China withholds Mongolia hydropower loan over Russian concerns – report

Lake Baikal.

Lake Baikal.

Shutterstock/Legion-Media
Mongolia would like to construct a dam on the Eg River near its confluence with the Selenge River, the main source of Lake Baikal. Environmentalists have expressed concern over the hydropower project, claiming it could threaten the lake’s fragile ecosystem.

Keeping Russian concerns in mind, China is withholding a $1 billion loan package to Mongolia for the Egiin Gol Hydro Power Plant, Bloomberg reported on July 11.

The loan has been stalled until a compromise can be found, the news agency said, citing Mongolian government documents.

Mongolia would like to construct the dam on the Eg River near its confluence with the Selenge River, the main source of Lake Baikal. Environmentalists have expressed concern over the hydropower project, claiming it could threaten the lake’s fragile ecosystem.

Russian President Vladimir Putin said in June 2016 that the project could create serious risks to the water supply of Irkutsk.

Looking to reduce its dependence on Russia for power, Mongolia would like to build the dam to generate power in the winter.  The landlocked country spends $25 million a year on power imports from Russia, according to Bloomberg.

 “We need to know if we are independent or just a marionette of Russia and China,” Odkhuu Durzee, the director of the Egiin Gol project, told the news agency. “If we give up it means the Western coalition will lose Mongolia as a supporting nation -- the Mongolian people will know that we can do nothing without Russian or Chinese permission.”

The World Heritage Committee discussed the dams that could damage Lake Baikal at a meeting in Bonn in July 2015
In an opinion piece for RBTH, noted Russian environmentalist Eugene Simonov wrote that the International Union for Conservation of Nature believed that the combined effects of the project on the lake are not fully known and could potentially seriously damage its World Heritage values.

“The World Heritage Committee discussed the dams that could damage Lake Baikal at a meeting in Bonn in July 2015,” Simonov wrote. “The committee set forth requirements for impact assessment of Egiin Gol and two other projects, as well as the cumulative impacts assessment of all three dams. The committee requested Mongolia (and by default, China) to not approve any of the projects until all assessments for dams have been completed and reviewed by the World Heritage Center.”

Mongolia may seek funding for the project from Japan or South Korea if China backs out of the loan, according to the Bloomberg report.

A source close to the Russian Ministry of Natural Resources and Environment told RBTH that Moscow was seeking a compromise with Ulan Bator. “Mongolia may abandon the project if Russia can provide power at a more subsidized rate,” the source said.

Read more: Bangkok to closely examine trade deal with Eurasian Economic Union - Thai Ambassador

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