About the Mongolia Water Compact

The U.S. Millennium Challenge Corporation (MCC) provides time-limited grants to developing countries that meet rigorous standards for good governance, from fighting corruption to respecting democratic rights. MCC has invested more than $13 billion in compact and threshold programs worldwide since established. A Compact is a large, five-year grants for selected countries that meet MCC’s eligibility criteria while threshold program is smaller grants focused on policy and institutional reform in selected countries that come close to passing MCC’s eligibility criteria and show a firm commitment to improving their policy performance. Mongolia concluded its first Millennium Challenge Compact on September 17, 2013. That compact, which was signed on October 22, 2007, and entered into force on September 17, 2008, including investments in property rights, health, vocational education, energy and environment, and transportation.

The Millennium Challenge Corporation (MCC), a U.S government foreign aid agency, selected Mongolia in December 2014 as eligible to develop the second compact based on its performance on MCC’s scorecard for the fiscal year 2015. Over the following months, the Government appointed a national coordinator and established the National Secretariat for Development of the Second Compact Agreement with the Millennium Challenge Corporation in May 2015 within the Ministry of Foreign Affairs to lead the compact development process. Working closely with MCC, the National Secretariat analyzed the constraints to economic growth in Mongolia and identified “costly access to water and sanitation” as one of Mongolia’s most binding constraints.

Mongolia’s capital Ulaanbaatar is home to nearly one-half of the country’s population and accounts for three-quarters of the country’s registered companies and two-thirds of its economic output. Following two decades of rapid growth, Ulaanbaatar faces an imminent shortage of potable water that, as early as 2023, may begin to undermine its economy and impact the quality of life of its residents. Through extensive due diligence analysis during 2016, 2017, and 2018, MCC and the National Secretariat identified investments to develop new wellfields, introduce the recycling and reuse of wastewater, and enhance long-term sustainability in the water sector. These investments align with the Government’s interest in more efficient and focused water governance.

Based on this decision, the MCC Board of Directors addressed a proposed second Compact with Mongolia at its quarterly meeting on June 11, 2018, authorized the Compact.  

The Government of Mongolia and the MCC signed the second Millennium Challenge Compact (Mongolia Water Compact) which aims to reduce poverty through economic growth in Mongolia on July 27, 2018, in Washington. The Parliament of Mongolia approved the Law on the ratification of the Compact Agreement on January 31, 2019. The Government also committed to making a contribution of up to 111.76 million to the Compact implementation under the Compact Agreement which will help to achieve an even greater impact.

Under the Mongolia Water Compact, Millennium Challenge Account – Mongolia, a state-owned accountable enterprise will implement a Water Supply Project that comprises three closely related investment activities and the Program aims to address the problem of limited long-term sustainable supplies of water for the capital city, Ulaanbaatar, as described below.

1. The Downstream Wells Activity supports the development of two new wellfields downstream of Ulaanbaatar, including the construction of 30 new wells in the two downstream wellfields, associated pumps, local collection pipelines, equalization tanks, and a transmission line to convey the water from the wellfields, an advanced water purification plant located at the western edge of the city to remove contaminants and storage facilities, pumping station, and conveyance pipeline to transport finished water from the purification plant into the existing municipal water network of Ulaanbaatar.

2. The Wastewater Recycling Activity supports the recycling and reuse of a large quantity of wastewater effluent from the central wastewater treatment plant (“CWWTP”) through the construction of a wastewater recycling plant, pumping stations and associated pipelines to convey the recycled water to water storage facilities near combined heating and power plants (CHP) and internal piping, storage facilities, and control systems to facilitate the use of recycled wastewater for certain processes within CHP-3 and CHP-4.

3. The Water Sector Sustainability Activity supports interventions that address improvements in policy, legal, regulatory, and institutional framework and build capacities of water sector organizations and will improve the long-term sustainability of the water sector in Ulaanbaatar.

It was estimated that the Water Supply Project will add 64 million cubic meters to Ulaanbaatar’s long-term supply of water, an 80 percent increase over current levels. This increased supply will put the city on a better footing to sustain its growing population and its future economic growth.

Please click on the link below to download the Compact.

The Mongolia Water Compact