Carolyn Clarke, Managing Partner, PWC, Mongolia

1. Financing options and
opportunities in infrastructure
development
www.pwc.com/mn

2. PwC
Content
• Infrastructure challenges and opportunities in Mongolia
• Infrastructure development needs
• The experience of emerging territories

3. PwC
Mongolia
Global Competitiveness Report
Rank /144 Value (1-7)
Quality of overall infrastructure 137 2.7
Quality of roads 141 2.0
Quality of railroad infrastructure 71 2.5
Quality of air transport infrastructure 128 3.3
Quality of electricity supply 103 3.6
Source: WEF The Global Competitiveness Report 2012-2013
“Infrastructure development in countries
with vast natural resource reserves is
essential. The synergy coming out of
interplay of infrastructure and mining
sector will boost the economic development
and increase direct foreign investment.”
Julian Smith, Infrastructure Leader PwC
Total population (millions) 2.8
GDP 2012 (US$, billions) 8.5
GDP 2011 (US$, billions) 6.1
Roadways (total, km) 49,249
Roadways paved (km) 3,015
Railways (total, km) 1,908
International Airports 1
Electricity production 2010
(kWh, billions)
4.056
Electricity consumption 2010
(kWh, billions)
3.375
Electricity imports 2010
(kWh, millions)
262.9
In the survey “The most problematic
factors for doing business in Mongolia”
by WEF, inadequate supply of
infrastructure was ranked in the 3rd
place after inadequately educated
workforce and inefficient government
bureaucracy.
Source: World bank, CIA The World Factbook

4. PwC
Opportunities and challenges:
The experience on the ground in Mongolia
• Opportunities:
- Country rich in natural resources with the biggest
consumer (China) next door
- Increasing infrastructure demand in various
sectors: rails and roads, electricity and power,
water, health etc.
- Large scale projects in planning and development:
◦ CHP5
◦ Sainshand Industrial Complex (SIC)
◦ Mongolian Railways (MTZ)
• Challenges:
- Infrastructure projects highly dependent from the
mining industry
- Huge logistical and financial challenges for the
government (Development Bank of Mongolia estimation
is that SIC alone needs US$ 9bn of funding)

5. PwC
Infrastructure development:
Matching the needs to the financing options
• High demand for infrastructure
-> Need for coordinated infrastructure policy
• Prioritization of infrastructure projects in consideration of needs and
financing options:
1 + 1 = 3

6. PwC
Infrastructure development:
Sources of finance for different project types
Public
• Sovereign debt
from multilateral
and bilateral
lenders
Private
• Commercial bank
debt
• Export credits
• Multilateral debt
and equity
• Listed equity
• Sponsor equity
• Sovereign wealth
funds
PPP
• Mix of public and
private sources
depending on
structure

7. PwC
Smart infrastructure development planning and
financing
Demand
analysis
Gap
analysis
Multi-
criteria
analysis
Financial
resources
Investment
plan Smart
infrastructure
development
planning &
financing
Transport
infrastructure
needs
Infrastructure
projects
Priorities
Constraints &
solutions
Implementation
Continuous process based on five basic pillars:

8. PwC
The experience of emerging territories
• Infrastructure demand of emerging markets for the next two decades to
be US$ 1 trillion per year at least
• Countries which invest in infrastructure benefit from:
- Faster and safer transportation of goods
- Smooth functioning of industrial production
- Improved communication and business activity and
- More efficient allocation of labour
All of which boost productivity and competitiveness resulting in higher
consumption and economic growth
RBS/Cambridge University, Oct. 2011

9. PwC
Tiger vs. dragon
How infrastructure influences economic growth
China
• State directed
• Clear policies for installing
infrastructure
• Infrastructure installed rapidly and
operating efficiently
• Proportion of Asia’s demand is
projected to grow to 67%
India
• Bureaucratic logjam hinders large-
scale projects
• Difficulties in acquiring land and
environmental clearances
• Slow decision-making
• Proportion of Asia’s demand –
growth up to 27%
“To illustrate the difference that effective provision of infrastructure can make, one
needs to look no further than the contrast between the two Asian giants, China and
India. The differences in infrastructure provision have been an obvious contributor to
the gap between the countries’ growth rates.”
Timothy Ash, Head of Emerging Markets Research RBS

10. PwC
Thank you!
Slide 10