1

Mongolia’s gateway logistics park

in Zamyn Uud: Potential PPP?

Chemonics International

Ulan Bator – Mongolia

July 2010

2

Agenda

1. PPP Project for Zamyn Uud logistics park

2. Potential center of revenues for PPP

3. Current demand

4. Revenue estimation for PPP

3

1. PPP project for Zamyn Uud

logistics park

4

PRC

Weigh

Scale

Manual

inspection

Scanner

inspection

Document

check

Rail-Rail transfer

Discharge

from

PRCRR

Load to

UBTZ

Road-Rail

transfer

Overland by road

Overland by rail

Mixed

Loads

Homogenous

Loads

Preliminary

GOM clearances

ENTER BY RAIL

Final

GOM

clearance

s

Final GOM

clearances

UB

Zamyn Uud flow of cargo

ENTER BY ROAD

5

6

Survey in Zamyn Uud

April 16th to 19th 2008Problem % of Complains

Waiting time for Permission Letter in Erlian 68%

Stay overnight for closure of Mongolian border 94%

Waiting time for weight in scale zone 64%

Road to scanner in bad condition 53%

Traffic jam and chaos in waiting area for inspection 55%

Traffic jam and chaos in waiting area for customs for lack of

space

75%

Lack of road or in bad condition 79%

Transshipment to the wagon is slow and number of wagons

is insufficient

83%

7

End of

transportation

Provision of wagons for transshipment

Road to rail transshipment

Areas covered in Questionnaire 4

Interview point 4

Documentation for specialized

Specialized inspection

Customs documentation

Physical inspection of mixed goods

Documentation for specialized

Specialized inspection

Customs documentation

Scanner inspection homogeneous

cargo

Areas covered in Questionnaire 3

Goods loaded in Erlian

Chinese border

Mongolian border

Scale

Beginning of

transportation

Interview point 1

Areas covered in Questionnaire 2

8

Value of import cargo

processed in Zamyn Uud by truck

Year Value Million US$

2004 54.2

2005 72.3

2006 96.0

2007 208.0

2008 368.2

Total Accumulated 2004- 2008 798.7

9

Value of import cargo

Zamyn Uud by truck monthly and weekly

PeriodValue by month

Million $

Value by week

Million $

Average 2008 30,686,883.2 7,671,720.8

Average 9 months 2008

(excluding nov-dec-jan)36,480,003.2 9,120,000.8

Average May-Jun-July 44,512,630.6 11,128,157.6

10

Cost of lack of infrastructure

Zamyn Uud weekly ($ dollars)

Period

20% of

opportunity

cost

5% of indirect

costs

Total weekly

opportunity

cost

Average 2008 1,534,344.1 383,586 1,917,930.2

Average 9 months

2008

(excluding Nov-

Dec-Jan)

1,824,000.1 456,000 2,280,000.2

Average May-Jun-

July2,225,631.5 556,407 2,782,039.4

11

2. Potential center of revenues

for PPP

12

Logistic Park

Development Co.

ParkingReal Estate

Development

Commercial

Services

Road to Rail

Imports

Rail to Road

Exports

Rail to Rail

Imports

Revenues from the

Business or fee

Revenues from the

Business or fee

Tariff for rent m2

and % of business

Fee Fee Fee

WarehouseGas Station

Fee Fee

Flow of revenues

13

3. Current demand

14

Current demand

15

Annual import tons and annual growth rate

in Zamyn Uud

YearTons by

truck

Tons by

railwayTotal Growth rate

2004 311,627 212,664524,292

-

2005 362,563 222,957585,520

11.7%

2006 416,260 228,300644,561

10.1%

2007 698,593 293,589992,182

53.9%

2008 1,189,794 350,7441,540,539

55.3%

16

Total cargo (tons) processed in Zamyn Uud by road and railway 2004-2008

2004 2005 2006 2007 2008 Average

January 23,866.153 29,277.436 30,225.754 31,966.569 87,333.419 40,533.866

February 19,207.254 22,397.425 32,065.066 29,440.064 81,379.371 36,897.836

March 36,015.163 43,184.018 43,636.150 48,330.923 165,170.691 67,267.389

April 53,873.209 62,905.096 57,763.667 78,421.236 187,587.026 88,110.047

May 57,468.028 57,914.687 62,581.153 86,671.477 189,039.761 90,735.021

June 67,266.459 62,716.385 74,825.930 104,834.253 160,690.731 94,066.751

July 47,856.327 67,932.232 69,396.434 152,588.527 169,283.233 101,411.351

August 49,986.145 64,283.940 75,185.164 130,501.745 117,651.584 87,521.716

September 55,643.238 59,210.501 67,203.198 96,206.249 129,331.700 81,518.977

October 46,706.214 46,979.934 59,773.490 97,003.042 125,471.351 75,186.806

November 33,835.384 39,840.188 39,919.603 66,490.841 68,038.323 49,624.868

December 32,568.693 28,879.147 31,986.077 69,727.999 59,561.815 44,544.746

Total 524,292.268 585,520.989 644,561.685 992,182.925 1,540,539.007

Average 43,691.022 48,793.416 53,713.474 82,681.910 128,378.251

17Months

2004 20052006

2007

2008

18

Monthly comparison total 2004-2008

19

3.1 Import cargo (tons) processed

in Zamyn Uud by road/truck

Road-Rail

20

Annual import tons and annual growth rate

cargo by truck

Year Tons Growth rate

2004 311,627

2005 362,563 16%

2006 416,260 14.8%

2007 698,593 67.8%

2008 1,189,794 70%

21

Months

2004 20052006

2007

2008

22

Monthly comparison road 2004-2008

23

3.2 Import cargo (tons) processed

in Zamyn Uud by railway

Rail to Rail

24

Annual imports tons and annual growth rate

cargo by railway

Year Tons Growth rate

2004 212,664 -

2005 222,957 4.8%

2006 228,300 2.3%

2007 293,589 28.5%

2008 350,744 19.5%

25

3.3 Import cargo (tons) processed

in Zamyn Uud

Rail to Road

Exports

26

Annual transshipment export cargo (tons)

YearTons by

truckTons by railway Total

2004 21.195 707.259 728.454

2005 19.984 1.024.130 1.044.114

2006 23.903 1.309.758 1.333.661

2007 44.631 1.167.951 1.212.583

2008 53.663 1.977.017 2.030.680

27

3.4 Import cargo (tons) processed

in Zamyn Uud

January by type of product

28

Type of products imports 2008

46%

11%9%

11%

3%

20%

Salt; sulphur; stone and

cement.

Articles of stone, plaster,

cement or asbestos

Iron and steel.

Vegetables, tubers fruits and

cereals

Wood and articles of wood

Others

29

3.5 Import cargo (tons) processed

in Zamyn Uud

January – April 2009

30

Cargo (tons) imports processed in Zamyn Uud by

road and railway

January-April 2004-2009

2004 2005 2006 2007 2008 2009

January 23866.2 29277.4 30225.8 31966.6 87333.4 34445.4

February 19207.3 22397.4 32065.1 29440.1 81379.4 25981.1

March 36015.2 43184.0 43636.2 48330.9 165170.7 35359.2

April 53873.2 62905.1 57763.7 78421.2 187587.0 67985.0

Total 132961.8 157764.0 163690.6 188158.8 521470.5 163770.7

31

5. Revenues estimation for the

PPP LPZU

32

Transshipment

revenues

$3.8 million

Road to Rail

$ 2.11 million

Rail to Rail

$1.56 million

Rail to Road

$0.13 million

2008

33

First estimation of the business

logistics park Zamyn Uud Case A

Discount rate

30 years

PV basic

revenues

$ Million

PV potential

revenues

$ Million

PV total

revenues

$ Million

10% 61.2 1.6 62.8

12% 48.7 1.3 50.0

15% 37.0 1.0 38.0

34

Discount

rate 30

years

PV total

revenues

(0.5%)

$ Million

Case B

PV total

revenues

(1%)

$ Million

Case C

PV total

revenues

(1,5%)

$ Million

Case D

PV total

revenues

(1.8%)

$ Million

Case E

PV total

revenues

$ Million

(2%)

Case F

10% 47.2 50.7 55.3 58.9 61.7

12% 39.8 42.5 45.9 48.4 50.5

15% 32.0 33.8 36.0 37.7 38.9

PV of revenues

logistics park Zamyn Uud

Cases B to F

35

0

5000000

10000000

15000000

20000000

25000000

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29

2011-2040

US

D

0.50% 1% 1.50% 1.80% 2% QRVD

Comparison of revenues estimation

transshipment cargo

36

THANK YOU