KUWAITI FUND TO GRANT SOFT LOAN FOR CONSTRUCTING ROADS

Ulaanbaatar, /MONTSAME/ Kuwait Fund for Arab Economic Development (KFAED) has decided to grant a soft loan of KWD 6 million (about USD 20.5 million) to Mongolia's government for implementing a project to construct auto roads in rural areas.
The soft loan agreement was signed Monday in Ulaanbaatar between Mongolia's government and KFAED, whereby the Fund will extend a loan of KWD 6,000,000 to assist in financing of the Unt -- Tarialan Road Project on Unt -- Moron Corridor Mongolia. The agreement was signed on behalf of Mongolia by Ch.Khurelbaatar, a Minister and head of the Cabinet Secretariat, and by Mr Hesham Al-Waqayan, a Deputy Director-General of the KFAED on behalf of the Fund.
The main aims of the project are to enhance the economic and social development of the Bulgan and Khovsgol aimags, and at the same time participating in linking Khovsgol aimag with Ulaanbaatar city, to promote economic activities, specially tourism in Khovsgol aimag by facilitating road transport of passengers and goods to meet the existing forecast and generated demand on road transport efficiently and safely, and to reduce vehicle operating cost and journey time.
The project will contribute also in improving safety on the road, and reinforcing the capacity of the Road Department for executing and maintaining roads projects.
The project consists of construction works for approximately 88 kilometers between Unt - Tarialan on Unt - Moron Corridor to attain an all-weather 7m wide asphalted road with 1.5m. shoulders on each side between Unt and Tarialan. It will include the: Earthworks, paving layers, bridge works, drainage facilities, and safety measures as well as Consultancy services for supervision of construction and technical support.
It is expected that the project will be implemented within about 3 years. The total cost of the Project is estimated at MNT 31.1 billion (KWD 7.66 million) of which the foreign currency is the equivalent of about KWD 6,140,000, which represents about 80% of the total cost of the project. The KFAED's loan will cover about 87% of the total cost of the Project.
The Loan shall be for a period of 22 years including 4 years of grace period, amortized in 36 semi-annual installments, the 1st of which will be due on the 1st date on which any interest or other charge on the loan shall fall due, after the elapse of the above-mentioned grace period. The loan bears interest at 2% per annum, in addition to 0.5% per annum to cover administrative and other expenses incurred in the implementation of the loan agreement.
Upon signature of this loan agreement, the Fund would have provided Mongolia with four loans. The total value of them is KWD 24 million (about USD 83 million). The Fund had also provided two Technical Assistance Grants to Mongolia; the first one equivalent to KWD 300,000 to finance the Feasibility Studies for the Electricity Project has already been integrated into the Loan for Taishir Hydropower Project. The 2nd one equivalent to KWD 133,000 for financing the feasibility studies of the Erdenet-Moron has already been integrated into the loan for the said-project.