[Mongolian Economy] UNENBAT BAATAR: WE HAVE EVEN FURTHER DREAMS

BY D. BEKHBAYAR


B. Unenbat, chief executive of Newcom Group, started his career with Newcom working as an accountant some ten years ago.
At that time, a study on the project to build the Salkhit wind farm was just about to begin.
Now, however, he is seeing the opening of that wind farm, Mongolia’s first, as the company’s chief executive. He served as chief executive of Newcom from 2008 to 2009 before travelling to New Zealand to studyfinance for two years. After his return he continued his career with Newcom.
Unenbat has served as chief executive since February 2013.


What is Newcom’s next plan with the launch of the Salkhit wind farm after so many years of development?


Before talking about the work we have planned, I would like to give you some clarification on what we have just done.
It needs to be mentioned that enormous time and effort have been committed to the launching of the Salkhit wind farm. The project has taken 12 years away from us. However, its construction work only began in 2011. Meanwhile, our extreme patience and hope were the most important.
In 2001, a study on renewable energy resources in Mongolia was carried out by USAID. Based on its map, the chairman of Newcom’s board of directors, Ts. Boldbaatar, initiated the construction of a wind farm for the first time. And our first study was launched by sharing our ideas with two large Japanese investment companies in 2004.As I remember, 70-metre long research instruments were transported from the US.

After that, we were permitted to carry out measurements on wind velocity in the territory of Sergelen soum of Tuv aimag. We were working really hard to install the equipment day and night. By the time when the Mongolian Law on Renewable Energy was approved first in 2007, all the studies related to determining wind velocity and building the wind farm were complete on our side. And now its construction has completed as a result of a number of stages and our hard work and hopes.


There have been a number of challenges and problems, although it seems very easy to talk about them. Newcom managed to overcome these huge challenges, demonstrating the many achievements which could be excellent examples for the future.


Therefore, I would like to express my gratitude for those who put their efforts on the project from the beginning until the end, including our employees, partners, and foreign and national organisations. Also we have great gratitude to the chairman and members of Newcom’s board of directors and the former chief executives.


What hope do you think the wind farm brings to entrepreneurs?


The launch of the Salkhit wind farm is just the beginning. This achievement is not only Newcom’s, but all Mongolians’. For instance, Mongolia used to be marked on the world renewable energy map in black colours. This launch is a historic event that could lead Mongolia to green marks on the map.


Mongolians do not necessarily need to burn coal all the time to produce energy. The country has enough renewable energy resources and it is stepping up into green development. And this newly built wind farm is an example of all this. Also it is important to send a message worldwide that Mongolia, the country of wild nature and nomadic traditions, has just started supplying renewable energy to the main grid via wind turbines.


Also it is very important that this event encourages entrepreneurs to compete in the renewable energy sector in the future. Because of this there is evidence of successful cooperation between public and private partnerships in the energy sector. In this sense, Newcom is becoming a renowned business partner in Mongolia. The company has received business proposals from globally renowned companies.


Accordingly, I have good news to share with you. We have just kicked off another project to build a new solar and wind farm in Umnugobi aimag in collaboration with Japan’s SoftBank. This time we are developing a feasibility study on building a 300-megawatt power station , which is six times bigger than currently seen at the Salkhit wind farm.


We have even further dreams beyond this. By using Mongolia’s renewable energy resources we are planning to collaborate in plans for the Asian super grid, with the aim of supplying Asian countries with clean energy.


How much energy has been produced at Salkhit since its launch?


The farm has been supplying its energy to the main grid. The electricity metre is operating on a regular basis. The construction was commissioned to the State Commission.


According to the agreement, the project will be officially finished after receiving its electricity payment for 60 days. Until it is finished, Newcom will be responsible for all the risks. But when the 60 days finish, the project bears responsibility for the risks.


What is the price scheme for energy generation at Salkhit?


According to the energy law, one kilowatt of energy costs USD 0.095. Energy experts say that this issue has been tackled not to cause any pressures on consumers. It means that its relatively higher price will not be fully paid by consumers, but its margin will be subsidized from the Energy Fund.


In the future, the price for energy will increase. According to our estimate, Mongolia’s energy price is expected to reach USD 0.095 by 2016. Then, the margin will disappear and no there will be need to pay for the margin with the fund.


Actually, there was a chance to get support from the Millennium Development Account, but the Energy Regulatory Commission was not able to increase the energy price consistently with market demand. Thus, the Millennium Development Account refused to provide support for the project. The project’s duration is about twenty years, but we have planned to make profits after 15 years. Within those 15 years, some issues including repayment of loan interest and principal payment will be raised for certain. If these payments are not repaid, it will close opportunities for follow-up projects. Thus, we should put our efforts into every stage.


How many new jobs did the wind farm create?


During periods of peak construction activity, there were 500 workers, of which 94 percent were Mongolian. But in the future, there will be 25 to 30 employees at the farm. The advantage of modern technologies really facilitate human labour, and there is no need of such large workforces. This is because of the construction of the non-stop sub¬station.


What progress has been made in the development of Power Plant No. 5?


Currently, bidding selection has been completed. The project will be implemented just at this moment as Mongolia’s energy sector is in trouble. We are looking forward to the soonest possible launch of the project activity.


Does Newcom have any plans to go public?


Newcom Group has some experience in going public. The idea of a public company is directly related to the stock exchange, I think. It is about issuing IPOs - when and where to issue an IPO - on the domestic or on international stock markets.


For Newcom Group, any of its subsidiaries could become public companies in the future. But the right time has not yet arrived.