MP N.Ganbyamba shares his opinion on Ot agreement, because he made interesting and notable comments on draft agreement on investment between the Government of Mongolia and IMMI.
Q: Of course, there are many alternatives on OT draft agreement. What version of agreement is good for Mongolia? Some say that Mongolia doesn’t need ownership, but better get the tax income according to the agreement.
MP N.Ganbyamba: Oyu Tolgoi agreement term is 30 years and it will be extended twice with 20 years, totaling 70 years of exploitation. Like other MPs, I like to shorten its term.
As for building the agreement, we can build the prodcut share agreement. Investor can invest its full investment and share its profit 50/50. If the investor agrees so we can get 40% and the investor can get 60%. In the alternative, that golden share version sounds good.
Q: When the working group presented its conclusion at the Standing Committee on Economy, you commented that we are going to get money under the name of “pre-payment” with high interest rate, loan and pre-payment are different issues. What would you say about it?
MP N.Ganbyamba: In the draft agreement developed by the Government, pre-payment has become loan. I warned it only. Actually, in the resolution of the State Great Khrual, pre-payment of royalty was stated.
Also this clause is included in the resolution 40 of the State Great Khural. Loan and pre-payment have different legal explainations. But in the agreement draft 125 million US$ pre-payment has different arrangement. It has high interest rate. Therefore, I suggested Minister D.Zorigt to fix this uncertain issue.
Q: What is the exact interest rate?
MP N.Ganbyamba: I think it was 8.9%. We will lose much with this rate. But 125 million US$ is not that big money. Realizing this deposit and see the production take 4-5 years. But we need to realize these two deposits in order to overcome the crisis with less damage to public and to distribute the Grant of the Motherland. Therefore, when we asked pre-payment, the other side agreed so.
Q: You also mentioned about responsibility issue…
MP N.Ganbyamba: Yes, we shouldn’t forget on talking about responsibility. Before, oil deposit was explored and owned by the American company, but Chinese took control later. Therefore, we should be careful from such acts. We should determine the subject of who is responsible for.
Q: Can you make it more clear?
MP N.Ganbyamba: Mongolian Government shall determine its partner more precisely. Rio Tinto sold its stake to the Chinese company! Therefore, we have to make it clear with whom we are partnering with. Actually, Ivanhoe Mines breached law from its beginning. Politicians hinder the issue for 4-5 years because of their political fractions. We lost our chance of making almost 100 billion US$ per month. The Constitution of Mongolia says that the wealth under the earth belongs to the state. This provision is only salvation for us. But IMMI breached the Constitution of Mongolia. It announced the wealth of Mongolia in the world through internet and made profit of billions and billions of dollars.
Q: Why we can’t file against IMMI to the international court?
MP N.Ganbyamba: Yes, we can, but we didn’t.
Q: Can we understand that IMMI takes advantage because it conducted the exploration work?
MP N.Ganbyamba: Exploration is different understanding. IMMI is not yet the owner of the property, but it announced that Oyu Tolgoi has big reserve of copper and made money with this announcement. Even though, it is going to give us 125 million US$ high interest rate. Another issue is the economy feasibility.
Q: Some politicians say that the agreement is profitable.
MP N.Ganbyamba: They say so. But the main issue is that how the feasibility is calculated. If the agreement is calculated by the international accounting system, it is not feasible? We should consider the agreement very neat. But it is not good to call this agreement is feasible without seeing the result of the complete feasibility study.
Q: So, Oyu Tolgoi technical and economical study is not made yet?
MP N.Ganbyamba: It was not made. The feasibility study is based on the technical and economical reasoning. Also the project value will be clear. I think that there is nothing is valueless in market economy. Therefore, the wealth under the ground must be evaluated.
Q: Do you think that some of the MPs or decision makers are lobbied by?
MP. N.Ganbyamba: There is no evidence that they not influenced by lobby.
Interviewed by National Post
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