gobi Region and to ensure sustainable development of the ecosystem surrounding the Orkhon River Basin with assistance of a hydropower station, a water transmission pipeline, water outlets, and reservoir complex to be constructed over the Orkhon River--the largest river in Mongolia. Therefore, comparison analysis on how the project would impact the environment, society, economy and public health will be conducted from various points of view. This comparison analysis will be part of the Feasibility Study. Including: • Orkhon River’s ecosystem, desertification and dryness in the Gobi Region will be changed and increased; • Shortage of water, water quality related issues, demographical issues such as health, sickness and death will be changed; • Future and current water consumptions of mining industries in the Gobi Region, utilizations of groundwater resources and water tariffs will be identified through economic indicators.

5.3.2 Laws, Regulations and Water Tariff Review of, and consistence with, the applicable international conventions, domestic laws and policy documents, treaties and bilateral agreements is a basis of successful implementation of any project, therefore, it is emerging to scrutinize international conventions, domestic legislations and other policy documents which are directly applicable to a particular project.

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Within the framework of legal issues, it is required to review all effective international conventions, treaties, and bilateral agreements which Mongolia is a party to and domestic laws, policy documents, national programs essential for the implementation of the project. The tentative list of the applicable and effective international conventions, bilateral agreements, domestic laws, policy papers essential for the project implementation, has been endorsed to the Report; however, this list shall not be treated as an exhaustive list for legal review purpose. In other words, if there is any new circumstances and legal documents emerged during preparation stage of the feasibility study for the project, such circumstances and legal documents must be covered adequately in the feasibility study report. Legal review helps to reveal the external and the internal legal factors that may affect the project implementation, and its cause or justification, to provide an answer to some public misunderstanding about the project from legal point of view, to correctly evaluate potential external and internal risks and its factors for the implementation of the project, to envisage decisive countermeasures against such risks, and to ensure in establishing legal preconditions for successful implementation of the project. Water use payment shall be calculated in accordance with the Law on Payment for Use of Natural Resources adopted in 2012 as revised; and Government Resolution #321, dated 21 September 2013, concerning Determination and Exemption of Water Use Payment. In financial and economic calculations, all effective laws and regulations, taxes and tariffs of Mongolia shall be complied. It is recommended to assess the project from perspective of whether the project is eligible for an international recognition within framework of international programs, such as Man and the Biosphere sponsored by UNESCO, and the World Heritage Convention due to its significance and extents; and if it is determined as eligible, then to recommend how to accomplish such recognition in the international level and its implication in environmental and social impacts of the project, to determine possible impacts for the project’s international significance and configuration and financing for the project.

5.3.3 Management Alternatives for Assets of the Project Within the framework of this objective, it is required to study issues concerning the ownership of assets created by the project. The consultant shall study the current or newly emerging experiences in the world with respect of ownership rights for assets created by a project, and/or joint ownership by several parties or countries and issue a recommendation in that respect. Recommendations must be made for the involvement of the stakeholders especially the government. It is required to make proposal or recommendation in respect of implementation of the project through ‘Build-Operate-Transfer’ concession type pursuant to the Concession Law of Mongolia by project implementing consortium comprising of foreign and local entities, with involvement or financing of international organizations or international private investors, define the terms to use and maintain the water related construction, relationship with other water users or consumers, rights and duties of project implementing entity, transfer of the assets into state or local property at the end of the term. Since the project is in the concession list adopted by the Government of Mongolia (Resolution #198 of 2010) pursuant to the Concession Law, it is required to make proposal or recommendation on possibilities to attract international financial institutions and donor countries, or international private capitals, including domestic investments into the project, possible types of cooperation, or project financing, special project vehicle, its right and duties, relationship with others, specific issues and scope thereof.

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5.3.4 Estimations of Water Consumption and Water Tariff Every water consumer will use water for different purposes. Therefore, different water tariffs have been applied within the estimations of the Initial Screening. Water Tariffs will be fixed differently on the basis of water transmission cost, consumers’ ability and social characteristics. Tariffs for water services should be recommended as a result of estimating the cost of water services to identify the difference between fixed rate and actual cost.

5.3.5 Project Cost Estimation Sources of Project financing for the selected alternative along with targeted weights for each will be identified and ranked in the context of current conditions in the global financial market for Mongolia-related capital. Market-based, realistic Weighted Average Cost of Capital (WACC) estimates for alternate financing scenarios and alternate project structures will be analyzed. Net Present Value (NPV) for potential technical solutions will be computed. Project structures and alternate financing scenarios will also be identified to recommend alternations. Besides the capital investment required for Engineering Structure, the ecological, social and financing costs should be estimated in the CAPEX.

5.3.6 Estimates of Revenue and Operating Expenses Develop Financial Model for the project selected alternative, inclusive of, but not limited to the following: . OPEX . Depreciation . Interest Expense . Labor Costs . Worker’s Compensation . Social and Health Insurance Taxes . Other Taxes . Fee on Use of Water Resources . Land Utilization . Insurance Cost . Environmental and Social Costs . Other operational costs The estimations must be done for each of the components of the Project. Water sales will be the source of revenue. Electricity generation from the Hydropower Station to be constructed over the Orkhon River will also be a source of revenue.

5.3.7 Direct and Indirect Benefits Estimate the direct benefits in the following sectors upon implementation of the project, such as: • Water supply for population • Animal husbandry, agriculture • Power supply

• Water supply to large light and food industries • Extension of job placements, creating new jobs and increased income for citizens • Tourism;

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• Water supply for mining exploring and processing; • Impact on the state and local economic and budget etc., Economic indirect benefits of the Project must be analyzed. Indirect benefits, such as, continuous mining operation, GDP growth rate, production by small and medium enterprises will be included. Indirect benefits of the Project are attractive to stakeholders, investors and financing organization and the Consultant shall clearly show in detail these indirect benefits. In addition, the Consultant shall determine the indirect benefits of the Project according to the interests and activities of stakeholders, investors and financing organization to give an opportunity to look at multiple points of view of indirect benefits including: - Impact on ecosystem of the Orkhon River and other Project territory - Impact against the desertification and drying - Change in amount of water for potable and domestic use and their quality - Population settlement and health - Changes in the culture and life quality for the population in the region - Tourism, development of city and settlement area The Consultant shall summarize the direct and indirect benefits of the Project for comparison or for use separately.

5.3.8 Potential Risks in the Environmental and Social Sectors Negative Environmental Impact Assessment shall be described in economic terms. Principles of retaining conditions to live and engage in traditional livestock industry activities for a long period of time--must be served. Potential impacts on water wells and herders’ wells shall be monitored and assessed to identify whether or not groundwater resources are affected. Although it has been documented (by many years of precipitation measurements) that the aquifer recharge rate is very low in the Gobi Region, changes in recharge rates during mining operations need to be studied and documented. Social criteria considers the percentage of population engaged with main domestic industry and changes in number of people engaged. In case of significant decrease in engagement of traditional industry, a socioeconomic impact assessment is to be conducted to assess changes in household income, involuntary resettlement and burden/pressure faced by indigenous people due to the changes in type of main industry.

5.3.9 Socioeconomic Study of Project General analysis and conclusions should be made for the socioeconomic situations of the Project region. Although mining development has variety of benefits and creates multilateral business opportunities, natural resources have their own capacity and limitation about which must be taken into account. Protecting the natural conditions for pastoral cattle breeding enables the ability to retain natural resources for future generations. Therefore, constructing a groundwater system (for mining purposes) within this ecological boundary will give opportunity for the local population to live and continue with their pastoral cattle breeding for decades to come. In other words, one consumer’s rights should not affect to another consumer’s rights. Social benefits of project should be described through economic assessment. The indirect and direct benefits will be expressed by: • Increased percentage and sufficiency of water for population 37

• Water Quality Improvement • Changes in distance of water intake • Changes in Water Tariff • Reductions of unproductive social expense • Number of job places • Increase of Household Income • Improvement pastureland generation • Reduction of desertification • Decrease of livestock mortality • Decrease of livestock birth rate. GDP growth before and after the implementation of projects such as Oyu Tolgoi and Tavan Tolgoi and their future direct and indirect trends and forecasts must be described including: • State Budget; • Province Budget; • Profits to local government; and

• Local citizens’ household income Although there is a probability of GDP growth, the Consultant should illustrate changes in the GDP rate in the event of mining industry suspension due to the insufficiency of water. 5.3.10 Evaluation of Project Risks The Feasibility Study for the Project shall evaluate possible economic and financial risks of alternatives. The Consultant shall conduct comparison analysis of financial, technical, environmental, social and economic risks, taking into account the level of infrastructure development, economic capacity and political situation of Mongolia. There should be a clearly described action plan to eliminate and prevent possible financial and economic risks. Identify risks by types and measures to reduce risks of causing damage to the ecology and society due to time loss, delay and unproductive expense during Project implementation. Financial and Economic Risk Assessment must be summarized together with the Environmental and Social Risk Assessment and Action Plan should be made to reduce the risks.

5.3.11 Project Benefit Estimation The Consultant shall employ the following principles to estimate project benefits: • All expenditures required for indirect and direct benefits of the Project must be estimated in detail with sufficient justification; • Income and revenue should be computed using financial and economic parameters and methodologies; • Add value to the estimations including figures, diagrams and schemes. These expressions should be acceptable and clear to read, understand and use by the interested parties. The Consultant must compute the following estimations using known traditional or new methodologies: • Individual estimations of drawings, investigations and surveys, construction activities and operations expenditure; and • Income and Revenue Estimations ; 38

Investment benefit estimation shall be estimated for each of the alternative via their implementation stages.

5.3.12 Financial and Economic Analysis The Consultant shall consider the following factors in the Financial and Economic Analysis: • Current price, base-price, NPV and payback evaluation; • Capital, depth and payment ratio, payment conditions, circulating asset; • Sensitivity Analysis – electricity rates, increase in CAPEX, delay of construction work • Financial and Political Factors - inflation, exchange rate, exchange rate difference, interest fee and payment risks. Evaluate comparisons of alternatives on “before-after” the project basis. Project beneficiaries of all sectors must be included in the Financial and Economic Analysis.

Develop Financial Model for the project, inclusive of the following: • Sales • COGS • Gross Profit • OPEX • EBIT • Pretax Income • Income Tax • Net Income • CAPEX • LT Debt Borrowing • LT Debt Repayment • Environmental Costs • Free Cash Flow • Discount Multiple • PV of Cash Flows The Consultant shall determine financing type and sources including: • Identify possible financing scenarios together with the components of the Project to determine interest level; • Identify possible investors and assess how to cooperate with them during the Project implementing phases. Project Economic Basis will be determined by not only economic benefits but also by the result of social, economic and ecological benefit assessment so that economic benefit can be determined by summary of assessment.

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C. DELIVERABLES BY THE CONSULTANT

6. Work Results 6.1 Introduction The Feasibility Study and Detailed Environmental and Social Assessment shall be performed simultaneously under individual agreement with separate Consultants. The Feasibility Study shall include engineering, technical, financial, economic, legal and institutional studies used for developing the project concept and justifications for its implementation. The Environmental and Social Assessment will include information collected during public consultations. Results from these two works will establish the basis for decisions on implementation of the project.

6.2 Deliverables Deliverables produced as a result of this TOR will packaged as described in this section. The Final Feasibility Study shall be submitted, discussed and approved by the “Water Resource Committee” under the Ministry of Environment and Green Development in accordance with the current Mongolian Law on “Construction” and Regulation on “Design for construction and its expertise approval, supervision of construction works and commissioning” which was approved by the Resolution No.185 in 2010.

6.2.1 Progress Reporting All reports listed below should be submitted in English and Mongolian. Unless otherwise stated, reports are submitted to the World Bank through the MINIS PMU according to the schedule given below. Inception Report: The inception report should be submitted in English to the PMU 30 days after Date of Letter Award. Proposed Work Program. The proposed work program should be submitted in English to the Technical Steering Committee 30 days after Date of Letter Award. Progress Reports: Progress reports should be submitted in English to the PMU monthly, following contract signature. The progress report should present a very brief overview of progress in completing the tasks, difficulties in achieving the work as described in the contract, proposed alternate means to achieve the Project objectives, status of budget and major scheduled milestones. It is anticipated that progress reports would be 1-3 pages maximum in length.

6.2.2 Pre-Feasibility Study Draft Final Pre-Feasibility Report: Submitted for review by the PMU and Project Steering Committee, presents the results of all technical, environmental/social and economic/financial work done for this stage. Final Pre-Feasibility Report: All reports should follow World Bank and Government of Mongolia requirements for content and format.

6.2.4 Feasibility Study Draft Final Feasibility Report: Submitted for review by the PMU and Project Steering Committee, presents the results of all technical, environmental/social and economic/financial work done for this stage. Executive Summary: should provide a clear presentation concerning the scope and objectives of the proposed Project, assess its technical, environmental and social feasibility under current conditions, indicate community/agency consultations undertaken and their outcome, and include 40 an evaluation of costs and potential sources and mechanisms for funding the Project. In addition to text, the Executive Summary should contain tables, figures and/or maps as needed. Final Feasibility Report: The Final Study should provide complete details of all work performed, analyses made, and justification of options and recommendations proposed. This report will build upon the reports completed previously and integrate comments received from the PIU, including issues raised and discussed at review meetings, as well as written comments. The Final Report should be delivered to PIU and disclosed to the public by posting it on the Project website and making it available at appropriate locations in printed form. In addition, a master hard copy and master soft electronic copy suitable for reproduction purposes should be provided to the Technical Steering Committee to meet any future needs for reprinting. Preliminary Engineering Report and Design Drawings

6.2.5 Finance and Economic Studies First Stage report for Finance and Economic Study: This report should present all data and information, new studies, questionnaires, consultation, analysis and their result and other information. The draft report shall be revised to final upon receiving opinion and incorporating them into the report. The Draft Final Report: should focus on findings, conclusions, and recommended actions supported by summaries of the data collected and citations for any references used in interpreting those data. Liberal use of tables, maps, and graphics to present summaries of data and analyses is strongly encouraged. Unpublished documents that are not readily available should also be assembled into an annex. The PIU will organize review meetings. Major comments should be incorporated in the final report and submitted to the PIU. Main sections of the Finance and Economy Study that require extensive re-writing and editing should be re-submitted for verification to the PIU. Executive Summary: should provide a clear presentation concerning the scope and objectives of the proposed Project, assess its technical, environmental and social feasibility under current conditions, indicate community/agency consultations undertaken and their outcome, and include an evaluation of costs and potential sources and mechanisms for funding the Project. In addition to text, the Executive Summary should contain tables, figures and/or maps as needed. Final Report for Financial and Economic Study: Finance and Economy Study shall be developed as Final Report as per schedule. The Final Study should provide complete details of all work performed, analyses made, and justification of options and recommendations proposed. This report will build upon the reports completed previously and integrate comments received from the PIU, including issues raised and discussed at review meetings, as well as written comments.

6.2.6 Workshops For every main deliverables the Consultant shall organize a workshop in Ulan Bataar to present the draft report results for the Client and key stakeholders. The anticipated workshops are

• Inception Workshop • Workshop to present Draft Pre-feasibility Study Report • Workshop to present draft Feasibility Report and Draft Final report on Financial and Economic Study

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D. PROJECT MANAGEMENT AND REQUIREMENTS 7 Management of the Feasibility Study 7.1 Roles and Responsibilities Roles and Responsibilities of Project Implementing Unit: The Project Implementing Unit (PIU) is responsible for providing managerial guidance and monitoring progress of the Feasibility Study. The PIU shall monitor the fulfillments of the Consultant and shall receive the reports on the Project from the Consultant for review and approval by related organizations. The PIU shall monitor the activities of the Consultant all times and shall report to the Client. Roles and Responsibilities of the Client: The Client for the Project is the Ministry of Nature and Green Development of Mongolia. The Working Group headed by the State Secretary of the Ministry of Nature and Green Development shall perform the monitoring with assistance of PIU during the Feasibility Study Phase. The Working Group shall review and discuss the reports on Project phases and shall grant necessary approvals when required. Roles and Responsibilities of the Consultant: To ensure fulfillment of Feasibility Study within a timeframe, the Consultant will be fully responsible for regulating their activities under transparent and united management. The Consultant shall be responsible for ensuring work interrelations, exchanging official information and organizing meetings with Consultant’s management and other key and non-key experts—as required--and in a timely manner. In addition, the Consultant will submit work fulfillments and will hand over reports to the PIU and the Client in compliance with Work Schedule for discussion and approval after including their recommendations.

7.2 Consultant Time Schedule The work of the Consultant will be supervised by the PMU, which will be the focal point for coordination with all other ministries, agencies and any other international institutions. It will also provide liaison and contacts with the academic and applied research institutions, Civil Society Organizations and Nongovernmental Organizations. The Consultants Team should begin work upon contract signature. The Consultants Team should submit a detailed work plan and schedule with critical milestones with allowance for PIU and external reviews. The Consultant must provide monthly progress reports in writing during the implementation of the Project to avoid unexpected problems and to resolve problems in a timely manner. The inception reports, monthly progress reports and any other reports must be prepared in English and Mongolian. The Inception Report shall include the work plan and schedule and be clearly written. The special and general drafts and final reports will be prepared in both English and Mongolian. The Draft Final Reports must be printed in Mongolian and be submitted to the Client, the Ministry of Nature and Green Development and to the Public Representatives for comments.

7.3 Ownership and Control of Information, Data and Documents All information and data, all intellectual property rights, ownership, licensing provided to the Consultant Team shall be used only for this Study and assessment. Documents and information/data provided to and/or generated by the Consultant Team shall not be disclosed without the expressed written consent of the PIU.

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Feasibility Study Schedule for Flow Regulation of Orkhon River and Construction of Reservoir Complex Project

Work Item Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month Month 10 Month 11 Month 12 Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19 Month 20 Month 21 Month 22 Month 23 Month 24 Month

Pre-Feasibility Study Data Gathering Review of previous studies Develop alternatives Preliminary technical, financial, and economic analyses Multi-criteria anlaysis, including environmental and social factors Feasibility Study Finalize facility locations and land use requirements Finalize technical data gathering (geotechnical, topographic, etc.) Refine engineering calculations for all project components Preliminary Design of all project components Implementation plan Economic and Financial Study Assess the financial and economic viability of the selected alternative Develop financial/economic models to identify sensitivities and analyze risks Develop recommendations for a financing plan Regional Environmental Study c Environmental and Social Impact Assessment International Advisory Committee Review by International Advisory Committee Public presentation of results

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8. Requirements for the Consultant Team The firm or the leading firm/main consultant in case of associations should have international experience of similar projects in similar climatic conditions in the last 5 years. Consultants may associate with other firms in the form of a joint venture or a sub consultancy to enhance their qualifications. The Consultant Team will determine the identity and biography of specialists to be involved in specific positions within the Consultant Team. Furthermore, the Consultant Team will qualify main members of the Consultant Team and all essential specialists. The Consultant Team must confirm that all specialists are available to work during the project implementation period.

Table 8.1 Indicated Key Staff Inputs for Feasibility study Key Staff National Position Man- Man- International Position Months Months

Team leader 15 Deputy Team leader 15 The Leader of Financial and The Deputy Leader of Financial 6 6 Economic Study Team and Economic Study Team The Leader of Technical and The Deputy Leader of Technical 6 6 Engineering Study Team and Engineering Study Team Natural Resource Economist 4 Natural Resource Economist 3 Financial Specialist 2 Financial Specialist 4 Legal Specialist 1 Legal Specialist 3 Hydrogeological Engineer 2 Hydrogeological Engineer 3 Hydrologist 2 Hydrologist 5 Hydraulic engineer 4 Hydraulic engineer 8 Water Transmission Pipeline Water Transmission Pipeline 3 8 Engineer Engineer Reservoir Planning Engineer 3 Geodesy engineer 2 Dam design engineer 3 Geologist 3 Geologist 2 Ichthyologist 2 Soil scientist 2 Construction Engineer 2 Road Engineer 2 Mechanical and piping engineer 4 Electrical engineer 2 Controls Engineer 3 GIS specialist 2 AutoCAD operators 24 TOTAL 53 109

The minimum qualification requirements of key Consultant specialists for Feasibility Study are presented below: Team Leader • Have a minimum of 20 years of work experience in his field of expertise and at least 10 years of work experience in dam and hydro engineering, nature resource management, strategic resource management, planning and environmental assessment. The team leader

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must have project management experience, as a team leader, regarding feasibility studies and detailed environmental impact assessment projects; • Demonstrate the capability to coordinate efficiently multi-dimensional project implementation including participating related individuals and companies; • Experienced in managing similar projects together with interacting with government, civil society and the public; • Have the qualifications to consult Project staff and specialists; • Have knowledge of project finance, economics, hydraulic engineering, and related technology, environment, social and organization development, practical experience of implementation; • A Master’s degree or higher qualifications in related field; • Have sound organizational skills and experienced in a timely manner often under severe time pressures; • Has demonstrated initiative in developing practical approaches that improve efficiency and effectiveness of projects; • Fluent oral and writing skills in English; • Proficient in all of PC based software applications; The Leader of Financial and Economic Study Team • Have minimum of 10 years’ work experience in finance, economics, and nature resource economic management; • Experienced in working in his field in developing countries. It is competitive advantage if have an experience of management and coordination in similar project in Mongolia; • Have work experience in management projects or bigger investment projects (budgets of at least 1 billion US. Dollars) and vested interests; • Experienced in performing similar projects and inter-acting with government, civil society and the public; • Demonstrate the capability to coordinate efficiently multi-directional project implementation including participating related individuals and companies; • Have the qualifications to consult Project staff and specialists; • A Master’s degree in finance and economics; • Have sound organizational skills and able to deliver assignments in a timely manner often under severe time pressures; • Demonstrated initiative in developing practical approaches that improve efficiency and effectiveness of the project and prioritize tasks; • Strong inter-personnel skills and a commitment to work within a team-oriented project • Fluent oral and writing skills in English;

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• Proficient in all of PC based software applications; The Leader of Technical and Engineering Study Team • Should have a minimum of 10 years project management experience in hydraulic engineering, hydro dam planning and water transmission pipelines. It is competitive advantage if have an experience of management and coordination in similar project in Mongolia; • Experienced in working on above field in developing countries; • Experienced in similar or larger projects as an administrator or in a leading management role; • Experienced with similar projects inter-acting with government, civil society and public; • Have demonstrated capability to coordinate efficiently multi-directional project implementation including related participants and specialists; • Qualified to consult and manage project staff; • A Master’s degree in hydraulic engineering; • Possess sound organizational skills and able to deliver assignments in a timely manner often under severe time pressures; • Has demonstrated initiative in developing practical approaches that improve efficiency and effectiveness of the project and establish priorities; • Have strong inter-personnel skills and a commitment to work in a team-oriented project; • Fluent oral and writing skills in English; • Proficient in all of PC based software applications; Financial Specialist • Should have a minimum of 10 years work experience in projects related fields in developing countries and Mongolia; • Ability to estimate, assess and prepare financial analysis of investment in natural resource and infrastructure development projects; • Experienced with financial analysis implemented by World bank and International Financial corporation in developing countries; • Ability to analyze and compare alternates; • Qualified to consult and manage project staff; • A Master’s of higher degree in finance; • Demonstrated initiative in developing practical approaches that improve efficiency and effectiveness of the project and prioritize tasks; • Strong inter-personnel skills and commitment to work in a team-oriented project; • Fluent oral and writing skills in English;

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• Proficient in all of PC based software applications. Legal Specialist • Should have a minimum of 10 years work experience in his profession; • Accustomed to working on projects developing warm legal environment on developing countries resource management; • Legal specialist should have experience related to instructions and requirements of the project and experienced with international development organizations, natural resource management policy and law in developing countries; • Experienced in managing situations typical of developing countries have wide range interests; • A Master’s or higher degree in law; • Fluent oral and writing skills in English; • Proficient in all of PC based software applications; Hydro-Dam and Reservoir Planning Engineer • Should have a minimum of 10 years work experience in his profession; • Experienced working for planning and assessment on larger water infrastructure projects. It is competitive advantage if have an experience in similar project in Mongolia; • Experienced with dam and reservoir projects implemented by World bank and International Financial corporation in developing countries; • Professional skill to prepare engineering estimations and method alternates; • Experienced in implementing projects in cold region countries; • Having professional experience in hydraulic structure engineering; • Possess a wide array of experience assessing negative influences of hydrology, river, water resource management, water infrastructure, climatic change and its processes; • Demonstrated initiative in developing practical approaches that improve efficiency and effectiveness of the project and prioritize tasks; • Fluent oral and writing skills in English; • Proficient in all of PC based software applications; Hydraulic Engineer • Should have a minimum of 10 years work experience in his profession; • Experienced with projects implemented or implementing in Mongolia or Cold region; • Experienced with water infrastructure projects; • A professional in hydraulic structure engineering. A Master’s or higher degree in hydraulic engineering;

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• Possess a wide array of experience with hydraulic estimation and testing of hydraulic modeling structure of various types of hydro structure; • Professional skill to make engineering estimations and prepare method alternates; • Demonstrated initiative in developing practical approaches that improve efficiency and effectiveness of the project; • Fluent oral and writing skills in English; • Proficient in all of PC based software applications. Water Transmission Pipeline Engineer • Should have a minimum of 10 years work experience in his profession; • Experienced in similar and larger projects. It is competitive advantage if have a work experience in similar project in Mongolia; • An experienced professional in hydraulic structure or water supply engineering. A Master’s or higher degree; • Possess a wide array of experience with water transmission pipeline planning and project planning for pump stations and other structures; • Has project experience implemented in cold region; • Professional skill to make engineering estimations and alternates of method; • Demonstrated initiative in developing practical approaches that improve efficiency and effectiveness of the project; • Fluent oral and writing skills in English; • Proficient in all of PC based software applications. Hydrologist • A Master’s or higher degree in hydrology. Should have a minimum of 10 years work experience; • Experienced with projects implemented in Mongolia; • Professional process skills and work experience in estimation modeling; • Demonstrated initiative in developing practical approaches that improve efficiency and effectiveness of the project; • Fluent oral and writing skills in English; • Proficient in all of PC based software applications; Hydrogeological Engineer • A Master’s or higher degree in hydrogeology; • Should have a minimum of 10 years work experience of underground water investigation in Mongolia or dry land region. It is competitive advantage if have a work experience in similar project in Mongolia;

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• Possess professional skill to process information and work experience in estimation modeling; • Demonstrated initiative in developing practical approaches that improve efficiency and effectiveness of the project; • Fluent oral and writing skills in English; • Proficient in all of PC based software applications. Ichthyologist • Have a Master’s or higher degree in ichthyology; • Should have a minimum of 10 years work experience; • It is competitive advantage if have a work experience in similar project in Mongolia; • Work experience in biological species study, aquatic and fish study; • Work experience with piscalogy in water fond; • Professional skills to process information with work experience in estimation modeling; • Demonstrated initiative in developing practical approaches that improve efficiency and effectiveness of the project; • Fluent oral and writing skills in English; • Proficient in all of PC based applications; Geological Engineer • The specialist shall be a Geological Engineer; • Should have master or higher degree in geology; • Should have a minimum of 10 years work experience in his profession;

• Experienced in geological survey and investigation for hydraulic projects implemented in the dry region, in Mongolia or similar region and have not less than 10 years’ experience. Similar project experience in Mongolia shall be an advantage; • Information on the development of professional skills and have experience working on computational modeling; • Demonstrated initiative in developing practical approaches that improve efficiency and effectiveness of the project and prioritize tasks; • Fluent oral and writing skills in English; • Proficient in all of PC based software applications. Geodesy Engineer • Should have master or higher degree in geodesy; • Experienced in geodesy survey and investigation for hydraulic projects implemented in the dry region, in Mongolia or similar region and have not less than 10 years’ experience; • Should have professional skill for data process and to work for modeling; • Demonstrated initiative in developing practical approaches that improve efficiency and effectiveness of the project and prioritize tasks; 50

• Fluent oral and writing skills in English; • Proficient in all of PC based software applications; The Consultant may suggest its team operation as another formation or may add required specialists those are not listed in above. The comprehensive team including other required specialists for investigation, HPP, electrical, roads, construction, structure detail, training, environment and social work; To properly accomplish the work required by this TOR, the Consultant will be required to have a project office in Ulaanbaatar for the duration of the Feasibility Study.

9. Payment Schedule The Contract and payments shall be in USD. The lump sum fee would be paid in the following manner: Payment schedule: • Ten percent (10%) as an advance payment against the submission of a bank guarantee for the amount. • Ten percent (10%) upon acceptance of the Inception Report / Work. • Thirty percent (30%) upon acceptance of Pre-Feasibility Study Reports. • Thirty percent (30%) upon acceptance of the Draft Feasibility Study Report. • Twenty percent (20%) after receiving an approval letter from the Client and upon acceptance of the Final Feasibility Study Report and the Final Report on Financial and Economic Study.

10. Bibliography 1. Mongolian National Statistics Committee 2008; 2009;and 2010“Statistics of Mongolia”, Ulaanbaatar City 2. Statistics Division in Dundgobi Province, 2009 and 2010 “Statistics of Book”, Mongolia 3. Statistics Division in Umnugobi Province, 2009 and 2010 “Statistics of Book”, Mongolia 4. Statistics Division in Dornogobi Province, 2009 and 2010 “Statistics of Book” Mongolia 5. Geo-Ecological Institute, 2011 “Report on Capacity Development Project on Climate Change”, Mongolia 6. Ronalid C. Griffin Water Resource Economics: The Analysis of Scarcity, Policies and Projects, USA, 2006 7. Scott J. Callan, Janet M. Thomas. Environmental Economics & Management: Theory, Policy and Applications, US, 2004 8. Ëóêüÿàí÷èêîâ, È.Ì Ïîòðàâíûé, Ýêîíîìèêà è Îðãàíèçàöèÿ ïðèðîäî ïîëüçîâàíèÿ.: Ì: ÞÍÈÒÈ- ÄÀÍÀ, 2007. 591ñ 9. Benninga, S., 2008. Financial Modeling. Third ed. Cambridge, Massachusetts: MIT Press. 10. Benoit, P., 1996. Project Finance at the World Bank: An Overiew of Policies and Instruments, Washington: The World Bank Group.

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11. Benoit, P., 1997. The World Bank Group's Financial Instruments for Infrastructure, Washington: The World Bank Group. 12. Berk, J. & DeMarzo, P., 2007. Corporate Finance. First ed. Boston: Pearson Education, Inc.. 13. Brealey, R. & Meyers, S., 1996. Principles of Corporate Finance. Fifth ed. New York: McGraw-Hill. 14. Collis, D. & Siegel, J., 2006. Module Note - Introduction to International Strategy. Boston: Harvard Business School Publishing. 15. Demaraia, C., 2010. Introduction to Private Equity. First ed. West Sussex: John Wiley & Sons. 16. Dranove, D. & Marciano, S., 2005. Kellogg on Strategy: Concepts, Tools, and Frameworks for Practitioners. First ed. Hoboken, New Jersey: John Wiley & Sons. 17. Economic & Commercial Section, U.S. Embassy Ulaanbaatar, Mongolia, 2013. 2013 Mongolia Investment Climate Statement, Ulaanbaatar: U.S. Embassy Ulaanbaatar, Mongolia. 18. Ferguson, N., 2009. The Ascent of Money: A Financial History of the World. First ed. London: Penguin Group. 19. Finnerty, J., 2007. Project Financing: Asset-Based Financial Engineering. Second ed. Hoboken, New Jersey: John Wiley & Sons. 20. Flyvbjerg, B., Bruzelius, N. & Rothengatter, W., 2003. Megaprojects and Risk: An Anatomy of Ambition. First ed. Cambridge: Cambridge University Press. 21. Gatti, S., 2013. Project Finance in Theory and Practice. Second ed. London: Elsevier. 22. Hechmann, B., 2007. Private Equity Investments in Emerging Markets. Norderstedt, Germany: GRIN Verlag. 23. Kawai, M. & Prasad, E., 2011. Asian Perspectives on Financial Sector Reforms and Regulation. First ed. Tokyo; Washington: Asian Development Bank Institute; Brookings Institution. 24. Klonowski, D., 2012. Private Equity in Emerging Markets: The New Frontiers of International Finance. First ed. New York: PALGRAVE MACMILLAN. 25. Luenberger, D., 1998. Investment Science. First ed. Oxford: Oxford University Press. 26. Ocampo, J. A., Kregel, J. & Griffith-Jones, S., 2007. International Finance and Development. New York: United Nations Publications. 27. Stowell, D., 2010. An Introduction to Investment Banks, Hedge Funds, and Private Equity: The New Paradigm. First ed. London: Elsevier. 28. Talmor, E. & Vasvari, F., 2011. International Private Equity. First ed. West Sussex, UK: John Wiley & Sons. 29. Wade, Malcolm;, 2011-2013. Raising International Private Equity for Mongolia Investment: Professional Experience & Expertise. Ulaanbaatar: Mongoljin Private Capital. 30. Weiner, E., 2011. The Shadow Market: How Sovereign Wealth Funds Secretly Dominate the Global Economy. Second ed. Oxford: Oneworld Publications. 31. World Bank, 2012. Doing Business 2012: Mongolia, Washington: World Bank.

WEB SITES

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32. World Bank, 2013. Country Lending Summaries - Mongolia. [Online] Available at: http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/0,,countrycode:MN~menu PK:64820000~pagePK:64392398~piPK:64392037~subTitle:Lending+Summary~theSite PK:40941,00.html [Accessed 28 11 2013]. 33. World Bank, n.d. Country Lending Summaries. [Online] Available at: http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/0,,pagePK:64392398~piP K:64392037~theSitePK:40941~countrycode:MN~menuPK:64820000,00.html [Accessed 27 November 2013]. 34. Investing.com, 2013. World Government Bonds. [Online] Available at: http://www.investing.com/rates-bonds/world-government- bonds?maturity_from=290&maturity_to=290 [Accessed 30 11 2013]. 35. Bloomberg, 2013. Mongolia to Sell up to $1 Billion in Samurai Bonds, Premier Says. [Online] Available at: http://www.bloomberg.com/news/2013-09-15/mongolia-to-sell-up-to-1- billion-in-samurai-bonds-premier-says.html [Accessed 28 11 2013]. 36. Bloomberg, 2013. United States Government Bonds. [Online] Available at: http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/ [Accessed 28 11 2013].

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