Implementing these recommendations resulted in a significant transformation of Mongolia's energy sector. The shift from a centrally planned model to a strategic business planning approach led to the reformation of the State-Owned Electricity Generators. The Coal Agency was repurposed as a consulting engineering firm, now focusing on providing mining engineering services to Mongolia's growing coal and minerals exploration sector.
Operational improvements, particularly in business planning and cash flow management, generated substantial cost savings. Preventing unnecessary shipments of non-coal materials, such as clay and rock, resulted in an annual savings of USD 700,000. These changes also led to operational efficiencies in electricity generation, including reducing damage to plant equipment, improved boiler temperatures, and enhanced steam pressure management.
— Mongolia —
transforming. state. energy.
Revitalizing Mongolia’s Energy Sector: Strategic Overhaul of Coal and Power Infrastructure
"Energy is the golden thread that connects economic growth, social equity, and environmental sustainability." – Ban Ki-moon
Challenge
Mongolia faced critical challenges in electricity generation, coal extraction, and rail transport. The country's coal-fired power stations were the sole providers of electricity and heat for most of its population, making them vital to Mongolia's infrastructure. Through the Ministry of Energy and Coal Agency, the Government of Mongolia sought to develop a medium-term business strategy for its State-Owned Coal Agency and Coal-Fired Electricity Stations. The coal agency was central to all coal mining operations in Mongolia's centrally planned economy, and its power stations depended on reliable coal transport. Inefficiencies in rail transport, hazardous coal dust issues, and inadequate management structures compounded the situation, threatening power generation and public service delivery.
Strategy
The team conducted a comprehensive on-the-ground review of the business operations of both the State Coal Agency and State Power Generation entities to address these challenges. They identified key issues, including ownership structure, governance, and operational inefficiencies. The strategy focused on three core tasks:
- Railway Transport Plan: This plan aimed to optimize coal transport to the power plants, addressing single-track rail line constraints and on-site storage issues. It also included steps to mitigate the hazardous coal dust problem.
- Strategic Business Plans: The team developed these plans for both the Coal Agency and State-Owned Energy Generators, covering all functional areas, including marketing, operations, HR, financial management, and R&D. They also created additional plans for external financing, capacity development (with key performance indicators), and cash management, focusing on efficient tariff setting and debt management.
- Stakeholder Engagement: The team consulted with government agencies and key stakeholders alongside seminars in Ulaanbaatar. They incorporated feedback from these engagements into the final strategic recommendations.