63484 Conference Version MONGOLIA Enhancing Policies Takuya Kamata James A. Reichert and Practices for Ger Tumentsogt Tsevegmid Yoonhee Kim Area Development in Brett Sedgewick Ulaanbaatar THE WORLD BANK MONGOLIAand Practices for Enhancing Policies Ger Area Development in Ulaanbaatar Takuya Kamata James A. Reichert Tumentsogt Tsevegmid Yoonhee Kim Brett Sedgewick This is a conference version Sustainable Development Department East Asia and Pacific Region The World Bank ©2010 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: feedback@worldbank.org All rights reserved This volume is a product of the staff of the International Bank for Reconstruction and Develop- ment / The World Bank. 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Forewords U laanbaatar city strives to become a well-developed capital city with vibrant econ- omy, the city with advanced land policy, management, improved housing conditions, the city with healthy and safe environment, developed social life, legal framework, the city with responsive and efficient public administration, which enables broad participation of community, private sector in civic services; and an attractive tourist destination in Asia. As of today more than 60 percent of UB population still lives in peri-urban informal settlements, ger areas, which lack modern infrastructure services, such as piped water, sanitation, proper roads, pub- lic transportation etc. And coverage of social infrastructure (health clinics, schools, kindergartens) also needs to be improved. Unplanned growth of ger areas and unprecedented pace of urbanization brings many challenges, such as unemployment, traffic congestion, air pollution and negative envi- ronmental impacts. The recently updated UB City Master Plan suggested the concept of compact city, which envisions densely populated downtown area with well developed public transportation system and improved accessibility of ger areas. Also the UB Master Plan revealed enormous financing needs to realize envisioned plans and ideas. I have pleasure to endorse the findings of the report “Mongolia – Enhancing Policies and Practices for Ger Area Development in Ulaanbaatar”, which has been developed by the World Bank team based on extensive discussions and dialogue with the UB Governor’s office and our agencies and stakeholders. I truly believe that options for ger area development in UB outlined in the report will serve as guiding directions for our work with the ger area residents, local communities, external partners, donors and other stakeholders. Sincerely, BAT Ch. General Manager Governor’s Office Capital City of Ulaanbaatar T he rapid expansion of Ulaanbaatar, the capital city of Mongolia, is one of the country’s most critical development issues. Its population has increased by some 70 percent in the last twenty years and now accounts 40 percent of the total population. The total administrative area of the city is now 30 times larger than the original built-up areas. Most of the expansion took place in the ger areas: low-income areas where basic infrastructure ser- vices are poor or non-existent. The government has developed policy directions—in its recent national and local development strategies and master plans—to better manage expansion of the ger areas. However, its practices have been mixed. The ger areas continue to expand today, improvements on urban services are slow, and the local government’s capacity to respond to these challenges is still limited. This report provides an analytical framework to assess the viability of various future development scenarios of the city. It offers costs and benefit analyses of the choices and tradeoffs relating to hous- ing and urban services. Policy makers and citizens of the city will be able to see the implications of the policy choices they make today. The report will serve as a vital instrument for broad public policy consultations, which are an integral part of the urban development policy dialogue between Mongolia and the World Bank. Arshad Sayed Ede Ijjasz Country Manager for Mongolia Sector Manager East Asia and Pacific Region Sustainable Development Unit The World Bank The World Bank Table of Contents Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Currency, Acronyms and Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi Policy Directions and Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvi Implications for Planning and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii CHAPTER 1. Introduction – Background, Scope and Methods . . . . . . . . . . . . . . . . . . . . . 1 Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Scope and Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 CHAPTER 2. Development Context: Governmental, Socioeconomic, and Local Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Government and Administrative Structure in Ger Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Socioeconomic Profile of Ger Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Current Status and Development Assumptions of Three Ger Areas . . . . . . . . . . . . . . . . . . . . . .9 CHAPTER 3. Land and Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Legal, Institutional and Policy Aspects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 General Household Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Land and Housing in Ger Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Implications of Ger Area Housing Development Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 CHAPTER 4. Water Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Status of Current Water Supply in Ger Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 City Center Ger (Naran), 11th Khoroo, Bayangol District . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Mid-tier Ger (Bayankhoshuu), 8th Khoroo, Songino Khairkhan District . . . . . . . . . . . . . . . . . . 29 Fringe Ger (Sharhad), 9th Khoroo, Bayanzurkh District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 CHAPTER 5. Municipal Roads and Public Transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 Current Status of Roads in City Center, Mid-tier, and Fringe Gers. . . . . . . . . . . . . . . . . . . . 33 Current Status of Public Transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Options and Challenges for Service Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 CHAPTER 6. Solid Waste Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45 Overview of Current Solid Waste Management in Ger Areas . . . . . . . . . . . . . . . . . . . . . . . . . 45 Options for Service Improvement for Solid Waste Management . . . . . . . . . . . . . . . . . . . . . . . 49 Financial and Economic Implication for Improved Solid Waste Service . . . . . . . . . . . . . . . . . 54 VI MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR CHAPTER 7. Heating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59 Current Status of Heating in Ger Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Options for Service Improvement and Financial Implications . . . . . . . . . . . . . . . . . . . . . . . . . . 62 CHAPTER 8. Electricity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69 Overview of Current Status of Electricity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Current Status of Electricity in Ger Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Options for Service Improvement in Ger Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 CHAPTER 9. Education and Health Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75 Current Status of Education and Health Service Provision in Ger Areas. . . . . . . . . . . . . . . . . . 75 Options for Service Improvement and Cost Implication . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 CHAPTER 10. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81 Implications for Planning and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 ENDNOTES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85 ANNEXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87 Annex A. List of People Met . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89 Annex B. Technical Note of Analysis of 2008 Household Socioeconomic Survey . . . . . . . . . .93 Annex C. City Center Ger Planning Illustrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .94 Annex D. Ulaanbaatar District Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96 Annex E. Distribution and Distances of Water Kiosks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .97 Annex F. Plan of Water Supply Pilot Project in Dambadarjaa . . . . . . . . . . . . . . . . . . . . . . . .100 Annex G. Solid Waste Detailed Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101 Annex H. Approximate Landfill Development and Operating Costs . . . . . . . . . . . . . . . . . . . .103 ? Acknowledgements T his report is based on information from many sources and has benefited greatly from the input of many contributors and reviewers. The work was undertaken by a core World Bank team led by Takuya Kamata and comprised of Yoonhee Kim, Brett Sedgewick, James A. Reichert, and Tumentsogt Tsevegmid. The following consul- tants formed part of the larger team by contributing to individual chapters: Namkhainyam Bus- jav (Heating); Erdenebat Ulziidalai (Electricity); Baasankhuu Manduul (Transport); Jae-Kyu Coi and Kang-Ki Song (Solid Waste); and Geun Yong Kim, Heon-Joo Park (Land and Housing). The team was supported greatly by the help of Nomuuntugs Tuvaan, Otgonbayar Yadmaa, and Vellet Fernandes. Sunjidmaa Jamba was instrumental in helping introduce the team to key government officials, and Altantsetseg Shiilegmaa provided key information to the team about Mongolia’s budget. Others who have contributed to this report include: Mila Freire, Songsu Choi, and Salvador Rivera, who graciously served as internal peer reviewers; as well as David Dollar, Arshad Sayed, Michael Warlters, Rogier J. E. Van Den Brink, Sunjidmaa Jamba, Graeme Eric Hancock, Toyoko Kodama, Christopher Finch, Gailius Draugelis, Yoshine Uchimura and Victor Vergara, who provided valu- able comments, advice and assistance along the way. John Felton provided editorial support. “Cities Alliance”—a multiple-donor grant facility—provided funding for publication and dissemination. World Bank management provided valuable guidance and support throughout the process, includ- ing David Dollar, Arshad Sayed, Ede Ijjasz, Keshav Varma and John Roome. This report was developed with the collaboration and assistance of the Government of Mongolia, and the Municipality of Ulaanbaatar, and the many representatives from the utility companies that operate in UB. The unique on-the-ground details contained in the report would not have been possible were it not for the many khoroo, kheseg and community leaders, as well as residents, who volunteered their time to meet repeatedly with the task team. These governors agreed early on to help and continued to provide support throughout the process. The project management unit of the IDA-funded Second Ulaanbaatar Urban Service Improvement Project provided valuable sup- port in facilitating these meetings and providing sectoral data. Members of the donor and NGO community, from the ADB to local nonprofits, were willing to inform and guide the process Existing reports provided key data and background information for the report. Of key interest were the various reports surrounding the Study On City Master Plan and Urban Development Program of Ulaanbaatar City (2008); the draft Air Quality and Health Impact Baseline Study; Heat- ing in Poor, Peri-urban Ger Areas of Ulaanbaatar (2009); Consolidating the Gains, Managing Booms and Busts, and Moving to Better Service Delivery (2009); Rethinking the Delivery of Infrastructure Services in VIII MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR Mongolia (2007); Capacity Building in Energy Planning (2002); Southern Mongolia Infrastructure Strategy (2009); A Review of the Mongolian Primary Mortgage Market (2007); Mongolia Urban Development And Housing Sector Strategy (2005); Hygiene and Sanitation Situation Report For Ger Areas, Mongolia (2006); Mongolia: Exploring Options for Management Contracting-out in Water Supply and Sanitation Services for Ger areas in Ulaanbaatar (2008); Assessment of the Child Money Program and Properties of Its Targeting Methodology (2006). Acknowledgementsand Definitions Currency, Acronyms CURRENCY EQUIVALENTS (Exchange Rate Effective January 2009) Currency Unit = Tugrik (Tg or MNT) US$1.0 = Tg1400 Tg1 = US$0.000714 ACRONYMS AND DEFINITIONS ADB Asian Development Bank Aimag Province ALAGaC Administration of Land Affairs, Geodesy and Cartography CHP Combined heat and power CMP Child Money Program CSC Customer Service Center Düüreg District-level administrative division, UB ERA Energy Regulatory Authority ESP Energy Sector Project GDP Gross Domestic Product Ger Portable felt dwelling structure, also known as a yurt Ger area Ulaanbaatar exurbs, containing both gers and detached houses GoM Government of Mongolia Hashaa Land plot HH Household HIES Household Socioeconomic Survey HOB Heat Only Boiler IMF International Monetary Fund ITS indoor transformer stations X MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR Kheseg Microdistrict-level administrative division, UB Khoroo Subdistrict-level administrative division, UB MDG Millennium Development Goals MoH Ministry of Health MUB Municipality of Ulaanbaatar NGO Non-governmental organization NSO National Statistics Office O&M Operation & Maintenance OTS outdoor transformer stations PHC Primary Health Care PIAFF Public-Private Infrastructure Advisory Facility Sum County-level administrative division, outside UB Tg Tugrik, currency of Mongolia Tuk Waste collection/transportation company UB Ulaanbaatar, Mongolia UBEDN Ulaanbaatar Electricity Distribution Network Company USIP2 Second Ulaanbaatar Services Improvement Project USUG Water Supply and Sewage Authority Co. of Ulaanbaatar City VAT Value Added Tax WHO World Health Organization WWTP Wastewater treatment plant XLPE Rubber insulated aerial conductors State Great Parliament of Mongolia Hural Summary T he sustainable development of ger areas in Ulaanbaatar (UB), the capital city of Mon- golia, is one of the critical development issues facing the country. The transition to a market economy and a series of severe winters (called zud) have resulted in the large- scale migration of low-income families into the ger areas of UB.The city represents 39 percent of the nation’s population and generates more than 60 percent of Mongolia’s gross domes- tic product (GDP). This migration pattern has led to an unprecedented expansion of the ger areas.The traditional built- up areas of the city center comprise some 130 km2 but the total administrative area of UB, includ- ing ger areas, is now estimated at around 4,700 km2.The population of the ger areas is now estimated to make up about 60 percent of the total population of UB. The city’s population has grown from some 600,000 in 1989 to more than 1 million in 2007 and is expected to reach 1.3 million in 2015. Basic services are very limited or even non-existent in ger areas. Nearly 85 percent of ger residents use wood or coal-burning stoves for heating, in contrast to apartment buildings, which are con- nected to the central heating system. Ger residents must purchase water at public water kiosks, while apartment residents enjoy reliable supplies of piped-in drinking and hot water.The low den- sity of ger areas, coupled with the extremely cold climate, makes the provision of these basic public services very costly. Poor urban services have also led to environment degradation, including the pollution of air and soil, which poses such health risks as respiratory diseases and hepatitis. Clearer policy directions, such as the “Compact City” concept of the UB Master Plan 2030, have emerged in recent years to control spatial expansion and promote high-density development for the ger areas. However, the government’s practices have been inconsistent. These practices are, in part, a result of limited awareness and understanding by the general public, as well as by policy mak- ers, of the public costs of their actions on land management. Also, many supporting mechanisms, including land valuation and taxation, have not yet been properly developed. This economic sector work by the World Bank aims to help policy makers and citizens of UB bet- ter understand the consequences of their practices.The report provides information for use in pub- lic consultation with stakeholders, which constitutes the core of the policy dialogue exercise. The intent of this report is to clarify the costs and benefits of different development paths. These paths include (i) conversion of ger areas into apartment building complexes; (ii) gradual improve- ment of urban services for existing ger areas; and (iii) further expansion of ger areas at the fringe of the city. XII MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR Three ger areas were chosen for review as proxies of these paths. A khoroo (subdistrict) in Naran Ger represents the first path (the “City Center” ger); another khoroo in the Bayankhoshuu Ger represents the second (the “Mid-tier” ger); and a third khoroo in Sharhad Ger (the “Fringe” ger) is the proxy for the last. Cost analyses—as well as some benefit analyses where possible and appropriate—were made for housing and land, water supply, municipal roads and public transport, heating, electricity, solid waste management, and other social services such as health and education. Housing and Land: Private ownership of land and houses is generally high. In older and established ger areas, nearly 99 percent of families own their own dwellings and land. The ownership rate is lower (around 80 percent) in newer fringe ger areas where many new immigrants rent their land or houses. Private ownership of land is around 60 percent for apartments and 92 percent for single- family housing. The size of hashaas (land plots) is fairly uniform at around 470 m2–590 m2 in all ger areas because residents occupy as much land as laws allow. The average house is slightly larger in the City Cen- ter Ger at 77 m2, compared to 55 m2 in the Mid-tier and Fringe gers. Apartments on average are 37 m2, smaller than houses. In the City Center (Naran) and Fringe (Sharhad) Ger areas, almost one- half of households still live in gers, while in the Mid-tier (Bayankhoshuu) ger area, 70 percent live in detached houses. Apartments are the most valuable assets for households in the city, with market prices on average Tg43.4 million–Tg60.2 million ($31,000–$43,000). Houses in central ger areas are significantly more valuable, at an average of Tg29.4 million ($21,000) than houses in the Mid-tier and Fringe Gers, which cost an average of around Tg18.9 million ($13,500) and Tg17.5 million ($12,500), respectively.The value of gers is much lower than either apartments or houses:Tg1,820,000 ($1,300) in central areas, and Tg980,000 ($700) in fringe ger areas. The mortgage market is still emerging in Mongolia, with only 10 percent of house owners using mortgage loans. Fewer than 20 percent of apartment residents use mortgages. A majority of resi- dents in the three ger areas will not be able to afford to live in any of the apartment buildings that the government proposes to build. Given this affordability issue, alternatives such as low-cost hous- ing and/or low-income public rental housing should further be examined. Residents in established ger areas are not only more likely to own their homes than residents of apartments, they are somewhat more likely to be satisfied with their homes. In a survey, almost 90 percent of residents in the Mid-tier Ger said they are either “very satisfied” or “moderately satisfied” with their living condition, compared to 70 percent of City Center Ger residents and 80 percent of apartment residents. However, half of residents in the Fringe Ger said they are “very dissatisfied” with their housing, compared to only 6 percent or 7 percent of residents in other ger areas. The likely reason is that Fringe Ger residents are new to UB, and urban services there are the poorest among all ger areas. In terms of the type of apartment developments, most residents would prefer to live in small groups of low-rise apartment buildings rather than in large high-rise apartment com- plexes. Water Supply and Sewerage: Residents in all ger areas receive their water through some 500 pub- lic water kiosks. Most ger residents say they are relatively content with the current system of water SUMMARY XIII distribution, in contrast to their views of other services and infrastructure such as solid waste col- lection, local pathways and drainage. Affordability of water purchased at kiosks is not a major issue, either, because the cost is low and residents consume an average of only10 liters per day per person. Unit costs of water supply and sewerage services are by far the lowest for residences converted to apartments, estimated at around Tg280 ($0.19) per m3. For ger areas, the existing system of public kiosks seems to be the most practical way to provide water. It would be exorbitantly expensive to connect detached houses in established ger areas to the central water supply systems; estimated connection costs range from Tg5.6 million–Tg16.1 million ($4,000–$11,500) per household, depending on topography, proximity to existing networks and requirements for wastewater treatment. Development of kiosks in fringe ger areas should be minimized, however, because of the possibil- ity for relocation of residents, and kiosk water supply is very expensive to develop. The pricing and subsidy of kiosk water supply is a major policy deficiency: the current kiosk tariff of Tg1,000 ($0.67) per m3 covers only a fraction of the total unit cost of kiosk water supply. There is no space for cross-subsidization, either. Currently, water is supplied by trucks to about one-half of all kiosks; the rest are connected to networks via water pipes. Converting the truck-supplied kiosks to net- worked-kiosks would make sense only if a drastic increase in consumption is expected, since net- worked-kiosks are only marginally less costly (estimated at around Tg3,280–Tg4,260 per cubic meter, or $2.19–$2.84) than trucked-kiosks (Tg4,250–Tg4,260, or $2.83–$2.84). Limited capac- ity in water source and treatment, and the limited sewerage system, would be major constraints for increased demand in the future. Municipal Roads and Public Transport:The poor condition of unplanned and unstructured earthen roads in ger areas is one of the most serious concerns expressed by ger residents. Many parts of these roads are impassable for vehicles, have drainage problems, pose traffic safety hazards and are the source of a substantial amount of dust. Also, the lack of street lights contributes to higher crime rates after dark. Poor access to public transport places ger residents at a disadvantage due to their long commuting times to work and schools. Residents in fringe gers tend to rely heavily on public buses because they cannot afford private vehicles. Residents of both mid-tier and fringe ger areas must walk long dis- tances from public transportation drop-off points along major corridors because buses, mini-buses, and taxis cannot or will not operate on the narrow earthen roads in ger areas. The cost of road improvement for a couple of km within the community to allow mini-bus operations are similar for each of the three types of ger areas. Typical costs are between Tg238 million and Tg322 million ($170,000–$230,000) for initial construction, between Tg1,120,000 and Tg1,750,000 ($800–$1,250) for annual maintenance, and Tg1,120,000–Tg1,960,000 ($800– $1,400) for the operation of street lights. Per capita, the capital costs would be around Tg21,600– Tg40,700 ($15.43–$29.07), while maintenance would be around Tg90–Tg465 ($0.06–$0.33) annually. Road improvement is largely a fiscal capacity issue for the Municipality of Ulaanbaatar (MUB) regardless of the characteristics or location of gers. Financial sustainability of public trans- portation is another policy issue, because many passengers do not pay fares and the public bus com- panies face financial deficits. XIV MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR Solid Waste Management: Ger residents cite solid waste management as one of the worst public ser- vices. Solid waste is collected solely by vehicles, the service is unreliable, and collections are infre- quent: once each month or even once every three months. Operational efficiency also is very low, with each vehicle collecting from an average of only 100 households per day in summer and even fewer during the winter (seasonal variation of waste quantity is significant: an average per house- hold of 1.0–0.9 kg in winter and 0.2–0.3 kg in summer). Conversion of gers to apartment complexes in central ger areas would make solid waste collection services more efficient and cost-effective. In areas where gers are not converted to apartments, alter- natives such as using a combination of local sanitary workers, collection stations and vehicles would be much more cost-effective than the current system. Also, waste collection is less costly in the more densely populated ger areas than in spread-out ones. Capital costs for a system of collection by sanitation workers are estimated at Tg13.2 million– Tg19.6 million ($9,400–$14,000) for equipment purchases. O&M costs would be Tg16.8 million– Tg35 million ($12,000–$25,000) in the Mid-tier and Fringe gers respectively, depending on density and spatial characteristics. Improvements using the current vehicle collection system would be more expensive, with capital costs of Tg77 million–Tg152million ($54,000–$109,000) and O&M of Tg16.8 million–Tg59 million ($12,000–$42,000) per year. However, MUB objects to the use of sanitary workers for unknown reasons. On a per capita basis, estimated capital costs range from as little as Tg1,654 ($1.18) for the com- bined approach to as much as Tg13,658 ($9.76) for improving the current system.Tariffs vary across districts, at Tg1,500–Tg3,000 ($1.07–$2.14) per month for each household, with a very low tariff collection rate of 30 percent. While operational and financial details of the Tuk (collection compa- nies) are subject of further review, solid waste collection services seem to be a heavy fiscal burden on district governments. Also, MUB would need to develop another landfill soon—at an estimated cost of Tg51.8 billion ($37 million)—if current services are significantly improved. Heating: There are four types of existing heating systems in UB: a) centralized (or district) heat- ing system; b) small heating systems for groups of buildings (heat-only boilers or boiler houses); c) individual heating systems (water heaters); and d) household stoves. The fuel for all these heating options is indigenous coal or lignite. The use of raw coal in heat-only boilers and household stoves is considered one of the main reasons for the worsening air quality in UB. Other problems include the high cost of individual connections, low heat density, the high rate of heat loss due to the lack of insulation in gers and houses, the lack of heating capacity in the Ulaanbaatar district heating net- work, and the unplanned and temporary location of hashaas (land plots). Possible options for heating improvements may include a) connecting more residences to district heating services; b) creation of small heating systems for groups of buildings; c) improving the effi- ciency of household stoves to reduce air pollution, and d) reducing the use of raw coal for heat- only boilers and individual stoves and using cleaner fuels instead. The cost of connecting small businesses and individual households to district heating may vary between Tg2.8 million and Tg5.6 million ($2,000–$4,000). In some cases, due to low heat density or dispersed locations, the per-unit costs could be as much as Tg11.2 million ($8,000). The connection SUMMARY XV cost in apartment buildings may vary between Tg560,000 and Tg700,000 ($400–$500) per apart- ment unit. Connecting individual gers to the district heating system is not considered cost-effective, however. One reason is that the heat load density for individual connections in ger areas is about 40–50 times lower than for apartment buildings. In addition, individual connections would not be economically feasible without proper heat insulation measures.The average ger loses 4–5 times more heat than national insulation standards; individual houses lose twice the national standards. Heat tariffs need to be reformed significantly because current tariffs do not cover the full costs. Pricing also is regressive, with wealthier households connected to district heating paying for their heating based on space size (rather than actual usage as measured by a meter), whereas ger area residents pay the market price for coal and firewood and get a fraction of the heating compared to apartment dwellers. Overall, lower-income families spend up to 40 percent of total household income on heating. Electricity: Electricity supply in ger areas is subject to several major problems, including voltage drops due to capacity shortages, insufficient capacity of transformers and substations, and a small number of households without electricity. Most households in the three ger areas under review have electricity, except about 120 families newly migrated from rural areas. Ger area residents who have connections use, on average. about 100–110 kWh of electricity per month and pay about 4–5 percent of their monthly income for it, which is within the internationally recognized affordabil- ity limit. Improving service for existing consumers, such as increased capacity at nearby substations and improved metering and wiring, would cost between Tg280,000–Tg560,000 ($200–$400) per household. The cost of new connections for households in the selected ger areas varies between Tg840,000– Tg1,120,000 ($600–$800) per connection depending on (among many variables) topography and distance from and available capacity of nearby transformers and substations of the Ulaanbaatar Dis- tribution Network (UBEDN). Households that currently do not have electricity would not be able to afford new connections. Even though the Energy Regulatory Authority (ERA) has introduced lifeline tariffs for low-income households, very few households have subscribed for these tariffs because they have recently migrated to the area and have not yet registered or they have not paid their bills for electricity. The lack of proper planning and enforcement among district and munici- pal authorities also makes it more difficult to provide new connections. Social Services – Education: Schools in ger areas lack facilities to absorb the increasing number of students. The burden on existing schools can be eased by expanding them or providing additional primary and secondary schools. Either of these actions would require not only investing in facili- ties but also adding teachers and other supporting infrastructure such as roads, water supplies and sanitation. The initial cost assessment suggests around Tg1.8 million ($1,300) per capita would be needed to provide school facilities on a normal single shift and the supporting infrastructure, excluding remuneration for school teachers. Given that expansion of schools is not expected in the short term, providing youth and recreational centers should be considered for prevention of juvenile delinquency. The capital cost of such centers is estimated to be around Tg175,000 ($125) per child, and Tg18,200–Tg25,200 ($13–$18) per child, per year for operation. Schools also could be made more accessible to students by improving general road conditions and increasing the fre- quency of the public/mini buses that many students use. XVI MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR Social Services – Health: Expanding or adding primary care providers is critical in the remote ger areas that are served by only a limited number of hospitals. Replacing outdated equipment and ensuring deployment of enough staff would prevent the existing problem of under-utilization of the facilities: currently not many people use these facilities. The cost of building new primary health care facilities is estimated at around Tg505,400 ($361) per capita, not including salaries and other variable costs. POLICY DIRECTIONS AND SCENARIOS The following policy directions and scenarios have emerged as a result of the above analyses. Smart Growth: It would make economic sense to adopt “smart growth” policies as principle direc- tions in the long run, i.e. to increase density in the center of the city where appropriate while con- trolling further expansion at the outskirts of the city. In general, high density development would make it easier to provide better urban services with higher efficiency and lower cost. The public also has the desire to live in high density development: low-rise apartments or collective housing with utility services. Realistically, however, the majority of ger areas will remain in their current conditions because achieving higher density development is very complicated, as elaborated below. Conversion of central gers to apartments will take time: Converting center ger areas into apartment complexes has not progressed as fast as the government had envisaged. One reason is that most ger area residents cannot afford the cost of apartments in the city center. The lack of mortgage finance also makes buying large assets (such as apartments) difficult for many people. A third reason is that the absence of a functioning real estate market—including proper methods for determining prices for private land transactions—has impeded the development of new housing. Retrofitting urban services in mid-tier gers is exorbitantly expensive: A majority of ger areas outside of the city center are older establishments. Many residents have lived there for a long time and have invested in their dwellings, a large number of which are detached houses. These residents are rela- tively content with their neighborhoods and would like to see improved urban services for their houses or development of low-rise, small-scale apartment complexes. These areas are not suitable for conversion to large high-rise apartment complexes—at least for the mid-term—mainly because they are not near network infrastructure, except along the major transportation corridors. While a minimum level of urban services have reached most of these areas, upgrading services to the full-fledged level now available for apartment buildings would be exorbitantly expensive and almost impossible. The unit costs of services to individual houses are several times higher than for apartment units. Instead, improvements in housing—such as conversion to low-rise, smaller collective dwellings, which might make connection to network infrastructure feasible—could be envisaged if residents’ income increases. In the meantime, gradually improving services within the affordability limit of residents and public financial resources would seem the most practical approach for the majority of ger areas. Room for relocating fringe ger residents: The situation in the more remote fringe areas of the city is slightly different. Gers in these areas are inhabited by recent migrants. Their income level is even SUMMARY XVII lower than those of city center residents or the residents of long-established gers. They are farther away from the economic activities of the city and have little access to health and education services. Utility services also are even worse than for residents in established ger areas. Therefore, residents of these fringe gers are very dissatisfied with living conditions and are ready to relocate, if affordable better housing is available elsewhere. But again, affordability is a very serious issue for these resi- dents because of their economic circumstances. IMPLICATIONS FOR PLANNING AND DEVELOPMENT Given the situation above, seven priority areas require attention by the government: 1. Access roads within ger areas: The majority of the residents in ger areas are lower-income and are further disadvantaged by very poor access to markets, work places, education and other services. Modest improvements in the secondary access roads from major corridors to inside the khoroos (including basic drainage and street lighting) would give residents major benefits, including easier access by taxis or mini-buses and reduced dust, storm-water torrents and crime.Therefore, it would make sense to initiate planning for development of access roads within the khoroos. Community- driven initiatives on land re-plotting, if appropriate, would also make it easier to plan roads and provide access for utilities. 2. Better heating systems to improve efficiency and reduce air pollution. Because the development of apart- ment complexes is likely to take a long time and most ger areas will not be connected to central heating systems in the near future, short-term measures are needed to improve air quality in the city. Such measures could include better access to cleaner and more efficient stoves and fuels, as well as programs to increase the energy efficiency of houses. 3. Solid waste management and community infrastructure: Solid waste management is often listed by ger area residents as one of their most serious concerns. The current solid waste collection practices seem to be very inefficient and costly. Other community infrastructure and services, such as path- ways, foot bridges and community youth centers, also would be helpful in meeting day-to-day needs of many ger area communities, given the lack of proper site development and the shortage of schools and extracurricular activities in ger areas. 4. Research on affordable collective housing in mid-tier gers: So far, all apartment developments have been concentrated in the center of the city and been targeted only for higher-income residents. There- fore, the development of apartments has not benefited the majority of ger residents. On the other hand, some residents in the older, established mid-tier ger areas located along major roads seem will- ing to consolidate their individual plots and develop low-rise collective housing; this would provide easier and less costly access to utility services.Therefore, it would make sense to begin reviewing the feasibility of affordable collective housing development along transport corridors and utility supply lines in the established mid-tier areas. 5. Fringe gers: Providing networked utility services in the fringe ger areas is very expensive. Many residents in those areas are very dissatisfied with current living conditions (including the poor qual- ity and availability of public utility services) and might want to find better housing and economic XVIII MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR opportunities elsewhere. For these reasons, a major expansion of networked utilities in the fringe ger areas does not make much economic sense. Instead, services should be provided at the minimum humanitarian level. Since the future of these gers will depend, in part, on the social integration of new migrants, some lessons from social housing in Hong Kong or Singapore might help Mongo- lia develop clearer policies. 6. Utility capacity expansion and reforms: The more residents enjoy a higher standard of living, the higher the required capacity will be for utility services. However, most utility services—water sup- ply, heating and electricity—already have reached capacity limits. As gradual progress is made on housing and utility services, capacity also can be expanded. Because estimated investment require- ments are significant and utility services face considerable financial constraints, reforms of pricing and regulations of utility services will be essential prerequisites. 7. Further research in related sectors: The municipal budgetary resources of UB are quite limited, at around Tg30 billion–Tg60 billion ($21 million–$43 million) per year. Given the slow implemen- tation of pricing reforms, many infrastructure services in UB already receive large implicit subsi- dies. Furthermore, expansion of key network infrastructure will easily require investments of Tg30 billion–Tg50 billion ($21 million–$36 million) or more. Other problems noted in this report— including inadequate housing development, the lack of mortgage financing and problems in the banking sector—create additional challenges for the housing sector. Further research on municipal finance and the banking sector, including mortgage financing, might help the government develop clearer policy directions. 1 Introduction – Background, Scope and Methods BACKGROUND The sustainable development of ger areas in Ulaanbaatar (UB), the capital city of Mongolia, is one of the critical development issues facing the country. The transition to a market economy since the 1990s and a series of severe winters, called zud, have resulted in the migration of many low-income families from the countryside into the ger areas of UB.The city grew from some 600,000 people in 19891 to over 1.03 million in 20072, representing 39 percent of the nation’s population. The city now generates more than 60 percent of Mongolia’s gross domestic product (GDP) and accounts for one-half of the total investment in the country. Given the lack of employment oppor- tunities in other major aimag cities, migration to UB is expected to continue. The latest forecasts indicate that the population of UB is likely to reach 1.3 million in 2015 and about 1.7 million in 20253. The growth has led to an unprecedented expansion of the ger areas. The total administrative area of the city is now estimated at about 4,700 km2, which is more than 35 times larger than the original center of the city (around 130 km2). The population of the ger areas is now estimated to make up about 60 percent4 of the total population of UB. Basic services are very limited or non-existent in ger areas. Nearly 85 percent of ger residents use wood or coal-burning stoves for heating, while apartments are connected to a central heating sys- tem. Ger residents must travel to public kiosks as far as 500m from their homes to purchase water, which they carry back home in plastic or metal tanks. Residents of apartments, by contrast, enjoy an around-the-clock supply of piped-in drinking water and hot water. Provision of very basic pub- lic services in the ger areas is very costly, largely due to the low population density and the extremely cold climate of Mongolia. The lack of basic urban services in the ger areas has also resulted in environmental degradation, including the pollution of air, water and other natural resources. This situation also poses serious health risks to residents, including respiratory diseases and hepatitis. Clearer policy directions have emerged to control spatial expansion and promote high density development. The “MDG-based Comprehensive National Development Strategy,” adopted by the Parliament in 2007, recommended that spatial expansion in UB should be controlled. The “2008 UB City Urban Development Master plan,” which was developed with assistance from the Japa- nese Government, advocated a “Compact City” concept through the more efficient use of land. Implementing this guidance, technical assistance has been offered by bilateral donors for the intro- 2 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR duction of effective zoning regulations, and BOX 1.1. Ger Areas and Gers the government has been taking on large- scale development of apartment residences for UB. Although policy directions have become clearer, the Government’s practices con- cerning the spatial development of ger areas have been inconsistent. The Govern- ment’s early attempts to control migration to UB by imposing punitive settlement fees were struck down by the country’s highest court as unconstitutional. The private land ownership laws enacted in 2002, and the subsequent land ownership registration pro- The peri-urban ger areas surround the built up “downtown” of cedures introduced in 2005, provide incen- Ulaanbaatar city, and are characterized by low-density scattered arrays tives for households to occupy as large a of fenced property containing informal housing structures, a mix of gers and detached houses. These areas now take up about more than parcel of land as possible. During the pre- 90 percent of UB. Migrants typically claim open land, install a fence election period in 2008, the private land along the property boundaries, and build a ger or a detached house. ownership laws were revised to expand resi- As the migrants settle down and save money, they upgrade or build the dents’ land holding entitlements by 400 per- more expensive detached houses on their land. In UB ger areas, some 61 percent live in houses and 38 percent reside in gers. cent–500 percent on average, resulting in a land-seizing frenzy around UB. These inconsistent actions are, in part, a result of limited awareness and understand- ing by the general public, as well as by policy makers, of the public costs of their actions. There is high susceptibility to ad hoc behav- ior that places premiums on short-term pri- vate gains over long-term value-creation in public goods. Many supporting mechanisms, including land valuation and taxation, have not yet been developed to create incentives for long-term value creation. Traditional gers are nomadic felt tents with wooden lattice substructures, used by Mongolian nomads for centuries. The ger was an ideal living solution for nomads over many centuries because it Therefore, this economic sector work aims is mobile (it can be assembled in half an hour), light-weight (one at helping policy makers and citizens of UB person can erect a ger), and portable, making it well suited for easy moving. The gers have limited space (on average only one room of improve their understanding of the con- ca. 28 m2), and do not meet modern standards of living. Cast iron sequences of their choices of policies and stoves provide heating and are inefficient due to poor insulation practices. Specifically, it intends to clarify (10–15 cm of felt) and create extremely poor indoor air quality. the cost and benefit implications of different development paths, with the goal of con- tributing to the eventual achievement of the “Compact City” concept.These paths include (i) con- version of ger areas into developments of apartment buildings; (ii) gradual improvement of urban services for existing ger areas, and (iii) further expansion of ger areas at the fringe of the city. CHAPTER 1 INTRODUCTION – BACKGROUND, SCOPE AND METHODS 3 SCOPE AND METHODS Since the economic sector work reflected in this report is intended to be an instrument for further public consultation and dialogue, it uses different scope and methods from those of typical sector reports of the Bank.This report provides cost benefit implications from the residents’ point of view, and refers to fiscal implications for the municipal government of UB. It does not provide compre- hensive sector overview of these urban services, which are readily available in many sector reports, including the 2007 Bank/PIAFF report, “Foundation for Sustainable Development: Rethinking the Delivery of Infrastructure Services in Mongolia”. This report is only the first phase of the exercise. It will be shared with stakeholders through a series of workshops and other public out-reach activities. Stakeholders include parliament mem- bers, policy makers and practitioners at the national and the municipal governments, district and khoroo community leaders, ger area residents, professional associations, academia, NGOs and donors. Cost analyses, as well as benefit analyses where possible and appropriate, were made for land and housing, water supply, roads and public transport, heating, electricity, solid waste management, and other social services. Analyses of water supply and social services mostly relied on data from on- going donor-funded projects in ger areas of similar characteristics and other existing sector reviews. Quick field surveys have been carried out for roads and public transport, heating, electricity, solid waste management, and housing and land. While on-site sanitation is one of the critical issues for ger residents, it is not included in this report because credible solutions have not yet been developed. Many on-going experimental programs are so costly that they are not affordable for ger residents. Recommendations from numerous past stud- ies have been deemed inappropriate because of the cold climate and thus have never been adopted in a sustainable manner. As proxies of the three paths of development—(i) apartment conversion, (ii) service improvement for existing ger, and (iii) further development of fringe ger areas—khoroos (sub-districts) in three ger areas were chosen for the analyses. In Naran Ger, the 11th Khoroo, Bayangol District (the “City Center Ger”), is expecting large-scale development of apartment and commercial complexes. In Bayankhoshuu Ger, the 8th Khoroo, Songino Khairkhan District (the “Mid-tier Ger”) is chosen for the analysis of the second path. In the Sharhad Ger, the 9th Khoroo in Bayanzurkh District (the “Fringe Ger”) is a new ger at the fringe of the city. The City Center Ger mostly borders existing urban areas and has experienced a gradual conversion into apartment buildings. The area partially accesses the standard level of services provided to gers, and partially accesses more extensive services through the area’s proximity to high-density areas. The Mid-tier Ger is bordered on all sides by other ger areas. Residents in the area receive the stan- dard level of services provided to gers. Residents intend to stay in their plots in the long run, mak- ing gradual improvements in their housing and expecting improved urban services. In the Fringe Ger, residents are still claiming land. Households, especially the new arrivals, lack the standard level of services currently provided to most ger areas. Further description of these khoroos is included in the next chapter. 4 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR The khoroo was chosen as a unit of analysis because it is the smallest administrative division with paid employees, thus allowing for the intimate study of each area but with access to relevant and reliable data.Typically, each khoroo has 1,800–3,000 households with a population of 7,000–12,000. Since khoroo-level data is collected across the city, there is merit in scaling the costs of infrastruc- ture service provision or estimating public benefits. In addition to location, khoroos were selected based on strong support for this study from khoroo leaders and district governors and the availability of socio-economic and service provision data from household (HH) assessments and other World Bank projects, donor projects, and NGO activities. 2 Development Context: Governmental, Socioeconomic, and Local Profile GOVERNMENT AND ADMINISTRATIVE STRUCTURE IN GER AREAS Ulaanbaatar is divided into nine districts, or düüregs. Six of the düüregs break up the central urban area of the capital city, fanning out to the ger areas. Each düüreg is divided into sub-districts, or khoroos, of which there are currently 132 in the city. Each khoroo is the further divided in micro- districts, or khesegs. Ger areas are located in all of the nine districts, usually corresponding to lower levels of administrative boundary, the khoroos. The breakdown of responsibilities, from the Mayor’s office to leaders of each kheseg, is fairly straight- forward (see Table 2.1). The municipality, led by a mayor who is chosen by elected representatives, sets budget and policy, coordinates the districts, and controls city-wide activities (road maintenance, for instance). The düüregs, each led by an elected governor, are the smallest administrative unit with budgets available for service improvements. They are responsible for the assets in the area, infra- structure and service improvements (road construction, health clinics, and schools, for instance). Khoroos are the primary level of government interacting with residents.To register as a resident, vote, or register a car, residents go to the local khoroo office. Each khoroo represents around 1,800–3,000 TABLE 2.1. Administrative Breakdown of Ulaanbaatar REPRESENTATION, APPROX. BUDGET FREQUENCY OF NEW GOVERNMENT DIVISION QUANTITY POPULATION RESPONSIBILITY (MILLION TG) APPOINTMENT Capital City 1 1,025,174 Budget allocation, 33,502 Citizen’s Khural (4 (Ulaanbaatar) services, maintenance years), which selects the Mayor (4 years) Düüreg District 9 113,908 Infrastructure, tax 754 2–4 representatives collection, services per Düüreg elected to State Great Khural (4 years), Düüreg Governor (4 years) Khoroo Sub- 132 7,766 Registration, census, Salaries Citizen’s Khural district voting, community and office Representative outreach maintenance (4 years); Khoroo only Governor selected by community meeting (4 years) Kheseg Micro- ca. 8–13 ca. 597–970 Registration, Part-time Kheseg Leader district per Khoroo community outreach stipend Sources: JICA master plan, local interviews 6 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR households and has a local office, often combined with a community center. Khesegs are the small- est administrative unit, containing no more than a few hundred households. Each has a volunteer leader who is given a small stipend and is responsible for helping with registration, outreach, health promotion, and local assistance to the unemployed and disadvantaged. The municipal budget of UB city is quite constrained, around Tg30 billion–Tg60 billion ($21 mil- lion–$43 million) annually. Since 2003, annual city revenues have significantly exceeded expendi- tures, with only 84 percent of revenues going into the city budget in 2008. SOCIOECONOMIC PROFILE OF GER AREAS5 The socio-economic differences between the ger areas and apartment areas are as significant as the physical differences. Ger area households are larger, younger, less educated, poorer, and more reliant on social services than households in apartment areas (Table 2.2). Demographics The average size of a ger area household is just above four persons, almost one person larger than in apartment areas. In line with the recent growth of ger areas, a high proportion of residents are migrants. Only 50 percent of ger area respondents were born in the district in which they are living, compared to 60 percent of apartment area respondents. Over 93 percent of those ger area residents who are not born in the district came from outside UB. In ger areas marriage is a dominant reason for migration (over 40 percent), followed by employment (19 percent), and education (14 percent). Employment Rates of employment in ger areas vary according to the source of the data, but unemployment rates tend to be higher in the ger areas than in apartment areas or other areas outside the capital.The 2008 HIES survey reported that of working-age6 ger area residents, only 51 percent had worked during the previous 12 months, compared to 56 percent in the apartment areas and the average national rate of 63.6 percent. The 2007 NSO yearbook did not disaggregate employment by the type of area, but did approximately substantiate the national employment rate, at 62.4 percent. Economic activities in the various areas also showed a contrast. Ger area residents perform sig- nificantly more manual labor than do resi- dents of apartment areas (Figure 2.1). Of those TABLE 2.2. Demographic Summary of Ger and employed in ger areas, 30 percent are engaged Apartment Areas in construction or manufacturing, followed by GER APARTMENT 12 percent in trade (wholesale and retail) and AREAS AREAS vehicle repair. These economic activities con- Male 47.1% 45.8% trast starkly with those in the apartment areas, where the most widely-held jobs are in educa- Female 53.0% 54.2% tion (12 percent), trade and vehicle repair (11 Avg. number of 4.2 3.4 household members percent), and public administration and defense (10 percent). Also, a higher share of ger residents Average Age 27.9 30.8 CHAPTER 2 DEVELOPMENT CONTEXT: GOVERNMENTAL, SOCIOECONOMIC, AND LOCAL PROFILE 7 FIGURE 2.1. Economic Activity of UB Apartment and Ger Area Residents Accommodation and food service activities Transportation and storage Human health and social work activities Economic Activity Public administration and defence Construction Education Wholesale and retail trade; repair of vehicles Manufacturing Other 0% 5% 10% 15% 20% 25% 30% 35% Apartment Area Ger Area Percent of residents involved are engaged in construction work (15 percent) and manufacturing (15 percent), as compared to 6 percent and 8 percent of apartment residents, respectively. These findings suggest that ger residents are more vulnerable to economic downturn than those in other areas. Incomes in Ulaanbaatar also highlight the differences between the areas (Figure 2.2). Ger area median household income (including cash, in-kind, and bonuses) in Ulaanbaatar is Tg 2,496,897 FIGURE 2.2. Household Income Distribution, Divided by Quintile 100% 9 90% 8 80% 7 Income Range (Million Tg) Distribution of residents 70% 6 60% 5 50% 4 40% 3 30% 2 20% 10% 1 0% 0 Lowest Second Third Fourth Highest Lowest Second Third Fourth Highest Quintile Quintile Quintile Quintile Quintile Quintile Quintile Quintile Quintile Quintile Apt Area Ger Area Mixed Area Max Average Min 8 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR ($1,665). This income is 43 percent less than for apartment area households. Similarly, income dis- tribution within ger areas and city centers show that even among the highest 20 percent, average income in apartment areas is 17 percent higher than in ger areas. Benefits and Allowances Government benefits play a significant role in supplementing the incomes of UB residents, repre- senting 20 percent of ger area income and 14 percent of apartment area income (Figure 2.3). These benefits are dominated by child-related payments and pensions; disability payments are also a sig- nificant contributor. With the economic crisis, however, these payments are targeted for severe reductions. FIGURE 2.3. Average Incomes, Including Wages and Benefits By far the most common benefit, child-related benefits dominated by the Child Money Pro- gram (CMP), are received by 73.5 percent 5,000 of ger area households. The system is largely 4,500 624 universal and multi-tiered, composed of: a) a 4,000 3,500 Tg3,000 ($2.14) monthly payment for every (,000 tugrug) 3,000 child under 18; b) a Tg25,000 ($17.86) quar- 2,500 586 terly payment for every child under 187; c) a 2,000 3,941 new baby allowance of Tg100,000 ($71.43) per 1,500 child; and d) a maternity benefit of Tg20,000 2,306 1,000 ($14.29) per month for five months dur- 500 ing pregnancy and seven months after birth, 0 for mothers below the Minimum Subsistence Ger Areas Apartment Areas Level (Tg30,000, or $21, in UB)8.In total, poor Wages Benefits families receive Tg419,333 (~$280) before the child turns seven months old, followed by Tg136,000 (~$91) per year. State pensions also are significant, providing an average Tg1.3 million (~$930) to 30 percent of ger residents. Other benefits received by at least 5 percent of the population include disability payments (average Tg236,051, or ~$170, received by 7 percent of ger residents), and an “other benefit” that is undefined in the survey (Tg246,717, or $176, to 13 percent of ger residents). Several other benefits reach no more than 5 percent of residents. Until 2007, the CMP had been a targeted, albeit inefficient, social transfer.With the universalization of the CMP, and the proliferation of other social transfer programs, these transfers quickly became a substantial part of the Mongolian budget.Three quarters of the Child Money Program comes from the Mongolia Development Fund, which is mostly financed by mining taxes.With the massive drop in commodity prices in the current economic climate, the Mongolian government is experiencing a corresponding budget shortfall. As part of a budget assistance package financed by the IMF, ADB, World Bank, Japan, and other donors, the GoM has agreed to propose a major restructuring, with the help of the ADB and World Bank, of its social transfer programs. The government will propose consolidating, reducing, and carefully targeting the transfers to the poor.The goal will be to include only the poorest families, as defined by the National Poverty Line, in the social transfer programs. CHAPTER 2 DEVELOPMENT CONTEXT: GOVERNMENTAL, SOCIOECONOMIC, AND LOCAL PROFILE 9 FIGURE 2.4. City Center Ger (Naran) CURRENT STATUS AND DEVELOPMENT ASSUMPTIONS OF THREE GER AREAS City Center Ger (Naran), 11th Khoroo, Bayangol District (Map # IBRD36906) Naran is one of the oldest existing ger areas, located immediately north of the city. Containing the national TV and Radio stations, as well as their antennas, the area is often referred to as the “TV Sta- tion Ger.” The 11th Khoroo was originally much larger, but as apartment buildings have been creep- ing northward and population has increased, clumps of apartment buildings have broken off into new khoroos. There are plans in the MUB to build more apartment buildings in the southern half of the khoroo (see Annex C). The khoroo climbs part of the southern slope of one of the many hills in UB, tapering off close to the top of the hill. The long eastern border is one of the main paved roads accessing the northern ger areas, and represents the border between Batangol and Chingeltei Districts. In the City Center ger, large-scale development of apartment buildings is expected given the prox- imity to the city center. The current municipal plans (featured in Annex C) are for permanent structures, most of them seven to 12 stories, to fill the southern half of the ger area. According to the planning, by 2015 there will be 15,684 households, and the population will reach 65,800 in the development zone (which includes the 9th, 10th, and 11th Khoroos). Facilities will be devel- oped, including schools for 13,160 pupils, kindergartens for 6,580 children, and health clinics with a capacity of 2,300 patients/day, as well as green areas and utilities. Water supply will be centralized, providing an estimated supply of 11,780 m3/day. Wastewater will also be centralized, using an esti- mated 2,900 meters of pipes and with collection estimated at 11,780 m3/day. Approximately 12,500 meters of transmission pipes will provide centralized heating, a load of 63.7gcal/hour. Seven sub- stations will supply power to the district, providing capacity of an estimated 32.6MWt. Implemen- tation, including ground engineering, roads, preparatory measures for engineering, gardening and furnishing, will cost approximately Tg26 billion ($17.3 million). 10 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR FIGURE 2.5. Mid-tier Ger (Bayankhoshuu) Mid-tier Ger (Bayankhoshuu), 8th Khoroo, Songino Khairkhan District (Map # IBRD36904) The Bayankhoshuu ger lies a few kilometers up the road from the City Center Ger’s main road, on the other side of a large hill. The main road provides the khoroo’s northern border and is the principal source of commerce. This kho- roo is relatively flat, with a small lake in the mid- dle that feeds several brick-making enterprises. The lake also effectively collects the solid waste that blows around the neighborhood’s streets. The mid-tier ger areas exemplified by Bayank- hoshuu form the mostly continuous mass of the larger ger area. It is surrounded, for several kilo- meters in every direction, by other khoroos filled with gers. Household plots of land have been oriented along the main road with little plan- ning, creating long, uninterrupted blocks some- times over 1 km long. The community is entrenched, with residents having established themselves and their families in the area and are reluctant to leave. Some higher-income residents may wish to obtain private services, such as private water supply connections or private hot-water boilers, for their houses. Other affluent residents might want to consolidate their land plots and build small scale residential building structures for multiple family dwellings. Fringe Ger (Sharhad), 9th Khoroo, Bayanzurkh District (Map # IBRD36905) Along the northeast edge of UB, the relatively new Sharhad Ger area is still expanding, with a com- paratively lower density.The Khoroo starts in the main UB basin, climbing the edges of foothills. The residents farthest from the center raise live- FIGURE 2.6. Fringe Ger (Sharhad) stock for a living; other than this type of pas- toralism, urban agriculture is largely unknown in UB. Several bus lines end at the bus ter- minal just over the nearest border, the only paved section of the khoroo. A largely self-suffi- cient national mental hospital is also located in the khoroo. The city’s main used-car market is located in the neighboring khoroo (17th), pro- viding jobs to many residents. Compared to the mid-tier ger areas, residents of the far-fringe ger areas are less attached to their land, having only recently arrived in the area, and are therefore more willing to move. IBRD 36903 MONGOLIA XVII ULAANBAATAR PROJECT SUB-DISTRICTS (KHOROOS) S ON GI NO C HI N G ELT EI XVI DISTRICT (DUUREG) BOUNDARIES R KH AI RKH KHA IR KH AN IX SUB-DISTRICT (KHOROO) BOUNDARIES XVI VII PAVED ROADS XV ATA A RAILROADS A A BUILT-UP AREAS VIII GER AREAS XI XII ZÜ B AYAN Z Ü R K H VII XIV ÜK B SÜKHB XIII XII XI X X II V XI XI 0 1 2 3 4 Kilometers IX IV IX XIX XVI IX X VI IX VIII III XII VI VII II XIII XIV XV I XII V VI XVII I IV VII XIX VIII XV VIII XVIII IV XVII III III I V XVI XIII XII VI II XV XIV II X IV I VIII This map was produced by the IV I XVIII XIV Map Design Unit of The World Bank. III II I V XIII The boundaries, colors, denominations and any other VI information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or B AYA NG O L I III acceptance of such boundaries. V XX 106°30’ Tsogt-Ondör 107°30’ XII SÜKHBA X SONGINO Area of ATAR CHINGE KHAIRKHAN main map 48°00’ 48°00’ LTEI Tuul BAYANZÜRKH G ol ULAANBAATAR BAYANGOL ol lG Bayanzürkh Tuu Songino l NALAIKH l Go KHAN UUL Tuu Nalaikh VII V Altanbulat Dzuunmod VI IV Sagadal Janchabling VIII K HA N U U L Örtöö Hiyd X IX 47°30’ Sergelen 47°30’ BAGAKHANGAI 106°30’ 107°00’ Bayan MAY 2009 CHAPTER 2 DEVELOPMENT CONTEXT: GOVERNMENTAL, SOCIOECONOMIC, AND LOCAL PROFILE 11 12 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR IBRD 36906 MONGOLIA ULAANBAATAR SONGINO KHAIRKHAN C H I N G E LT E I AR BAYANGOL 11th SUB-DISTRICT A AT SÜKHB NARAN GER See IBRD 36904 VIII Area of Map See IBRD 36905 for detail for detail XI IX DISTRICT (DUUREG) BUS STOP BOUNDARY B AYA N G O L B AYA NZ Ü RKH SUB-DISTRICT (KHOROO) BOUNDARIES Tuul PAVED ROADS Go l STREET LIGHTING OUTDOOR TRANSFORMER KHAN UUL ULAANBAATAR AREA SUBSTATIONS 10kV SUPPLY LINES KIOSKS CONNECTED TO WATER SUPPLY LINE KIOSKS WITH TRUCK WATER SUPPLY BH BATH HOUSES BOILERS BUS STOP EXISTING HEATING PIPES PLANNED HEATING PIPES SCHOOLS VII ADMINISTRATIVE BUILDINGS RESIDENTIAL OR INDUSTRIAL BUILDINGS ULAANBAATAR CITY URBANIZATION PLAN GER AREAS BH X XI C H I N G E LT E I B AYA N GO L GO BUS STOP BH VIII 0 100 200 300 400 500 Meters This map was produced by the Map Design Unit of The World Bank. XII The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. XV XIII XIV JUNE 2009 CHAPTER 2 DEVELOPMENT CONTEXT: GOVERNMENTAL, SOCIOECONOMIC, AND LOCAL PROFILE 13 IBRD 36904 IX X BUS STOP BUS STOP BH VIII XI BH VII 0 100 200 300 400 500 Meters MONGOLIA This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, ULAANBAATAR denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or SONGINO KHAIRKHAN 8th SUB-DISTRICT acceptance of such boundaries. BAYANKHOSHUU GER SUB-DISTRICT (KHOROO) BOUNDARIES PAVED ROADS SON GI N O C HI N G E LT E I KHAIRKHAN STREET LIGHTING AR A AT OUTDOOR TRANSFORMER SUBSTATIONS See IBRD SÜKHB VIII 36906 See IBRD 36905 10kV SUPPLY LINES See main map for detail for detail for detail KIOSKS CONNECTED TO WATER SUPPLY LINE IX KIOSKS WITH TRUCK WATER SUPPLY XI BH BATH HOUSES BOILERS B AYA N G OL GOL BAYAN ZÜ R K H EXISTING HEATING PIPES PLANNED HEATING PIPES Tuul G ol SCHOOLS ADMINISTRATIVE BUILDINGS KHAN UUL GER AREAS ULAANBAATAR AREA JUNE 2009 14 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR IBRD 36905 MONGOLIA ULAANBAATAR SO NG INO KH AIRKH AN CH ING ELTEI AR BAYANZÜRKH 9th SUB-DISTRICT A AT See IBRD SÜKHB SHARHAD GER See IBRD 36904 VIII 36906 for detail Area of Map SUB-DISTRICT (KHOROO) BOUNDARIES for detail PAVED ROADS XI IX IMPROVED DIRT ROAD/EMBANKMENT EX. FUT. OUTDOOR TRANSFORMER SUBSTATIONS BAYANG O L BAYAN Z ÜR K H 10kV SUPPLY LINES KIOSKS CONNECTED TO LOCAL BOREHOLES Tuul G ol KIOSKS WITH TRUCK WATER SUPPLY BH BATH HOUSES KH AN U U L BOILERS ULAANBAATAR AREA EXISTING HEATING PIPES This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, PLANNED HEATING PIPES denominations and any other information shown on this map do not imply, on the part of The SCHOOLS World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. ADMINISTRATIVE BUILDINGS RESIDENTIAL OR INDUSTRIAL BUILDINGS GER AREAS BH BH BUS STOP IX XXIV XVII 0 100 200 300 400 500 Meters JUNE 2009 3 Land and Housing T his Chapter is based on a survey the study team organized in three ger areas and a repre- sentative apartment area to assess land ownership, dwelling types, and households’ pref- erence for housing options as well as affordability issues9. The survey analysis intends to highlight issues related to financing and affordability for housing. LEGAL, INSTITUTIONAL AND POLICY ASPECTS Land ownership in Mongolia has gradually been privatized since the country’s transition to a mar- ket economy. There has been a series of land laws or amendments of existing laws; the current land ownership in Mongolia is based on the 2002 “Law of Allocation of Land to Mongolian Citizens for Ownership.” According to this law, the land tenure system in Mongolia is comprised of a com- bination of three land rights: “ownership” only for Mongolian citizens; “possession rights” for up to 60 years, with possible extension, available to Mongolian citizens and joint ventures; and “land use rights,” valid up to five years with possible extension, for which foreigners are also eligible. Land ownership is tied to the land fee system which the Government introduced in 1997 under the “Law of Mongolia on Land Fee.” The law stipulates that individuals, business entities, and orga- nizations that own, possess or use land are subject to land fees. For cities, villages and other settled places, the land fee ranges from 0.1 to 1 percent of the base land value. The land fee is determined by the Central Government taking into account certain fixed parameters, including location and land use as well as socioeconomic, geological, and environmental conditions.10 The city of Ulaan- baatar is divided into five land valuation zones depending on location and income level and the land fee is applied uniformly to the properties in each zone. The GoM has fully privatized ownership of land for “family needs” or residential purposes. The “Law on Allocation of Land to Mongolian Citizens for Ownership” stipulates that each household is entitled to the following for ownership: up to 700 m2 in Ulaanbaatar; up to 3,500 m2 in Aimag; or up to 5,000 m2 in Sum. The associated land fee is set low: about 90 percent of the land fee up to 700 m2 is exempt.11 The fees are estimated on an annual basis and charged quarterly; collection is managed at the district government level. Land management is currently done by the Administration of Land Affairs, Geodesy and Cartogra- phy (ALAGaC), under the Ministry of Construction and Urban Development. The mandate of the ALAGaC is to oversee and implement the government’s land policy, to manage and update geo- detic and cartographic information and databases, and to improve the cadastral system by carrying out cadastral surveys and establishing a unified database. In addition to the ALAGaC, there are Land 16 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR Departments in nine districts of Ulaanbaatar that process and manage registration. These Departments are also responsible for mediating any disputes over land ownership as well as evicting the occupants of illegal settlements. While there have been numerous initiatives to improve land management—mostly funded by external donors—the cadastral system (surveys of land boundaries) generally suffers from a lack of administrative capacity and the limited availability of adequate databases. This is mostly caused by unsatisfactory or insufficient cadastral surveys and mapping and inadequate registration of land owners, users and possessors. On the legal side, existing cadastral law does not include procedures for property registration. There also is no legal framework for handling disputes arising during cadastral surveys; such disputes are increasingly common in residential areas. Institutional roles and responsibilities at different levels of government are not clearly delineated, in addition to the general lack of administrative capacity, espe- cially at the district levels that are mainly responsible for managing land registration. The National Land Information System—a comprehensive cadastral database connecting the collection of data from around the country—was planned for implementation but has experienced some delay12. The GoM launched the 40,000 Housing Units Program and more recently the 100,000 Housing Construction Policy.This is essentially a supply-driven housing development that focuses mainly on providing apartments and core supporting infrastructure. However, the effectiveness and viability of these programs remain questionable, as there are still critical systematic deficiencies in housing finance and affordability. In addition, there are no institutional systems to provide low-cost housing for middle- and low-income households, which comprise of about 70 percent of all households. TABLE 3.1. Survey Respondents’ Average Age (years) and Household Size (number of persons) RESPONDENTS (%) AVERAGE AGE OF HH AVERAGE HH SIZE HEAD OF HH SPOUSE City Center Ger (Naran) 47.1 4.9 65.1 34.9 Mid-tier Ger (Bayankhoshuu) 48.8 4.3 97.7 2.3 Fringe Ger (Sharhad) 44.4 4.5 68.0 32.0 Apartment area 46.0 3.4 76.1 23.9 TABLE 3.2. Employment Status (% frequency) TEMPORARY SELF-EMPLOYED OR SEASONAL (BUSINESS WAGE EMPLOYEE EMPLOYEE OWNERS, ETC) UNEMPLOYED City Center Ger 27 (28.0) 0 (0.0) 39 (21.1) 44 (50.9) Mid-tier Ger 14 (10.5) 6 (5.3) 22 (21.6) 68 (62.6) Fringe Ger 26 (24.3) 3 (1.5) 21 (19.9) 60 (54.3) Apartment area 43 (39.4) 10 (9.2) 33 (30.3) 23 (21.1) CHAPTER 3 LAND AND HOUSING 17 TABLE 3.3. Household Assets, Liability, Monthly Income and Savings ($) TOTAL ASSETS LIQUID ASSETS ILLIQUID (CASH, ASSETS STOCKS, TOTAL MONTHLY MONTHLY (PROPERTY) CARS) TOTAL LIABILITIES INCOME SAVINGS City Center Ger 21,920 4,381 26,196 234 223 70 Mid-tier Ger 13,521 935 14,454 42 154 14 Fringe Ger 8,958 312 9,266 46 164 5 Apartment 26,444 1,362 27,806 2,049 319 21 GENERAL HOUSEHOLD CHARACTERISTICS For the surveyed households, the average age of residents ranges from 44.4 to 48.4, and the number of people per household ranges from 3.4 to 4.9. About half of ger residents are reported to be unemployed, consistent with the findings from the HIES Survey, which showed about 59 percent of the sample in ger areas reported not to have worked during the previous 12 months.The percentage of unemployed is highest in the Mid-tier and Fringe gers: 62.6 percent and 54.3 percent, respectively, in contrast with 21.1 percent in the apartment area. The survey result highlights income and wealth gaps between ger and apartment areas. Average monthly income in the Mid-tier and Fringe gers is only about 50 percent of apartment areas’ income level. The income level in the City Center Ger is higher than the Mid-tier and Fringe gers, at $223 per month, which is about 70 percent of apartment area’s income. As for assets and liabili- ties, there is again a stark contrast between ger and apartment residents. Differences are most notable between apartment areas and the Fringe Ger, where the total reported assets are only 30 percent of the apartment residents. LAND AND HOUSING IN GER AREAS Similar to most ger areas, dwelling types in the three ger areas consist of a combination of gers and detached houses, and the distribution of different dwelling types reflects the locations of the areas. TABLE 3.4. Dwelling Types in Three Ger Areas (% of respondents in ger area) GER (%) DETACHED (%) APARTMENT (%) TOTAL HHS City Center Ger 1,800 59 1,100 36 150 5 3,050 Mid-tier Ger 460 29 1,151 71 1,611 Fringe Ger (Sharhad) 1,418 58 1,015 42 2,433 Source: Statistics from district government offices 18 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR TABLE 3.5. Size of Land and Houses in Three Ger Areas LAND SIZE # OF LAND HOUSE # OF APT SIZE # OF (m2) WALLS SIZE (m2) SIZE (m2) ROOMS (m2) ROOMS City Center Ger (Naran) 535.7 4.8 593.5 76.5 3.5 59.0 1.9 Mid-tier Ger 589.3 4.9 546.8 55.4 2.9 — — (Bayankhoshuu) Fringe Ger (Sharhad) 469.2 4.8 501.3 54.0 2.3 — — Apartment area — — — — — 36.7 2.1 In the City Center Ger, a majority of people (59 percent) still live in gers.This is due to the fact that the area is still expanding with people settling in the hilly side of the district. In Bayankhoshuu, the Mid-tier Ger, more than 70 percent of households live in detached houses, consistent with the fact that this ger area was established a relatively long time ago. In the Fringe Ger, more than one-half the residences are gers because this is a newly-established and still-growing area. The average size of land plots in the three areas is less than the 700 m2 size of a hashaa, which indi- vidual households are entitled to by law. For gers, average land size ranges from 470 m2 to 589 m2, and the average number of walls in the three gers areas is more or less the same, just under five. For detached houses, plot sizes range from 501 m2 to 593 m2, with the average number of rooms rang- ing from 2.3 to 3.5. In the case of detached houses, the closer to the center of Ulaanbaatar house- holds are located, the larger the average plot size and house. Most households in ger areas own their residence and the land attached to it. In case of the Fringe Ger, the share of income paid as rent is higher.This could be because the residents are very low income and cannot pay an up-front land registration fee (average Tg10,000/$7.14 for migrants; Tg5,000/$3.57 for intra-city migrants) and hence residents rent gers temporarily. Another explanation is that people plan to stay in the fringe area for only a short period of time before moving to a different location. In addition, ger residents reported that they paid about Tg16,800 ($12) per year in land fees; those liv- ing in detached houses paid about Tg29,400 ($21) and apartment residents about Tg211,400 ($151). The unit price analysis of existing detached houses and apartments shows that the price of apart- ments is about 2.5 to 3 times higher than of detached houses. The price of detached houses per TABLE 3.6. Ownership Patterns for Housing and Land (% frequency) STATE- OTHERS- OWNED RENT OTHERS PRIVATE OWNED* OWNED City Center Ger 108(97.3) 1(2.7) 0(0.0) 109(99.1) 0(0.0) 1(0.9) Mid-tier Ger 108(98.8) 2(1.2) 0(0.0) 84(87.9) 23(6.7) 2(5.4) Fringe Ger 100(81.5) 10(18.5) 0(0.0) 96(75.7) 1(0.5) 12(21.4) Apartment area 100(91.8) 7(6.4) 2(1.8) 65(59.6) 36(33.0) 8(7.4) Note: In the case of apartment residents in the City Center Ger, about 70 percent responded that their land was state-owned (not privately owned). Following the definition of three types of land ownership, this could be either possession rights or land use rights. CHAPTER 3 LAND AND HOUSING 19 TABLE 3.7. Housing Prices and Annual Operation and Maintenance Costs (Tg per m2) ESTIMATED AVERAGE ANNUAL LOCATION DWELLING TYPE CURRENT PRICE PRICE INCREASE ANNUAL O&M COST City Center Ger (Naran) Ger 700 Detached house 434,980 29.0% 7,140 Apartment 1,076,600 15.5% 13,020 Mid-tier Ger Ger 140 (Bayankhoshuu) Detached house 324,940 24.2% 1,680 Fringe Ger (Sharhad) Ger 140 Detached house 449,960 15.7% 2,800 Apartment Area 1,226,960 10,080 Note: Operation and maintenance costs do not include utilities, only costs incurred by living in the houses. square meter ranges from Tg324,800 to Tg449,400 ($232 to $321), while the apartment unit cost for the City Center Ger and apartment areas is Tg1,064,000 ($760) and Tg1,226,400 ($876), respec- tively. Apartments in the City Center Ger were completed in 2005, and apartment areas include those built during the late 1990s, early 2000s and most recently in 2009. The average price increase for detached houses varies.The highest price increase is seen in detached houses in the City Center Ger. While generalizing price trends based on a small sample size is dif- ficult, the analysis shows that the closer to the city center, the higher the price. The price increase is most evident in the City Center Ger area and least in the Fringe Ger area. As for the annual costs of operation and maintenance, ger residents reported that they spend Tg700–Tg2,800 ($0.5–$2.0) per m2, a contrast with the cost for apartments, which ranged from Tg10,080 to Tg13,020 ($7.2 to $9.3) per m2. The average price of a ger ranged from Tg29,400 to Tg8.5 million ($21 to $6,071) with average of Tg607,600 ($434). Housing finance is mostly done through personal savings, and only a small percentage of housing finance is possible via loans from banks or other formal sources. In the case of detached houses, only 2 percent to 9 percent of the total price is financed through loans. The analysis shows that house- holds in the Mid-tier Ger and the Fringe Ger had very limited access to bank loans, amounting to less TABLE 3.8. House Financing Sources (million Tg) LOANS FROM SELF- BANKS OR FINANCING (%) OTHERS (%) TOTAL City Center Ger Detached houses 7.197 91.2 0.692 8.8 7.888 Apartment 31.510 89.6 3.653 10.4 35.162 Mid-tier Ger Detached houses 10.521 97.7 0.242 2.2 10.765 Fringe Ger Detached houses 5.487 95.3 0.267 4.7 5.754 Apartment area 31.245 80.7 7.463 9.3 38.709 20 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR TABLE 3.9. Level of Satisfaction with Housing Conditions (% of respondents in ger area) MODERATELY MODERATELY VERY SATISFIED SATISFIED DISSATISFIED VERY DISSATISFIED City Center Ger 9.8 63.2 20.2 6.8 Mid-tier Ger 46.8 46.7 5.3 1.2 Fringe Ger (Sharhad) 4.4 37.3 8.3 50.0 Apartment area 32.1 53.2 9.2 5.5 than 5 percent of the total housing price. Apartment residents, however, reported that they borrowed a higher portion from banks or other creditors: 10.3 percent and 16.7 percent in the City Center Ger apartment and apartment areas respectively. This finding reflects the fact that mortgage lending for housing is still an evolving concept and only the well-to-do can borrow from financial institutions. As for satisfaction with housing conditions, there seem to be diverging views among khoroos. Almost all residents in the Mid-tier Ger said they were “very satisfied” or “moderately satisfied” with their housing. In the Fringe Ger, however, more than one-half of survey respondents voiced a lack of satisfaction with their housing. Such a difference is probably caused by the fact that the Mid-tier Ger has existed for a long time and residents have had the time to improve their housing condition, while Fringe Ger residents are relatively newly settled and hence have not had the time and oppor- tunity to improve their situations. In the City Center Ger and apartment area, a majority of resi- dents indicated they were comfortable with their housing. As to the reasons for dissatisfaction with housing, residents in both the City Center Ger and the Mid-tier Ger ranked water supply, drainage and sanitation as the most immediate concerns. Fringe Ger residents ranked the size of rooms, lack of a proper kitchen and heating as reasons for dissatisfaction, in addition to water supply, drainage and sanitation. While ger residents expressed a relative comfort in their housing conditions, with the exception of the Fringe Ger (Sharhad), survey respondents seem quite dissatisfied with the broader environment in which they live.This is most apparent in Fringe Ger, where more than 90 percent of respondents said they were “highly dissatisfied.” In contrast, most residents in the Mid-tier Ger answered that they were “moderately” or “very satisfied” with their living environment. The differences between the Mid-tier Ger and Fringe Ger may be attributed to their respective characteristics as ger areas: the Mid-tier Ger has existed for many years, while the Fringe Ger is relatively new and still expanding. In the Mid-tier Ger, more than 70 percent of residents live in detached houses, indicating that the TABLE 3.10. Level of Satisfaction with Living Environment (% of respondents in ger area) MODERATELY MODERATELY VERY SATISFIED SATISFIED DISSATISFIED VERY DISSATISFIED City Center Ger 6.5 26.9 23.8 42.8 Mid-tier Ger 36.3 38.6 22.8 2.3 Fringe Ger 0.0 1.9 7.8 90.3 Apartment area 17.6 27.8 15.7 38.9 CHAPTER 3 LAND AND HOUSING 21 population has been there for a period of time; this also can be linked to the high level of satisfac- tion with housing conditions. Asked why they are dissatisfied with their living environment, Fringe Ger residents pointed to a range of social and public infrastructure deficiencies, including school facilities, health services, roads, public parks, garbage collection, etc. For City Center Ger and Mid-tier Ger residents, access to school and health services seem to be less of a concern but road access, limited public space, gar- bage collection, air pollution and crime were rated as important reasons for dissatisfaction in their living environment. In the case of apartment area residents, air pollution, limited public space, and traffic congestion were rated as the primary reasons. Preferred Dwelling Type and Development of Khoroo Areas In light of the government policy to modernize existing ger areas by building apartment complexes, ger areas in the vicinity of the city center and mid-range ger areas will develop apartment complexes or a combination of apartments and detached houses. Survey questionnaires included households’ preference for dwelling type and development patterns in khoroo areas to determine how the city government’s policy is in line with ger residents’ preferences for housing and development options. The survey analysis shows that a conversion to apartments seems to be the option most preferred among residents, especially in the City Center Ger and Fringe Ger. In the Fringe Ger, more than 95 percent of residents said they would like the area to be developed with apartment complexes. Since the same residents are most dissatisfied with their housing and living environment, it may be that the residents see apartments as the ultimate solution for improving their living environment and housing. In the City Center Ger, more than 60 percent of residents preferred an option to convert their dis- trict into an apartment area; a minority favored redevelopment with a combination of apartments and detached houses. About 13 percent of the City Center Ger residents responded that they would not like to see the area developed but would prefer to improve existing houses or supporting infrastructure. Responses from the Mid-tier Ger were somewhat different from the other two khoroos. Residents in the Mid-tier Ger seem to want to maintain the current characteristics of gers with a partial TABLE 3.11. Preferred Options for Khoroo Development (% frequency) CITY CENTER GER MID-TIER GER FRINGE GER Build apartments in all khoroo areas 61.6 16.4 95.1 Redevelop the entire areas of khoroo with a mix of 21.4 17.5 1.0 apartments and detached houses Build apartments in some parts of khoroo 2.0 17.5 1.5 Develop a mix of apartments and detached houses in some 1.3 24.0 0 ger areas Do not redevelop the area but improve existing housing and 13.0 24.0 2.4 supporting infrastructure Keep the khoroo as it is 0.7 0.6 0 22 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR TABLE 3.12. Preferred Dwelling Type development of their khoroo, including a mix (% frequency) of apartments and detached houses—or keep- CITY ing the khoroo as it is while improving exist- CENTER MID-TIER FRINGE ing houses and infrastructure. This is probably GER GER GER explained by the relatively high level of satis- High-rise apartment 14.9 6.9 37.1 faction with housing conditions and the living buildings environment expressed by these residents. Low-rise apartment 69.3 79.3 0 buildings In general, surveys found that ger residents Newly built 15.8 13.8 47.4 seem to prefer apartment buildings over single detached houses detached houses or gers. As for a particular type Others (ger, 0 0 15.5 dormitory, etc) of apartments, these residents said they would prefer low-rise rather than high-rise buildings. Note: High-rise apartment buildings are 10 stories or more with multiple buildings in a complex; low-rise apartment are A large share of residents in the City Center five stories or less with one or two buildings in one complex. and Mid-tier gers said they wished to live in apartment buildings of five stories or less, with one or two buildings grouped together in a complex. They chose this style in preference to high-rise buildings (ten stories or more) with multiple buildings grouped together.The focus group interview also suggested that many residents are interested in low-rise multi-family buildings. In the case of the Fringe Ger, where about 95 percent of survey respondents answered that they would like their khoroo to be developed into an apartment area, residents in fact said they would prefer to live in newly built detached houses.This may reflect the resident’s awareness that their income level is below what is required for apart- ment buildings. IMPLICATIONS OF GER AREA HOUSING DEVELOPMENT OPTIONS Implications for GoM: The above survey results suggest the following implications when consider- ing ger housing development options. Residents of most ger areas seem generally content with their housing. In particular, families who have lived in the area for a long period have replaced gers with detached houses, and they are quite comfortable with their current housing. An exception is found in the remote Fringe ger area, where members of households expressed a very low level of satisfaction; this reflected the characteristics of that area, which is fairly new and still expanding. By contrast, ger area residents seem generally dissatisfied with the broader environment in which they live. This is mainly due to such factors as air pollution and the lack of key infra- structure and social facilities, including roads, garbage collection, and public space. Many residents, especially those living close to the city center and in the remote ger areas, would prefer to live in apartments. However, a significant number of residents, especially in the Mid-tier Ger area, want to keep their existing housing but with improved living conditions and better infrastructure and services. Ger residents seem to prefer small concentrations of low-rise, multi-family apartment buildings, as opposed to large concentrations of high-rise buildings. CHAPTER 3 LAND AND HOUSING 23 TABLE 3.13. Income, Asset and Housing Price in City Center Ger AVERAGE AVERAGE CURRENT MONTHLY MONTHLY TOTAL ASSETS HOUSING PRICE INCOME (TG) SAVINGS (TG) (MILLION TG) (MILLION TG) City Center Ger Ger 257,600 92,400 22.69 1.91 (Naran) Detached house 376,600 93,800 53.57 28.97 Apartment 488,600 204,400 80.62 61.23 Apartment Area Apartment 446,600 29,400 38.93 43.11 Note: Housing price is benchmarked as average price of apartments in City Center and apartment area. The real estate market is still forming in Mongolia. Housing prices seem to be determined on an ad-hoc basis, though there are some consistent correlations between location and housing price, and between dwelling type and housing price. Housing in the ger areas is financed mostly through private savings. Even for residents who have steady incomes and could afford to purchase apartments, getting loans from commercial banks at an affordable rate would be a key challenge. This is because bank loans are scarce and credit and mortgage market are still evolving. A majority of residents in the three ger areas will not be able to afford any of the apartment buildings the government proposes to build. Given the affordability issue, low-cost housing and/or low-income public rental housing should further be examined as alternatives. Implications for Households in the City Center Ger (Naran): Under the government’s plan, some parts of this khoroo will be converted to high-density apartment complexes. An affordability analy- sis shows that income level, asset holding, and savings in Naran are not significantly different from residents already living in apartments13. If the area is converted to apartment complexes targeted for middle-income households, most of the residents in detached houses should be able to afford newly built apartments, if they wish, since they share similar socio-economic characteristics as res- idents of the city center. Even so, these residents would need to finance about 10 percent to 20 percent of the cost using bank loans. Thus, the lack of mature credit market could become a key constraint for them. TABLE 3.14. Income, Asset and Housing Price in Mid-tier and Fringe Gers AVERAGE AVERAGE MONTHLY MONTHLY TOTAL ASSETS CURRENT HOUSING INCOME (TG) SAVINGS (TG) (MILLION TG) PRICE (MILLION TG) Mid-tier Ger Ger 190,400 4,200 8.74 — Detached house 225,400 26,600 24.83 17.59 Fringe Ger Ger 232,400 — 6.96 1.00 Detached house 225,400 16,800 21.37 18.69 Apartments in City Center Ger 349 488,600 204,400 80.62 Apartment area 446,600 29,400 10.93 43.11 24 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR Residents living in gers, however, face a different story:Their income levels and asset values are only about 70 percent and 40 percent, respectively, of residents of detached houses. Ger residents will be less able to afford apartments. For residents living in areas scheduled to be converted, the afford- ability issue will not be of great importance because developers are likely to compensate them by granting them apartments in exchange for their land. In newly built apartment areas in Naran, the financial burden of maintenance and opera- tion for housing and other utilities will increase greatly. For detached houses, the annual cost per square meter of maintenance and operation ranges from about Tg1,400–Tg7,000 ($1–$5); maintaining a ger costs practically nothing. When residents move into apartments, their costs would rise to Tg9,800–Tg12,600 ($7–$9) per square meter per year. Implications for Households in the Mid-tier and Fringe Gers: Socioeconomic conditions in these two ger areas are much worse than in the City Center Ger and apartment areas.The current market price of apartments—ranging from Tg42 million to Tg63 million ($30,000 to $45,000)—is clearly beyond the affordability range for ger residents whose average annual income is about Tg2.52 mil- lion ($1,800). These residents will probably have to stay in their existing houses, even if they wish to move to apartments. In the case of the Mid-tier Ger (Bayankhoshuu), a majority of people responded that they are rel- atively content with their housing conditions and would like to see improvements in the living environment, rather than moving to new homes. Hence, maintaining the status-quo on housing does not seem much of a concern for them. Residents of the Fringe Ger, however, would prefer to move into apartments but, because of their poor economic condition, probably will have to make the accept the more realistic alternatives of building or improving their gers and detached houses. 4 Water Supply STATUS OF CURRENT WATER FIGURE 4.1. Water Containers Filled at a Water Kiosk SUPPLY IN GER AREAS Water Kiosks: The current status of water supply and sewer services is fairly consistent across the three khoroos under review. No house or ger in any ger area of UB has a private connection to water distribution networks. Residents instead purchase water at kiosks. More than 550 kiosks have been developed across the ger areas of UB, some 460 of which are managed by USUG— the public water supply and sanitation utility company owned by the municipal government of UB14. The rest are contracted out to private operators. About 66 percent of the kiosks depend on tanker trucks operated by USUG for water delivery; most of the rest are connected to water distribution mains, which have been developed under the two World Bank-financed UB Service Improvement Projects. A small number of kiosks in remote areas depend on local water wells. (See Annex E for the distribution of kiosks.15) Access to kiosks: Kiosks have been located so that each serves about 900–1,200 people, in line with the city’s benchmark of 1,000 people per kiosk. For most residents, kiosks are located within 100–500 meters.Table IV.1 summarizes the distributions of kiosks in the three khoroos under review, and Annex E provides information on broader ger areas. Services: The selling schedule is generally 10 am–8 pm, with a mid-day lunch break. Residents report that 83 percent of kiosks provide water according to this schedule, with exceptions usually due to supply breakdowns or kiosk employees not following the schedules; 88 percent indicated that this schedule was suitable.16 Kiosks fed by tanker trucks are less reliable due to limited capacity, TABLE 4.1. Distribution of Kiosks in Three Ger Areas (Data from USUG) NUMBER OF DISTANCE FROM TRUCK-FED RESIDENTS PER KIOSK (M) FOR MOST GERS/KHOROOS PIPE-FED KIOSKS KIOSKS KIOSK RESIDENTS City Center Ger (Naran) 9 1 1,225 500 m Mid-tier Ger (Bayankhoshuu) 9 0 887 100 m Fringe Ger (Sharhad) 5 5 1,113 500 m 26 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR breakdowns and traffic.While it is cumbersome FIGURE 4.2. Young Children Load Water for for residents to transport 10–30 liters of water Transport from kiosks to their houses a couple times a week, most of them accept the current prac- tice. Approximately three-quarters use carts for transport, while 2 percent (mostly those living more than 600m from a kiosk) use vehicles17. Water transport is made difficult by the weather and the lack of infrastructure: rocky or icy sur- faces, speeding traffic, trash-strewn roads, and steep inclines are the most frequently-described obstacles.18 Even so, residents are relatively con- tent with the water supply situation, as compared to other more pressing problems such as the lack of solid waste collection, drainage and proper sanitation facilities. Affordability: Affordability of water purchased at kiosks is not a significant issue for residents. Household expenditures for water represent less than 3 percent of ger residents’ average income, even though that income is quite meager: around Tg657,000 ($469) per year for the lowest quin- tile. Residents can afford water because their consumption is extremely limited: around 5–10 liters per person per day due to inconvenient transportation.The water tariff at kiosks is Tg1,000 ($0.71) per cubic meter, or Tg1 (less than $0.01) per liter.The cost of water, type of dwelling, or household income levels do not seem to affect per capita consumption.19 Table 4.2 below presents detailed data on water expenditures compared to income. Utility company: The USUG is the water supply and sewerage company in charge of develop- ing, maintaining and operating kiosks, except for about 90 kiosks that have been contracted out to private operators. For the USUG, kiosks lose money since the existing tariff of Tg1000 ($0.71) per cubic meter is well under the full unit cost of kiosk water supply operations, which is estimated at somewhere between Tg3,200–Tg4,300 ($2.29–$3.07) per cubic meter, depending on the types of water delivery (truck-fed or piped) and the complexity of construction. Providing water via kiosks is estimated to be more than ten times more expensive than the cost of central water supply to apart- ments (Tg280, or $0.20, per cubic meter20). Each kiosk incurs annual losses in the range of Tg10 million–Tg26 million (~$7,100–$18,600), depending on sales volume, which resulted in TABLE 4.2. Household Water Expenditure and Income USUG annual operating losses of Tg4.1 billion HH EXPENDITURE PERCENT OF INCOME ($2.9 million) in 200821. The biggest portion of INCOME HH INCOME ON KIOSK WATER (HH SURVEY QUINTILE (TG/YEAR) (TG/PER YEAR) RESPONDENTS) kiosk operating costs is for the salaries of kiosk operating personnel: estimated at 51 percent of Highest 5,389,809 16,897 0.3% the total unit cost of piped-kiosks and 44 per- 4th 2,963,326 16,466 0.6% cent of truck-fed kiosks22. For truck-fed kiosks, Middle 2,075,552 14,706 0.7% fuel and operating costs of tanker trucks repre- 2nd 1,412,200 16,764 1.2% sent more than 30 percent of the unit cost. For pipe-fed kiosks, depreciation charges (or debt Lowest 657,144 18,582 2.8% service) of the distribution pipe network are Total 2,496,897 16,701 0.7% 25 percent of total unit costs. More details are Source: HIES 2008 reviewed by specific ger areas below. CHAPTER 4 WATER SUPPLY 27 Wastewater: There is no sewerage service in ger areas since the sewer network has not reached beyond the central apartment areas. Disposal of wastewater in ger areas is not a major issue for now, but it will have to be resolved in the long-run. Because of the minimal amount of water consump- tion in the ger areas and the extreme climate of the country, sewer collection would face almost unsolvable technical challenges unless the ger residential areas are converted to fully-served apart- ment dwellings. Therefore, wastewater issues are only lightly discussed in this report. Sanitation: Most households have pit latrines, the majority of which are not ventilated. Lined latrines are used to a varying degree from khoroo to khoroo. (See Table 4.3 for a breakdown of latrine types.23) While various donors offer programs to improve latrines, none of these programs seem to have made any large-scale impact in ger areas, and some donors have withdrawn support for improved latrines. It does not appear that there is much incentive for ger area residents to invest in improving latrines, either. Because of the extremely cold climate of the country, existing programs have proven difficult to adopt in UB or have been very costly. However, the negative environmen- tal impact—pollution of soils and ground water and the poor health conditions of ger residents—is obvious and will require more focused attention. Because of the current lack of a clear solution, the household sanitation issue is not addressed in this report. CITY CENTER GER (NARAN), 11TH KHOROO, BAYANGOL DISTRICT Options of service improvement A large-scale development of apartment buildings is expected given the proximity of the khoroo to the city center. If apartment buildings are built, they will be connected to the water supply mains. All the apartments will have tap water, as well as hot water supply. FIGURE 4.3. A Water Kiosk in the Ger Areas 28 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR Costs of water supply and wastewater service to apartment buildings Water supply mains and sewer collectors already exist near this area, therefore the capital costs of connecting new apartment complexes to existing service will be minimal. A preliminary develop- ment plan prepared by the UB municipal government envisages development of apartment com- plexes for some 2,450 households, as well as commercial and community infrastructure near this area. It would cost only an estimated Tg1.855 billion ($1.325 million) to connect these apartment complexes to the existing water supply mains and wastewater collectors; installing booster pumps would cost around Tg770,000 ($550) per household. Key assumptions are as follows: The total water consumption in these complexes would be 3,350 m3 per day (270 liters per day per capita, which is in line with the current average consumption of apartment residents); pipeline length is 3.1 km for water supply and 3.4 km for sewer collectors; and pipe diameters are DN100–DN500 for water supply and DN250–DN400 for wastewater. The costs of pipes, fittings and water meters within the apartment buildings are not included in this esti- mate and will be included in the selling prices of the apartments. The estimated unit operating cost of water supply, including maintenance, is the same as the on- going costs of water supply for existing apartment buildings in the city, estimated at Tg280 ($0.20) per cubic meter. The water supply tariff for apartment residents is currently Tg167 ($0.12) per cubic meter, which is well below the unit cost of supply. This subsidy causes enormous financial deficits for the water utility company, USUG. Financial and economic implications of service improvement Consumer economic benefits: Apartment residents are known to consume large quantities of water because it is heavily subsidized and usage is not metered.The consumption at the new apart- ment complexes is expected to remain at around 270 liters per person per day, as currently observed in many apartments. This would represent a drastic increase over the current water consumption of current ger area residents, who use only about 5 to 10 liters per person per day. Therefore, while the residents of the new apartment complexes are unlikely to be the same current residents of this khoroo, there will be significant increase in consumer benefits. Financial implications: The pricing of water supply for apartments will remain the most criti- cal policy issue. If the current level of heavily subsidized tariffs continues and water consumption increases drastically, the financial performance of the already loss-making water supply operations in UB will be worsened to a calamitous level. Current financial losses of USUG from apartment residential operations are estimated at Tg41 billion ($29.3 million) for 2008. Fiscal implications: Mainly due to significant delays in tariff adjustments for apartments, the USUG is not in a position to service debt obligations on various foreign loans, including subsidiary loans and loans from World Bank USIP1 and USIP2, and the Spanish Government. The outstand- ing debt obligations amount to some Tg42 billion ($30 million). Currently, the MUB is making debt repayments and interest payments on behalf of USUG, thus subsidizing the company’s finan- cial losses. If tariff increases are not enacted and water consumption increases in new apartment development, these implicit subsidies also will increase, thus having a significant negative effect on the fiscal performance of MUB. CHAPTER 4 WATER SUPPLY 29 Other implications If additional water sources need to be developed (along with the necessary infrastructure), addi- tional costs will be incurred, though not attributable only to conversion of houses to apartment buildings. Also, while it is difficult to quantify at this stage, the opportunity costs to the environment of tapping into precious water resources will have to be considered. There also may be implications for the capacity of the wastewater treatment plant of USUG, since the water consumption volume in this area will significantly increase at the new apartment com- plexes. There is only one large-scale WWTP in UB with peak flow of 180,000 cubic meters per day, as well as a couple of small independent treatment facilities, including one near the UB inter- national airport. MID-TIER GER (BAYANKHOSHUU), 8TH KHOROO, SONGINO KHAIRKHAN DISTRICT Options of service improvement: Some higher-income residents may wish to obtain private water supply connections for their houses. Other affluent residents might wish to consolidate their land plots and build small-scale residential structures for multiple family dwellings. However, insulating water pipes to protect them from freezing temperatures will be a daunting engineering challenge, and the engineering viability of private connection needs further review. So far, there have been no private water connections to any houses in UB. In addition, wastewater branches will have to be connected to the nearest sewer network. If no sewer network serves the area, other methodologies such as mini-treatment plants will have to be pursued. Cost of service improvement: Several engineering estimates indicate that private connection costs for houses in ger areas would be in the range of Tg5.6 million–Tg16.1 million ($4,000–$11,500) per household, excluding in- house materials such as sinks and faucets. The cost depends on many factors in each area, includ- ing proximity to the existing water supply networks, connectivity to sewer treatment systems and topography. The breakdown of costs is as follows: Construction cost of branches for water distribution/sewer collection and main networks for water/sewer per household amounts to about Tg5.6 million– Tg7 million ($4,000–$5,000 per household), excluding construction costs within each private property. The additional cost of connecting to houses within their private property would be around Tg2.8 million–Tg4.2 million ($2,000–$3,000) per household. This means, typically, the total private connection cost will be around Tg8.4 million–Tg11.2 million ($6,000–$8,000). If a small wastewater facility has to be built because the wastewater main networks have not reached the area, the capital development cost of the independent small wastewater treatment plant will be an additional Tg4.2 million–Tg4.9 million ($3,000–$3,500) per household. So, the total cost in more expensive cases of private connection will be around Tg12.6 million–Tg16.1 million ($9,000–$11,500) per household. Details of the breakdown of capital cost for private connection are presented in Figure 4.4. 30 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR FIGURE 4.4. Examples of House Connection Costs Since there is no existing water supply tariff for individual houses, tariffs for water consumption 16.00 would be set at somewhere between the cur- rent apartment water tariff (currently Tg167, 14.00 or $0.12, per cubic meter) and the ger area 4.90 12.00 0 kiosk water tariff (currently Tg1,000, or $0.71, Cost per house (million Tg) per cubic meter). Assuming that consumption 10.00 5.94 would increase to 70–80 liters per capita per 2.80 8.00 1.36 day, monthly water bills are estimated to be 1.70 around Tg19,000–Tg115,000 ($13–$82) per 6.00 2.41 0 0.99 0.77 1.32 four-person household per year. 1.03 0.94 0 3.24 4.00 0.89 2.44 Affordability and willingness-to-pay for house 0.68 2.00 4.08 0.95 2.26 0.56 1.53 connections would be major issues, as the aver- 1.18 0.00 0 0 age annual income of even the wealthiest quin- Dambadarjaa Dari Ekh Naran Nisekh tile of ger residents is Tg5.4 million, or $3,600. Ger Areas Options for consideration might include cost- House – Water House – Sewer Branch – Water Branch – Sewer sharing and public contributions to the cost of Mains – Water Mains – Sewer WWTP/Land connecting each private service to the distri- bution/collection networks. Even if the costs are shared or subsidized at the beginning, con- sumers might eventually be required pay all the costs through their tariffs. Benefits of service improvement Consumer economic benefits: The direct benefit to consumers will be quite significant because the household consumption will definitely increase from the current level of 5–10 liters per per- son per day to as much as 60–70 liters per person per day—more than a ten-fold increase in some cases. Utility company:The city-owned utility company could recover its costs if private houses are required to pay the actual cost of water delivery and ongoing operations. But if the current, heavily-subsi- dized apartment residential tariff is applied to private houses, the utility company will incur sub- stantial losses. Fiscal implication: Also, depending on who bears the cost of connecting private plots to the water distribution mains (either in the form of direct counterpart contribution at the time of construc- tion, or through tariff collection later on), this expansion of service could put a fiscal burden on the municipality. Other implications In the long-run, providing piped-in water service to many more homes will require expansion of the city’s sewer network and wastewater treatment capacity. CHAPTER 4 WATER SUPPLY 31 FRINGE GER (SHARHAD), 9TH KHOROO, BAYANZURKH DISTRICT Options for service improvement Construction of more tanker-fed kiosks with more reliable water delivery is desired for the short term. In the long-run, construction of a water main might be considered for connecting the kiosks to water supply mains, depending on the relative costs and benefits of the two options (tanker-fed kiosks or network-connected kiosks). Cost of service improvement The cost of building kiosks is relatively small: Tg12.6 million ($9,000) per kiosk. However, both pipe-fed kiosks and truck-served kiosks are relatively expensive to operate. This is due to the high cost of personnel required to operate both types of kiosks, the high fuel and operating costs for water tanker trucks for truck-fed kiosks, and capital construction cost of the water distribution net- work for the networked-kiosks. The capital costs of network construction and rehabilitation/con- struction of kiosks are presented in the Table 4.4. Total unit costs for networked kiosk water supply are estimated at around Tg3,280–Tg4,260 per cubic meter, compared to the unit cost of central apartment water supply operations of (Tg280 per cubic meter). Depending on construction methods and cost calculation methods (e.g., attribu- tion of associated central network operation costs and allocation of capital investment costs), the unit costs of piped-kiosk water supply seem to be lower or equal to the unit cost of trucked-kiosk water supply. According to the “2008 performance indicator” calculations made by USUG, the unit cost of piped-kiosk water supply was Tg3,280 ($2.34) per cubic meter (excluding USIP2-related capital costs) and the unit cost of trucked-kiosk water supply was Tg4260 ($3.04) per cubic meter. A World Bank task team has estimated that the unit cost of piped-kiosk water supply is around Tg4,250 ($3.04) per cubic meter (with fully-loaded USIP2-related capital costs) and the unit cost of trucked-kiosk water supply is around Tg4,260 ($3.04) per cubic meter. Conversion of truck-supplied kiosks to networked-kiosks would make sense only if a drastic increase in consumption is expected, since the cost advantage for networked-kiosks is only mar- ginally proven vis-à-vis the cost of truck-sup- plied kiosks However, it should be noted that TABLE 4.4. Example: Capital Costs of Network/ Kiosk Construction 24 either type of kiosk water supply is very costly when compared to piped-in water supply to CAPITAL COSTS GER AREAS (MILLION TG) # OF KIOSKS apartments. Even with the increased tariff of Tg1000 ($0.71) per cubic meter, kiosk water Bayankhoshuu Tg 6,638 36 North supply is a huge loss-making operation for the utility company. Bayankhoshuu Tg 1,954 29 South Chingeltei Tg 1,712 24 Benefits of service improvement Dari-Ekh Tg 959 16 Consumer economic benefits: Converting kiosks Dambadarja Tg 2,259 26 from service by trucks to service by networked Total Tg 13,524 131 pipes will have little impact on consumption, 32 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR TABLE 4.5. Unit Cost Estimates of Kiosk Water and therefore should not be seen as a direct Supply (Tg per m3) benefit to consumers. TRUCKED- NETWORKED- KIOSK KIOSK Financial implications: For the USUG, kiosks will USUG estimates 4,260 3,280 remain as loss-making operations with the cur- rent level of tariff at Tg1,000 ($0.71) per cubic WB task team 4,250 4,260 estimates meter. The more kiosks are built, the bigger the losses would be. The financial loss of one kiosk for a khoroo is estimated at Tg19million (~$13,600) per year, and there are more than 550 kiosks in UB. Fiscal implications: USUG will not be able to meet debt repayment obligations for the construction of water mains and kiosks as long as the current level of tariffs prevails. Therefore, MUB will have to assume the debt repayment obligations of USUG. 5 Municipal Roads and Public Transport CURRENT STATUS OF ROADS IN CITY CENTER, MID-TIER, AND FRINGE GERS The condition of road networks in the three khoroos reviewed in this study is largely similar. Most of the roads began as informal tracks to hashaas and ger households under development. As subsequent hashaas were plotted out and land taken, tracks were simply extended to reach them.There was no for- mal planning involved, and with time the tracks evolved in a haphazard manner to become “earthen roads.” As a result, they have little connectivity or integration with the formal municipal road network. The earthen roads in each of the khoroos have no predetermined alignments, are not built to any standards, lack consistent dimensions, and are completely devoid of supporting facilities, including drainage systems, sidewalks and space for parking. Street lights are evident along some of the roads, but many do not work and others are unreliable. Along any given corridor, the width of available rights-of-way ranges from about 2.5 meters to 16 meters, and the roads often have sudden and unexpected sharp turns. The roads are suitable only for smaller vehicles because larger ones are unable to negotiate the unforeseen narrow passages and tight turns. In some instances, these earthen roads end abruptly at certain geographic features, such as deep ravines or gullies, or steep hillsides. Except during the rainy season, vehicles driving along the earthen roads create dust. When it does rain, the roads turn to mud. Because there is no proper drainage, water flows from the surrounding FIGURE 5.1. An Earthen Road in the Mid-tier Ger (Bayankhoshuu) 34 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR slopes onto the roadway. This accelerates deterioration and creates a nuisance for people living in the area. During winter months, the snow and ice on steeper slopes can create treacherous driving conditions. Residents complained of having to wash clothes and shoes more than normal because of the earthen roads. Shallow ravines are common in ger areas, and it is not unusual for these ravines to be used as roads during dry periods. Typically, hashaas are situated along both sides of a ravine with fences built to the edge. During heavy rains or prolonged wet periods, the ravines flood, cutting off a route for vehicles. The rains also bring trash and garbage onto roadways, creating health hazards. Approximately 10 percent of the road network in the three gers is paved. However, most of the paved networks tend to be large arterial roads that border the gers. The short segments of second- ary paved road that penetrate the gers tend to be in very poor condition and have deteriorated so much that they need to be reconstructed. Most roads have a PSR roughness25 of between 1 and 2, which means they are passable but not in good condition. The exceptions to this are located in the City Center Ger (Naran), in which there is a 1.5 km stretch of paved road that bisects the ger area, and a short segment of Khasbaatariin Street, both of which are in good condition. Although the districts are responsible for maintaining khoroo roads, preventive maintenance is almost never under- taken. Table V.1 provides a snapshot of road type by length in each of the gers included in this study. If one excludes the City Center Ger, the percentage of paved roads drops significantly to just over three percent. CURRENT STATUS OF PUBLIC TRANSPORT Greater Ulaanbaatar Area. The public transport system in Ulaanbaatar consists of large buses, trolley buses, minibuses and taxis. According to estimates,26 there are more than 155 million passen- ger trips per year, which equates to an average of around 435,000 passenger trips daily. Public transport services are essential for enhancing people’s mobility and access to work, school and other activities. In the greater Ulaanbaatar area, passenger transport demand consists of buses (34 percent), walking (30 percent), cars (25 percent), taxis (9 percent), and other (2 percent). The most popular mode of travel to work is by bus (39 percent), while 85 percent of students walk or use the bus to get to school. The average time it takes to get to work is 32 minutes and the average distance traveled is 4.5km. TABLE 5.1. Road Type by Ger TYPE OF ROAD CITY CENTER GER MID-TIER GER FRINGE GER TOTAL Earthen 18,461 23,241 30,611 72,313 Paved 6,805 1,004 807 8,616 Totals: 25,266 24,245 31,418 80,929 % Paved Roads 26.9 4.1 2.6 10.6 NOTE: The figures above are in meters unless otherwise specified. CHAPTER 5 MUNICIPAL ROADS AND PUBLIC TRANSPORT 35 Large buses typically seat between 40 and 50 passengers, while minibuses have seating for 12 to 15 passengers. Bus fares, which are set by the municipality, are Tg300 ($0.21) for large buses, between Tg200 ($0.14) and Tg400 ($0.29) for minibuses (depending on distance traveled), and Tg400 ($0.29) per km for taxis. However, with only around 25 percent of passengers paying the full price on large buses, the government is obliged to heavily subsidize fares. Nearly 100 percent of passengers using minibuses pay full fare. City Center, Mid-Tier and Fringe Khoroos. With the exception of the Sharhad Bus Station,27 which is on the edge of the khoroo boundary in the Fringe Ger, only minibuses and taxis provide service to the three gers. However, services are limited by poor road quality, an inability to access all areas during inclement weather, and drivers’ unfamiliarity with the destinations within the gers. In each of the three khoroos under study, approximately 20 percent or less of households own vehicles.28 As a result, the share of walking is high among families that do not own a vehicle, and the use of public transport is high among all households. The use of bicycles and motorbikes is not common. Rough estimates indicate that inhabitants of the three gers get to work using public transport ser- vices (buses) 58 percent of the time, followed by walking (29 percent) and family vehicles (13 per- cent). These figures would indicate that residents rely almost twice as much on public transport (buses) to travel to work as do citizens of other districts (34 percent), and that they use private vehicles half as much (13 percent vs. 25 percent). The average travel time to work (25 minutes) is roughly the same as for residents of other districts, but the average distance traveled (8 km) is almost twice as far. Since residents rely heavily on public transport to get to work, initiatives to improve bus services to the khoroos should be considered. In terms of traveling to school, 90 percent of students in the three gers walk the entire way or walk to catch a bus; this is in line with findings for students in other districts. However, it takes twice as long to get to school (16 minutes more) in these gers than in other districts, even though the distance is nearly one km less on average. Because so many students walk to school, construction of sidewalks and adequate street lighting are important priorities. TABLE 5.2. Transport Modes in UB During informal interviews with 21 minibus TRANSPORT TARGETED GER driver/owners that currently provide services to DEMAND BY MODE ULAANBAATAR AREAS the peripheries of the khoroos, all indicated that they would expand services within the khoroos if Bus 34% 58% roads were widened and improved, i.e., paved. Walk 30% 29% Family Vehicle 25% 13% Tables 5.2 and 5.3 provide snapshots of trans- port modes and travel times/distances for all districts in Ulaanbaatar and for the three kho- TABLE 5.3.Travel Times and Distances in UB roos in this study. and Ger Areas TRAVEL TIMES TARGETED GER A casual observation of traffic counts29 at select AND DISTANCES ULAANBAATAR AREAS key intersections in each of the targeted ger To work (averages) 32 mins./ 25 mins./ areas reveals that in the City Center (Naran) 4.5 km 8.0 km and Mid-tier (Bayankhoshuu) gers, the over- To school 27 mins./ 43 mins./ whelming percentage of vehicles observed (averages) 3.3 km 2.5 km 36 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR TABLE 5.4. Observed Vehicles in Targeted Ger Areas DISTRICT CARS % BUSES % TRUCKS % City Center Ger 48,391 93 933 2 2,523 5 Mid-tier Ger 7,335 87 130 2 976 11 Fringe Ger 407 26 828 52 351 22 Totals: 56,133 1,891 3,850 were passenger cars (Table 5.4). In the Fringe Ger (Naran), more than half of the vehicles were buses, presumably because the Sharhad Bus Station is located in the south central edge of the ger. OPTIONS AND CHALLENGES FOR SERVICE IMPROVEMENTS Options. Road quality and safe access for pedestrians seem to be the biggest concerns for resi- dents of the three khoroos. When asked what measures were most needed to improve transport in their khoroo, 95 percent of respondents supported the improvement of district roads and the condi- tions for pedestrians.30 Because the roads are too rough for most public transport operators to pro- vide comprehensive service, many residents must walk long distances—up to 30 minutes in some cases—to reach their homes. In doing so, they must compete with vehicles for the limited space available, and they say that after dark, the lack of street lighting contributes to crime.31 Improving roads would also facilitate access for emergency vehicles, including ambulances and fire trucks, and the delivery of goods and other services. Increasing the coverage and frequency of public bus services is another priority area. When resi- dents were asked what measures would improve the current transport situation in the three khoroos, more than 95 percent of inhabitants wanted improvements to bus and taxi stops.32 When asked to assess the quality of minibus services in terms of convenience of transfer to other city buses, 45 per- cent responded that it was “bad” or “very bad.”33 Challenges. One of the key reasons operators do not provide service to these areas is the extremely poor condition of roads, which prevents them from entering many areas. Improving road quality would encourage public transport providers to extend their operations in the three khoroos, and it would appear that demand is high for public transport services in these areas. While paving roads would increase access, it would also have a dramatic impact on area development, both in terms of land use and socio-economic activity. As such, any plans to pave or build roads in the khoroos must be considered in light of local land use plans. If roads are to be paved, facilities for pedestrians, including sidewalks and street lighting, must be included. It would also make sense to consider preserving the rights-of-way for possible future utility services (power, water and waste water), although this could involve considerable additional expense. However, because of the significant cost involved, the provision of water supply and sani- tation services should only be considered if there are apartment blocks along a paved road’s align- ment. If public transport services were to be extended into the khoroos, space would also be needed to construct lay-bys for public transport stops. CHAPTER 5 MUNICIPAL ROADS AND PUBLIC TRANSPORT 37 Another difficulty to paving roads in the khoroos is the likelihood that land will need to be acquired from property owners. Because there was no formal planning in the location of hashaas, plots are of various sizes. As a result, most of the earthen roads do not have straight alignments, and, instead, meander past and around hashaas and natural geographic features. Complicating matters are the fences that most owners have built to enclose their hashaas, many of which extend into the path of the earthen roads. Depending on the alignment of the road to be paved, some inhabitants or eco- nomic activities might need to be relocated. Maintaining the improved roads would present another challenge. The value of maintaining roads has long been recognized: Roads in good condition reduce vehicle operating costs, decrease travel times, and contribute to safe driving conditions. International good practice calls for countries to spend about 1 percent of their GDP to maintain existing roads. For Mongolia, which had an esti- mated GDP of around $3 billion in 2008, this would imply expenditures in the range of $30 mil- lion per year. However, only Tg4.2 billion ($3 million), or about 0.1 percent of GDP, was spent to maintain the country’s network of roads in 2008. Any plan for road improvements will require a review of options for financing the cost of maintenance. All road projects would need to be carefully reviewed and subjected to a variety of technical assess- ments. These would include geotechnical studies and hydrological reviews, as well as economic, financial, environmental and social analyses to ensure their viability and value for money. Construction and Maintenance Costs Typical Construction Costs.34 Low traffic-volume roads and parking areas are often sealed uti- lizing double bituminous surface treatment (rather than hot mix paving) due to the cost savings that are possible.35 In Ulaanbaatar, the cost to build roads using this method is about Tg28 million ($20,000) per km, and the municipality has issued a set of guidelines for using double surface treat- ment for ger area roads.36 To drain storm water from the road surface and the base course, U-shaped roadside ditches, lined with stones in concrete, are proposed at a cost of approximately Tg70 mil- lion ($50,000) per km.37 The cost to build concrete sidewalks (one meter wide) is about Tg21,000 ($15) per square meter, and the cost to erect street lighting is around Tg420,000 ($300) per street light.38 There would be an additional cost of some Tg14 million ($10,000) per km for cabling and control boxes.39 Typical Maintenance Costs. As a general guideline, countries should devote about 1 percent of GDP annually to maintain road assets. In Mongolia, this would equate to about Tg840,000 ($600) per km per year.40 The average estimated amount spent to maintain and power street lighting in each of Ulaanbaatar’s khoroos is Tg2.1 million ($1,500) per month. City Center Ger (Naran): 11th Khoroo, Bayangol District Roads The khoroo covers some 162 hectares, has 12,245 inhabitants, and is characterized by hilly terrain. The khoroo has about 25.3 km of roads, 6.8 km of which are paved. The percentage of paved roads 38 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR is higher in this ger than the other two locations under study (27 percent compared to 4 percent and 2 percent), and the roads tend to be in better condition. However, most of the paved network runs along the eastern and southern periphery.There are also three vehicular bridges and eight foot bridges. In addition, residents have better access to public transport, due to its central location and dense concentration of inhabitants, than those in the other areas. It is, however, one of the older ger areas, with even less order in the placement of hashaas and gers. As such, when one leaves the paved network, the streets tend to meander more and are narrower, which creates a challenging environ- ment for vehicular movement. Because of the hilly nature of this khoroo, and due to the lack of protective measures on the steep slopes, large stones and boulders have been known to roll down the hillsides after heavy rains, diminishing road width. During winter months, it often is not possible for vehicles to utilize the undulating narrow roads that are covered with snow and ice. An existing 1,200 meter-long flood water dam was constructed between 1982 and 1985. It is in poor condition and garbage has accumulated at the dam wall. Illegal ger dwellers occupy the upper end of the floodway. The city plans to build a series of apartment complexes in the southern half of the khoroo.The plans should provide for sufficient parking for the residents of the apartments. It is estimated that 5 percent to 10 percent of khoroo residents own private vehicles. A quick obser- vation of traffic indicates that this khoroo has the most daily traffic of the three under study. At the ger’s busiest intersection, Tasganii Ovoo, the average daily traffic is around 52,000 vehicles per day. CHAPTER 5 MUNICIPAL ROADS AND PUBLIC TRANSPORT 39 The vast majority of vehicles, 93 percent, are passenger cars; buses and microbuses account for less than 2 percent of traffic. This would tend to indicate that at Tasganii Ovoo Intersection, a lot of vehicular traffic originates outside of, or passes through, the area. Public Transport Although numerous public transport options serve the eastern and southern peripheries along main transport corridors, no regular microbus service is offered inside the ger. Taxis provide only limited access, primarily along the east-west road that bisects the khoroo. As a result, residents must typically walk from 100 meters to 500 meters to access public transport services. Because of the hilly terrain, this can be particularly challenging during winter, when temperatures regularly drop to –30 degrees Celsius, and during spring, when the rains turn the earthen roads to mud. Options for Service Improvement Because of its location in central Ulaanbaatar, the City Center Ger has more paved roads and bet- ter access to public transport services than the other two gers in the study. Nonetheless, improving roads and encouraging better public transport services remain important considerations. Residents indicated that their priorities would include the following investments: Option 1. Upgrade and pave (including drainage, sidewalks and street lighting) the 1.2 km road that runs from the “Micro Road” on the southern periphery in a northerly direction past the District Center to the “TV Bus Terminal Intersection.” This road used to be well-maintained and is paved for the first 200 meters off of Micro Road. When traffic builds on the main road, drivers use this road as a bypass. Option 2. Remove the current restrictions that prohibit microbus operators from providing sched- uled services along the main paved road that bisects the khoroo from east (“TV bus terminal”) to west (“microbus #7 terminal”). Designated areas beside a road where microbuses can pull over and not impede traffic, or bus lay-bys, should be constructed, and sidewalks should be built along the length of the road. Street lighting is already in place. Option 3. Provide paved sidewalks from the Microbus Terminal on the south-western periphery north about 2 km to the kindergar- ten. This alignment is steep and passes through a high-density area. It was reported that a num- ber of citizens walk along this route because it is too difficult for most vehicles to access. Although it is not currently planned as an option, it is highly recommended that adequate parking be provided for the residents of the planned apartment complexes. This is because of the already high percentage of passenger cars operating in and around the khoroo. 40 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR Cost of Service Improvements The estimated cost of proposed service improvements 1, 2 and 3 are outlined in Table 5.5. Financial and Economic Implications of Service Improvement Economic Benefits to Residents. Benefits for residents would mainly come from improved road conditions (which would make a minor contribution to lowering vehicle operating costs), and more reliable and higher frequency of bus services (which would decrease travel times for some users by reducing the walking distance to catch a microbus). The sidewalk to the kindergar- ten would create safer walking conditions. These improvements would result in increased access to markets, schools, health clinics, other public services, and employment—as well as improved air quality due to the reduction of dust. Fiscal Implications. Implementing the improvements proposed in this section would have fiscal implications, primarily in the form of funding required to maintain the new assets. The improved road would require routine and periodic maintenance, which is collectively estimated to cost Tg840,000 ($600) per km per annum (or Tg1 million/$720 per annum for the proposed road improvement project). If street lighting systems are provided at 50-meter intervals along the improved road, the cost to maintain and power them is expected to be less than Tg1.1 million (~$800) per year, Tg90 ($0.06) per resident.41 TABLE 5.5. Estimated Costs of Proposed Service Improvements in City Center Ger COMPONENT PER CAPITA CITY CENTER GER (NARAN) LENGTH OR COST/UNIT COST COST PROPOSED SERVICE IMPROVEMENT QUANTITY (MILLION TG) (MILLION TG) (THOUSAND TG) 1. Upgrade & Pave 1.2 km from Micro Rd to TV Bus Terminal 1.1 Road Construction (double surface 1.0 28 28 2.3 treatment per km) 1.2 Road Drainage System (per km) 1.2 70 84 6.9 1.3 Sidewalks (per km) 1.2 21 25.2 2.1 1.4 Street Lighting (1 every 50 meters) 20 0.42 22.4 1.8 1.5 Cabling for Street Lights (per km) 1.2 14 30.8 2.5 Estimated Capital Cost: 190.4 15.5 2. Remove Restrictions on Microbus Operators 0.0 (East-West Rd.) 2.1 Construct Bus Lay-bys (per km, 2 each 4 28 112 9.1 direction) 2.2 Sidewalks (per km) 1.0 21 21 1.7 Estimated Capital Cost: 133 10.9 3. Provide Sidewalk from Microbus Terminal to 0.0 Kindergarten 3.1 Sidewalks (per km) 2.0 21 42 3.4 Estimated Capital Cost: 42 3.4 Overall Estimated Cost of Improvements: 365.4 29.8 CHAPTER 5 MUNICIPAL ROADS AND PUBLIC TRANSPORT 41 Mid-tier Ger (Bayankhoshuu): 8th Khoroo, Songino Khairkhan District Roads The Mid-tier khoroo covers an area of nearly 99 hectares of land, is home to 7,979 inhabitants, and has predominately flat terrain. There are about 24.2 km of roads, but just 4 percent, or 1 km, is paved. All of the paved roads run along the northern, western and eastern boundaries of the kho- roo. There are no paved roads within the khoroo. The most striking feature about the road network in this khoroo is the fact that there is just one north-south road (the “Gully Road”) on the west- ern side. However, this road does not provide access to the northern side of the khoroo as it stops some 750 meters short of the main road to the north. All other roads have east-to-west alignments, which severely limits access and vehicular movement. Fences enclosing hashaas abut one another, preventing north-south access, but small footpaths every one km or so do permit pedestrians to walk between some hashaas. Approximately 7 percent of residents own private vehicles. Traffic counts were taken at the inter- section between Zuunsalaa and Bayankhoshuu Streets (along the main road bordering the khoroo to the north). A rough estimate of average daily traffic along this stretch is 8,500 vehicles per day. The majority of vehicles, 86 percent, are passenger cars, with buses and microbuses accounting for about one percent. Residents complain of heavy trucks transporting bricks between hashaas where no formal roads exist. The bricks come from brick factories that operate in the southern side of the khoroo. Trucks operate throughout the day, produce inordinate amounts of dust, and create hazardous conditions for pedestrians. Public Transport There are no regular microbus services provided within the khoroo.To travel within the khoroo, most residents walk or rely on taxis, when available. Options for Service Improvement Providing better north-south access is a priority for most residents. Improving the Gully Road would be helpful, but since it’s on the western side of the khoroo another north-south alignment further to the east should be identified.There are no sidewalks or street lighting on the Gully Road, and during the rainy season, low elevations along the alignment tend to have standing water. Option 1. Upgrade and pave, including drainage, sidewalks and street lighting, the existing Gully Road from Bayankhoshuu #25 to Nuur Street (about 1.4 km). Some minor changes in the align- ment may be required, and if possible, the road should be extended to the northern side of the khoroo. It is important to note that extending the road might require the acquisition of property, which would add to the cost of the project. It is also worth noting that the overall length of the Gully Road is around 3.7 km, and that around 2.3 km of the road passes through two other kho- roos (to the north-east and south-west). Any planned improvements to the road should be coordi- nated with those khoroos. Cost of Service Improvement The estimated cost to improve the Gully Road is summarized in Table 5.6. 42 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR TABLE 5.6. Estimated Costs of Proposed Service Improvements in Mid-tier Ger MID-TIER GER (BAYANKHOSHUU) LENGTH OR COST/UNIT COMPONENT PER CAPITA COST PROPOSED SERVICE IMPROVEMENT QUANTITY (MILLION TG) COST (MILLION TG) (THOUSAND TG) 1. Upgrade & Extend Gully Road 1.1 Road Construction (double surface 2.1 28 58.8 7.4 treatment per km) 1.2 Road Drainage System (per km) 2.1 70 147 18.4 1.3 Sidewalks (per km) 2.1 21 44.1 5.5 1.4 Street Lighting (1 every 50 meters) 42 0.42 31.64 4.0 1.5 Cabling for Street Lights (per km) 2.1 14 43.4 5.4 Estimated Capital Cost: 324.94 40.7 Overall Estimated Cost of Improvements: 324.94 40.7 NOTE: If the road is not extended 750 meters to the north, the cost would be about Tg226 million/$161,400. Financial and Economic Implication of Service Improvement Economic Benefits to Residents. Although limited to one side of the khoroo, an improved Gully Road would provide a reliable north-south corridor with year-round access. This would be the biggest benefit to residents. It would speed travel times and might open the way for micro- bus services. Sidewalks and street lighting would create safer and cleaner walking conditions for pedestrians.These improvements would also result in increased access to markets, schools, health clinics, other public services, and employment; as well as an improvement in air quality due to the reduction of dust. Fiscal Implications. Financing the costs for routine and periodic maintenance of an improved Gully Road would require about Tg1.75 million ($1,250) per year with the extension, and Tg1.2 million ($840) per annum if the extension is excluded. Maintaining and powering the street lighting system can be expected to cost less than Tg1.96 million/$1,400 annually (Tg1.26 million/$925 without the extension). Per capita, these costs would be about Tg300–465 ($0.22–0.33) per year. Fringe Ger (Sharhad): 9th Khoroo, Bayanzurkh District Roads The Fringe Ger is the largest outlying khoroo both in terms of size (48 hectares) and number of inhabitants (11,130). It has the same hilly terrain as the City Center Ger, and is bordered on the west by the Uliastai River and on the north by the Eej Khairkan (mother mountain). Overall, there are about 31.4 km of roads, 30.6 km of which are earthen (97.5 percent). The 807 meters of paved roads that run from the khoroo boundary to the Sharhad Bus Station are in very poor condition. Some 20 percent of residents own private vehicles. Traffic counts were taken of vehicles passing through the main intersection where the National Physiology Health Center is located. Based on very limited observations, the average daily volumes look to be around 1,600 vehicles per day. Buses and microbuses made up just over 50 percent of traffic, followed by passenger cars (25 percent) and trucks (25 percent). The composition of traffic at this location is different from the other khoroos CHAPTER 5 MUNICIPAL ROADS AND PUBLIC TRANSPORT 43 included in this study, where well over 90 percent of traffic consisted of passenger cars. The higher percentage of buses is likely the result of the Sharhad Bus Station. Public Transport The Sharhad Bus Station is situated on the extreme south-central edge of the khoroo, occupying nearly 650 square meters of land. It is used by large buses, minibuses and taxis. The bus station is located on a roundabout, but is not well organized and creates a bottleneck as drivers seek to enter and exit the facility. It is also located next to a school, which creates unsafe conditions for students. There are no scheduled bus services or bus stops beyond the Sharhad Station, but some taxis do offer to take residents to some outlaying areas within the khoroo. However, much of the area has very rough road conditions, which limits where most taxis will go. Residents who need to use pub- lic transport must walk from their homes to the Sharhad Bus Station, or hope to catch a shared taxi that might be passing by. Because of its distant location, residents must travel twice as far to get to and from the central busi- ness district, which results in higher travel costs for inhabitants of this khoroo. Options for Service Improvement While residents of this hilly khoroo would welcome improved public transport services, they expressed more interest in having better roads. A number of suggestions for improving specific roads were provided, but most of the proposed projects presented problems. In one case, the road to be improved would provide better access for hashaas that had been built in an illegal area. Proposed 44 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR road improvements in the core of the khoroo were constrained by limited space and narrow, wind- ing alignments that would severely limit the size of vehicles that could use the road. As such, just one proposed road improvement project was considered. Option 1. Upgrade and pave, including drainage, sidewalks and street lighting, the 1.5 km road from the Sharhad Bus Station to the top of Eej Khairkan Mountain to the north. The proposed route parallels a high density area to the west and would provide residents living on the north side of the khoroo better access. If conditions were improved, microbus operators might offer bus services for residents living in the area along the alignment. A number of residents also asked that the Sharhad Bus Station be relocated to the top of Eej Khair- kan Mountain because of ample open land that’s available. However, doing so would require sig- nificant study to determine the benefits, if any, and potential environmental and social implications. It would also take considerable coordination with municipal agencies. Cost of Service Improvements The estimated cost to improve the 1.5 km road to Eej Khairkan Mountain is outlined in Table 5.7. Economic and Financial Implications of Service Improvements Consumer Economic Benefits. If public transport services are provided along the new route, the biggest economic benefit to residents would likely be the amount of time saved by not having to walk to and from the Sharhad Bus Station. These improvements would result in increased access to markets, schools, health clinics, other public services, and employment; as well as an improvement in air quality due to the reduction of dust. Fiscal Implications. Funding maintenance activities would be the biggest fiscal impact. Rou- tine and periodic maintenance for the improved road is estimated to cost Tg1.26 million ($900) per annum, while the cost to maintain and operate the street lights would be around Tg1.4 million ($1,000) per year. Per capita, these costs would be around Tg239 ($0.17) annually. TABLE 5.7. Estimated Costs of Proposed Service Improvements in Fringe Ger PER CAPITA FRINGE GER (SHARHAD) LENGTH OR COST/UNIT COMPONENT COST PROPOSED SERVICE IMPROVEMENT QUANTITY (MILLION TG) (MILLION TG) (THOUSAND TG) 1. Upgrade Road from Sharhad Bus Station to Eej Khairkan 1.1 Road Construction (double surface 1.5 28.00 42.00 3.8 treatment per km) 1.2 Road Drainage System (per km) 1.5 70.00 105.00 9.4 1.3 Sidewalks (per km) 1.5 21.00 31.50 2.8 1.4 Street Lighting (1 every 50 meters) 30 0.42 26.60 2.4 1.5 Cabling for Street Lights (per km) 1.5 14.00 35.00 3.1 Estimated Capital Cost: 240.10 21.6 Overall Estimated Cost of Improvements: 240.10 21.6 6 Solid Waste Management OVERVIEW OF CURRENT SOLID WASTE MANAGEMENT IN GER AREAS Institutional Arrangement: The bulk of responsibilities for solid waste management are decentral- ized to the district level, while the city government is responsible for landfill operations. Until 2007, the City Waste Management Department directly managed the collection and disposal of solid waste in Ulaanbaatar. In 2007, a new regulation on waste management was introduced to mini- mize the city government’s involvement, while increasing the efficiency of management. Under the current institutional arrangement, each district government is responsible for collection and transportation of waste from homes, business entities and all the other locations except for public spaces. The Waste Management Department of each district collects fees (which are often decided by the City Council), manages contracting services with a privately run waste collection and FIGURE 6.1. Institutional Arrangement and Responsibilities for Solid Waste Management in Ulaanbaatar Ulaanbaatar Landfill operation and management Waste Management Department Ulaanbaatar Tuk District Management of waste collection and transportation [Enterprise owned Waste Management Executing budget for waste collection by the city] Department Directly levies collection charges from residents Personnel dispatched by Collection/ Deposits the tariff funds at the district office district office in Khoroos transportation of waste in public Designates collection area place Instructs Tuk to collect/transport garbage Waste collection/ Privatized companies transportation company Waste collected by unit-price contract withthe Waste [Tuk] Management Department ofdistrict office To comply with the instruction of person incharge of waste management dispatched by district office Source: interviews with various city officials 46 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR FIGURE 6.2. Current Waste Disposal in Ger Areas OUTSIDE HOUSES HILL OR YARD AROUND LAKE transportation company (a Tuk), and provides street cleaning services to citizens. The Waste Man- agement Department of Ulaanbaatar operates waste landfills, collects and transports waste in public places via contracting-out to the state-owned enterprise, Ulaanbaatar Tuk. Current Garbage Collection System. Because formal garbage collection is infrequent and unpre- dictable, residents dispose of most household garbage waste themselves—usually by dumping it outside their houses, on hills, in yards, and alongside roads and waterways.This ad hoc waste disposal poses a risk to public health and sanitation, including respiratory diseases. Open garbage disposal is also linked to environmental degradation, including the contamination of soil and underground water. In contrast, apartment areas run a relatively efficient and clean system. Separate transfer spaces are installed on the first floor of each building and waste is discharged into these spaces by trash chutes directly connected to individual apartment units. Ger area garbage is collected by vehicles that visit each household, door-to-door, and collect fees onsite. In the City Center Ger, an autonomous collection system within the khoroo has been put in place. The khoroo owns collection vehicles and operates a few crews of drivers and supporting staff. District staff and vehicles go around to households to collect garbage and also levy the waste col- lection charge. The district government, in turn, pays a community-owned system for collection and transportation to landfill sites. In the case of the Mid-tier (Bayankhoshuu) and Fringe (Sharhad) gers, collection is done similarly via collection vehicles visiting each household and transferring the collected garbage to landfill sites. The quantity of waste produced in ger areas varies significantly by season.The waste quantity during winter is three times that of summer: 0.9–.0 kg per person per day in winter in comparison with 0.2–0.3 kg per person per day in summer. This is because heating fuel (mostly wood and coal) is consumed in large volumes during the cold winters. Ashes are separated from general garbage and usually discharged into 200 liter iron drums or sacks. During the summer, when fuel is used only for cooking, ash is not separated.Throughout the year, recyclable materials are sorted for sale to the recyclable materials stores. The frequency of waste collection in the ger areas is very low, from once a month in the case of the Mid-tier and Fringe gers, to once every three months in the City Center Ger. Low frequency of collection is attributed to a number of factors. First, the current vehicle-based system of collection at each household is not efficient given the low density of ger areas. Collection vehicles can cover CHAPTER 6 SOLID WASTE MANAGEMENT 47 FIGURE 6.3. Solid Waste Collection Household (Discharge waste) in Three Ger Areas Waste management staff of Khoroo (Dispatched from district) The waste management staff deposits collection charge in the account of waste management department of district City Center Ger Mid-tier and Fringe Ger Aut. Enforcement by Instruct Tuk to col/trsp Ger (waste waste (waste collection Collection/transportation charge is collection/transport) area, collection frequency) paid by waste management department of district Waste management staff of Khoroo (Dispatched from district) only 20–30 households during summer and 15–20 households in winter per two-to-three hour trip. Collection vehicles operate on average nine hours per day, and hence each vehicle can cover fewer than 100 households per day. A shortage of collection vehicles, equipment and workers is another problem. District govern- ments have limited resources for equipment and vehicles, as their revenue is solely dependent on a collected tariff. According to the field survey, only one open truck, one driver and two assistant FIGURE 6.4. Current Situation of Waste Collection in Ger Areas WASTE COLLECTION WASTE COLLECTION CLEANING STREET CHARGE RECEIPT 48 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR TABLE 6.1. Solid Waste Management in Three Ger Areas CLASSIFICATION CITY CENTER GER MID-TIER GER FRINGE GER Households / Population 3,000 / 12,245 1,677 / 7,979 2,500 / 11,130 % of HH paying tariff 30% Less than 20% 30% Frequency of waste collection 2 times/day, 3 times/day, 2 times/day, 1 time /3 months per 1 time /month per household 1 time /month per household household Form & number of pieces of 1 Open Truck 1 Open Truck 1 Open Truck collection equipment Number of collectors 1 Driver, 1 Driver, 1 Driver, 2 Assistant workers 2 Assistant workers 2 Assistant workers Wages of collector Driver : 4,500 4,000 7,000 (Tg./capita.trip) Assistant worker : 4,000 Distance to landfill Approx. 15km Approx. 9km Approx. 30km Source: Field interviews with district officials and khoroo leaders. workers are assigned in each ger area to cover 1,677 to 3,000 households (See Options for Service Improvement for detailed investment requirement). Finally, poor road conditions, or in some cases the lack of an access road to ger households, add to the difficulty of collection. Houses located at a distance from the main road, without proper road access or with very narrow roads, often remain un-served. The collection schedule is random and there is no designated date and time for collection. As gar- bage bins are kept inside household fences, waste cannot be collected if no one is at home. The unpredictability of waste collection reinforces residents’ habits of disposing domestic garbage in open dump sites nearby. Solid Waste Tariff Structure. The waste collection tariff for households in Ulaanbaatar was set by the Municipal Council in 2006 at Tg2,500 ($1.79) per month for ger areas and Tg2,000 ($1.43) per month for apartment residents. However, the District can adjust the tariff level to some extent reflecting the revenue requirements and socio- economic conditions of ger residents. In the TABLE 6.2. Solid Waste Tariff in Three Ger Areas City Center Ger (Naran), the monthly tariff is ITEM CITY CENTER GER MID-TIER GER FRINGE GER Tg3,000 ($2.14); in the Fringe Ger (Sharhad), Collection tariff 3,000 Tg/ 1,500 Tg/ 2,500 Tg/ Tg2,500 ($1.79); and in the Mid-tier Ger (Bay- per HH month month month ankhoshuu), Tg1,500 ($1.07). % of HHs paying 30% Below 20% 30~40% tariff Only about 30 percent of households actually Willingness of Additional Additional Current pay a waste collection tariff. One reason obvi- households to payment charges could collection pay an increased is difficult, be paid, if charge should ously is the socio-economic condition of poor collection because the collection be maintained. households. Another important factor is the lack charge for better current waste charges are of awareness of the need for environmental pro- collection collection differentiated charge is high. for each tection and public goods. The field survey indi- season. cates that ger residents generally think garbage CHAPTER 6 SOLID WASTE MANAGEMENT 49 collection is the responsibility of city government, so they are not used to the notion of paying for public service. Furthermore, some residents who could afford the collection fee do not want to pay as long as they can dispose of domestic garbage elsewhere outside their houses. Residents also do not seem to have a strong confidence in the government’s ability to manage waste. Some of long-term residents believe that the garbage problem is created by new migrants and are reluctant to pay the collection fee.When asked about their willingness to pay for improved collection, only the Mid-tier Ger residents showed a willingness to pay additional collection charges if a differential tariff level can be introduced, e.g. one that is higher during winter times when more garbage is produced. OPTIONS FOR SERVICE IMPROVEMENT FOR SOLID WASTE MANAGEMENT The key area for service improvement of solid waste management would be to increase efficiency in the collection system. At the moment, the frequency of collection is very low: once every month or once every three months per household. The target benchmark is to increase collection fre- quency to once a week per household. City Center Ger. Since the bulk of this area will be converted to apartments, the collection system will remain vehicle-based. Similar to the current collection system in apartment areas, a transfer FIGURE 6.5. Solid Waste Collection in Apartment Area Household 5th Floor 4th Floor 3rd Floor 2nd Floor 1st Floor Transfer Station Step 2: A sanitary worker carries waste to Step 3: collection vehicle Step 1: The collection vehicle Households discharge waste transports to the landfill site in transfer station after the vehicle is full 50 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR TABLE 6.3. Procurement Required for Service Improvement in the City Center Ger (Naran), Apartment Area ITEM UNIT CITY CENTER GER Baseline data Waste generation Ton/day 12.245 Times of collection/ household Times/week 1 Round trip distance(Landfill) km 30 Waste collection Time spent for collection/ transportation min 346 vehicle (LD, TR, UL, RT) hr 5.7 Number of collection vehicle (total) EA 1 Using existing vehicle EA 1 Workers and driver Driver Person 1 Assistant Worker Person 2 station will be installed on the first floor of apartment buildings connected to individual house- holds via a trash chute. If the City Center Ger is turned into an apartment area, existing equipment and workers are enough to manage garbage collection and transportation in the area. FIGURE 6.6. Solid Waste Collection by Sanitation Workers Sanitary worker Waste transportation truck Household Transfer Station Landfill Step 3: The compactor transports to the landfill site after the vehicle full Transfer Station Step 1: Residents discharge waste in the house(Ger) Ger Ger Garbage bin or Waste bin Step 2: A sanitary worker carries waste Narrow road to a transfer station by using handcart Sanitary worker Main Road Ger Ger CHAPTER 6 SOLID WASTE MANAGEMENT 51 TABLE 6.4. Procurement Requirement for Service Improvement Option 1 ITEM UNIT MID-TIER GER FRINGE GER Baseline Population Population 7,979 11,130 data Number of households Household 1,677 2,500 Population/household Population/ 4.8 4.5 Household Waste generation per capita kg/capita.d 1.0 1.0 Waste generation ton/day 7.979 11.130 Times of collection/ household Times/week 1 1 Round trip distance(Landfill) km 18 60 Sanitary Collection efficiency of garbage bin MH/ton 5.8125 5.8125 worker Total collection time hr 46.4 64.7 Daily collection time hr 8 8 Number of Sanitary Workers Person 6 9 Collection households/ Sanitary Worker household 280 278 Transfer Number of Hand Carts EA 6 9 station Number of installed transfer stations EA 2 3 Waste Time spent for collection/ min 92 142 collection transportation(1 time) vehicle (LD, TR, UL, RT) hr 1.5 2.4 Number of collection vehicles (total) EA 1 1 Using existing vehicle EA 1 1 Per- for Driver Person 1 1 col/veh Assistant Worker Person 2 2 Mid-tier Ger and Fringe Ger. In these two areas, which likely will not be converted to apartment areas in the immediate future, three collection methods can be considered to improve collection frequency: collection service by sanitation workers; collection service by residents; and vehicle- based collection. Each method has a different implication for investment and operation costs, and this will be discussed in detail. Option 1: Collection Service by Sanitation Workers. In this case, the waste discharged by each household in a ger is collected by a sanitary worker, who uses a handcart to transport it to a transfer station. Then, the waste is transported from the transfer station to a waste landfill in a high volume vehicle. Under this option, the required number of sanitary workers and the amount of collection equip- ment are determined by taking into account collection efficiency and collection work time, etc. In the Mid-tier Ger, six sanitation workers, six hand carts and two installed transfer stations will be needed. In the Fringe Ger, nine sanitation workers, nine hand carts and three installed transfer sta- tions would be necessary. 52 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR FIGURE 6.7. Solid Waste Collection by Residents Residents Waste transportation truck Household Simple Transfer Station Landfill Step 3: The compactor transports to the landfill site after the vehicle full Container Step 1: Residents discharge waste in the house(Ger) Ger Ger Garbage bin or Waste bin Step 2: A resident carries waste to a Narrow road container by using vinyl or paper bag, etc Resident Main Road Ger Ger TABLE 6.5. Procurement Requirement for Service Improvement Option 2 ITEM UNIT MID-TIER GER FRINGE GER Baseline data Population Population 7,979 11,130 Number of households Household 1,677 2,500 Population/household Pop/HH 4.8 4.5 Waste generation per capita kg/capita.d 1.0 1.0 Waste generation ton/day 7.979 11.130 Times of collection/ household Times/week 1 1 Round trip distance (Landfill) km 18 60 Simple Average interval of installation m 100 100 transfer facilities No. of installed facilities EA 84 125 (1EA/200household) Waste Time spent for collection/ min 382 607 collection transportation (LD, TR, UL, RT) vehicle hr 6.4 10.1 Number of collection vehicle (total) EA 1 2 Using existing vehicle EA 1 1 Aqr new vehicle EA — 1 Per- for Driver Person 1 2 col/veh Assistant Worker Person 2 4 CHAPTER 6 SOLID WASTE MANAGEMENT 53 Options 2: Collection Service by Residents. Under this option, the waste is collected by each house- hold in bags. Residents will dispose of garbage bags themselves in nearby simple transfer facilities or waste containers. The waste collected in containers is then transported to a landfill by a waste transportation vehicle. It was estimated that one container is required per 20 households, with the average distance of 100 meters to transfer facilities. Based on this, it is estimated that about 84 con- tainers will be needed in the Mid-tier Ger and 125 in the City Center Ger. In the Fringe Ger, addi- tional vehicles to transport garbage will be needed. Option 3:Vehicle-based Collection. This is the model most similar to the status quo, but would replace current collection and transportation equipment with a modern collection system. Waste is col- lected using the door-to-door system and then transported to the landfill. It is estimated that two collection vehicles would be needed in the Mid-tier Ger and three in the Fringe Ger (Sharhad). Additional drivers and workers would be needed to operate the new vehicles. Each option has its own advantages and disadvantages. Collection by sanitation workers would bring the additional benefits of employment creation by utilizing laborers in ger areas who would oth- erwise remain unemployed. Collection efficiency will be higher than vehicle-based collection, as FIGURE 6.8. Solid Waste Collection by Vehicles Waste transportation truck Household Landfill Step 3: Step 1: The compactor transports Residents discharge waste to the landfill site after in the house(Ger) the vehicle full Ger Ger Garbage bin or Waste bin Step 2: A sanitary worker carries waste to a compactor by using garbage bin Sanitary worker Main Road Ger Ger 54 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR TABLE 6.6. Procurement Requirement for Service Improvement Option 3 CITY CENTER MID-TIER ITEM UNIT GER GER FRINGE GER Baseline Population Population 12,245 7,979 11,130 data Number of households Household 3,000 1,677 2,500 Population/household Pop/HH 4.1 4.8 4.5 Waste generation per capita kg/capita.d 1.0 1.0 1.0 Waste generation ton/day 12.245 7.979 11.130 Times of collection/ household Times/week 1 1 1 Round trip distance(Landfill) km 30 18 60 Waste Time spent for collection/ min 1,546 872 1,333 collection transportation vehicle (LD, TR, UL, RT) hr 25.8 14.5 22.2 Number of collection vehicle (total) EA 3 2 3 Using existing vehicle EA 1 1 1 Aqr new vehicle EA 2 1 2 Per- for Driver Person 3 2 3 col/veh Assistant Worker Person 6 4 6 waste pickers would go to individual households that are difficult for vehicles to access. This is also the most economical option (See Financial and Economic Implication for details). For the second option of collection by residents using small transfer systems, considerable public education and campaigning on waste disposal would have to accompany its implementation as residents become a part of the collection system. For the option of using the existing vehicle-based collection system, interviews with government officials and residents indicate that this is the most preferred option because it is a system they are most familiar with. In all options, a new tariff system will have to be introduced to replace existing one where residents pay a fee at the time of garbage collection. FINANCIAL AND ECONOMIC IMPLICATION FOR IMPROVED SOLID WASTE SERVICE The three options for improving solid waste management bear different financial implications, both in terms of initial investment costs and recurring operating and maintenance costs. As for the investment cost, in case of the City Center Ger, which will be turned into an apartment area, exist- ing collection vehicles and equipment are considered sufficient to cover the newly built apartment area. Hence, there should be no additional investment required. In the Mid-tier and Fringe gers, however, there is a wide variation among different service options (See Annex G for detailed cost assumptions). The lowest cost investment option is collection ser- vice done by sanitation workers. The estimated investment cost for this service is about Tg13.2 million ($9,400) for the Mid-tier ger and Tg19.8 million ($14,000) for the Fringe ger. In con- trast, collection by residents into small transfer systems is the most expensive option, with an esti- CHAPTER 6 SOLID WASTE MANAGEMENT 55 TABLE 6.7. Comparison of Different Options for Service Improvement CLASSIFICATION ADVANTAGES CHALLENGES Option 1 Collection gers, areas with high unemployment, as replacing current one which levies tariff at service by sanitary workers the time of collection sanitary worker in each home by increasing collection station frequency efficiency compared to the current stench and noise from the transfer station collection system by direct -door- to-door collection system materials by operating the transfer station Option 2 Collection they are part of collection system. replacing current one which levies tariff at service by the time of collection residents cost participate voluntarily, through publicity and in the house, as the resident personally education campaigns. disposes waste to the transfer station transfer station with the consent of local residents stench and noise from the transfer station Option 3 Collection supplements the collection equipment required to improve the collection vehicles service by of the current collection system and collection containers vehicle public officials viable and a new tariff system needs to be adopted mated cost of . about Tg 241 million ($172,000) and Tg 434 million ($310,000) in the two gers, respectively. Investment costs for vehicle-based collection in the two gers would be Tg75.6 million ($54,000) and Tg152 million ($108,576), respectively. As for operation and maintenance, in the City Center Ger, about Tg14.56 million ($10,400) is the estimated cost per year for labor and vehicle maintenance and operation. In the Mid-tier and Fringe gers, collection by residents into small transfer systems would entail about one-half of the operation and maintenance cost of the two other options. Using sanitation workers would cost about Tg16.5 million ($11,800) and Tg16.5 million ($25,500) in the Mid-tier and Fringe gers, respectively. The most expensive option, vehicle-based collection, would require Tg16.1 million ($11,500) and Tg58.8 million ($42,000) per year in the two gers respectively. From a service provider’s perspective, the first option—a system of collection by sanitary work- ers—seems the most cost-effective, considering initial required investment cost and annual opera- tion and maintenance cost. All of the proposed options will increase both the frequency of collection and the volume of col- lected solid waste, putting additional pressure on the city landfill. Operating costs for the landfill, 56 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR TABLE 6.8. Initial Investment Cost and Operation Cost to Improve Waste Collection Service CITY CENTER ITEM UNIT GER MID-TIER GER FRINGE GER Option 1 Initial Buying EA — 6 9 (Sanitary investment Handcart workers/ Million Tg (unit) — 0.73 0.73 handcarts) Million Tg (total) — 4.38 6.58 Installing T/S Million Tg — 8.82 13.23 Total Cost Million Tg — 13.20 19.81 Operation Labor cost Million Tg/year — 15.22 29.23 Operating C/V Million Tg/year — 1.37 6.41 Total Cost Million Tg/year — 16.59 35.65 Option 2 Initial Installing STF EA — 84 125 (Small investment transfer Million Tg (unit) — 2.87 2.87 stations) Million Tg (total) — 240.96 358.58 Buying C/V EA — — 1 Million Tg (unit) — — 76.00 Million Tg (total) — — 76.00 Total Cost Million Tg — 240.96 434.58 Operation Labor cost Million Tg/year — 6.75 33.06 Operating C/V Million Tg/year — 1.37 6.41 Total Cost Million Tg/year — 8.12 39.48 Option 3 Initial Buying C/V EA 2 1 2 (Improved investment status Million Tg (unit) 76.00 76.00 76.00 quo) Million Tg (total) 152.01 76.00 152.01 Total Cost Million Tg 152.01 76.00 152.01 Operation Labor cost Million Tg/year 32.81 13.51 49.59 Operating C/V Million Tg/year 7.09 2.66 9.12 Total Cost Million Tg/year 39.90 16.17 58.71 currently around Tg1.54 billion ($1.1 million) annually, will increase as the frequency of delivery increases. With the likely boost in volume, the estimated 20-year life of the landfill may be short- ened slightly. The costs of an additional landfill site are estimated at Tg52.36 billion ($37.4 million) for a 7.5 million m3 landfill. (Detailed estimated landfill development and operating costs can be found in Annex H.) The current collection tariff level is set by the municipal council at Tg2,500 per household (about $1.79 per month) in ger areas, higher than the tariff for apartment residents at Tg2,000 ($1.43). In three ger areas, tariffs range from Tg1,500 to Tg 3,000 ($1.07 to $2.14). This relatively high level of tariff is mostly due to the low collection rate and also to the lack of government subsidy. In order CHAPTER 6 SOLID WASTE MANAGEMENT 57 to estimate the financial burden for households, the tariff level was estimated just to cover opera- tion and maintenance costs, not investment or depreciation. The resulting tariff varies considerably across ger areas depending on service options. Households in the Mid-tier Ger are expected to pay at least Tg410 to Tg830 ($0.29 to $0.59) per month; in the Fringe Ger from Tg1,320 to Tg1,960 ($0.94 to $ 1.40) and in the City Center Ger, Tg410 ($ 0.29) for new apartment areas. TABLE 6.9. Expected Tariff Level for Solid Waste Management CITY CENTER GER MID-TIER GER FRINGE GER Household 3,000 1,677 2,500 Current Tariff (Tg) 2,996 1,498 2,492 Option 1: Annual O&M cost 16.59 35.65 Sanitary (million Tg/year) workers Cost per household 826 1,190 (Tg /month) Option 2: Annual O&M cost 8.12 39.48 Small transfer (million Tg/year) systems Cost per household 406 1,316 (Tg /month) Option 3: Annual O&M cost 14.54 16.17 58.71 Improved (million Tg/year) status quo Cost per household 406 112,798 1,960 (Tg /month) 7 Heating U laanbaatar is one of the coldest capitals in the world, making reliable and affordable heating vital for sustainable livelihood and development. The heating season lasts around eight months, from mid-September until mid-May. The fuel for all of the heating options in Mongolia is based on indigenous coal or wood. The use of raw coal in heat-only boilers and household stoves is considered one of the main causes of worsening air quality in Ulaanbaatar. According to a recent air pollution assessment in UB, the ground-level air pollution, measured in terms of Particulate Matter (PM10), during winter time is estimated to be between three and six times higher than the levels recommended in Europe and North Amer- ica, and 10 to 20 times higher than the World Health Organization-recommended standards. It has been well established that airborne particulate matter is a critical pollutant responsible for nega- tive health outcomes, such as respiratory illnesses, premature death, and restricted activity days.This implies a severe impact on both human health costs and economic costs to the society.The Munic- ipality of Ulaanbaatar is keen to ban the use of raw coal, and to develop and promote the use of cleaner fuels, such as semi-coke briquettes. In fact, in recent years the UB Government has spent several billions of Tugrik in subsidies to promote the use of cleaner briquettes. Based on the above context, this chapter describes the current situation of heating systems in the three ger areas, brings forward possible service improvement options, and estimates associated costs and benefits. CURRENT STATUS OF HEATING IN GER AREAS In general, four different types of existing heating systems are used in Mongolia: a) centralized (or district) heating systems; b) small-district heating systems for groups of buildings (heat-only boilers or boiler houses); c) individual heating systems (water heaters); and d) household stoves. Centralized (or district) heating offers a number of benefits over decentralized heating options in areas of high heat load density. One of the key advantages of centralized heating is an increased use of combined heat and power (CHP) production, which results in increased efficiency of the use of the primary energy (coal in the case of Mongolia) and a positive impact on the ambient air quality. There are significant economic benefits of centralized (or district heating), such as low production costs, compared to any other types of individual boilers, and fuel savings (and related environmen- tal impacts), due to economies of scale and high heat load density. Combined heat and power gen- eration provides fuel savings up to 30 percent compared to of those of heat-only boilers.Therefore, centralized (or district) heating is more efficient in terms of cost of service and environmental friendliness. This efficiency is widely understood: in Germany there is even legislation which sub- sidizes combined heat and power generation. 60 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR District heating can be efficient and suitable for densely populated urban areas with high heat load density per km of network. The heat density in ger areas is very low, however, and can be as much as 40–50 times lower compared to apartment complexes. Because of the unplanned development of ger areas, it is technically almost impossible to provide district heating. Even if it was technically feasible to connect these ger areas, without proper heat insulation and energy efficiency measures on the demand side, it would be a waste of resources. Traditional gers and detached houses in ger areas are not efficient in terms of heat insulation. On average, gers lose about 4–5 times and houses about 2–3 times as much heat as national standards for heat insulation. In Mongolia the electricity sector is closely linked to the heat sector because the majority of heat supplied in the Central Energy System (CES) is produced from five combined heat and power (CHP) plants in Ulaanbaatar, Darkhan and Erdenet. Though co-generation of heat and power provides the most efficient energy utilization, significant improvements are required to reduce energy losses in the existing heat distribution system, meter properly and regulate heat consumption on the demand side. Coal-fired water heaters can heat up to 100–500 m3 space (40–200 m2) and are installed in the boiler houses. The number of these stoves has increased significantly since the early 1990s with the tran- sition to the market economy system and the establishment of numerous small businesses and services. Coal-fired water heaters have low capacity and are used mostly in ger areas by small busi- nesses, shops, services, etc. All of these heaters use raw coal, contributing to UB city air pollution. A recent study revealed that 1,005 coal-fired water heaters in six districts in UB use about 11,900 tons of raw coal per heating season. In terms of capacity, there are 514 (51.1 percent) water heaters of capacity 1–10 kW, 226 (22.5 percent) of capacity 10–20 kW, 192 (19.1 percent) of capacity of 20–50 kW, 40 (4 percent) of capacity 50–90 kW, and 33 (3.3 percent) of capacity of 90–120 kW. All of these water heaters are designed for heating only one structure, with usually two or three rooms. Heat-only boilers include boilers that can produce 0.2–1.0 Gcal/hour (250–1000 kW) and are used mostly to heat one or several schools, kindergartens and hospitals. There are 166 boilers, of 24 dif- ferent types, in 89 boiler houses in UB. In the 2007–2008 heating season their total coal consump- tion was 66,643 tons. In terms of capacity, there are 32 (35.6 percent) boiler houses of capacity 0–0.2 Gcal/h; 40 (44.9 percent) of capacity 0.2–0.6 Gcal/h; 10 (11.2 percent) of capacity of 0.6– 1.0 Gcal/h; and 7 boiler houses with a capacity of more than 90–120 kW. Heating stoves are used in a variety of ways. Stoves can be used directly for space heating, or a heating wall is attached to the stove for better heat distribution. Some stoves have a hot water distribution system and radiators to heat the house; this is commonly known in Mongolia as small, low-pressure boiler. Recently, different modifications of improved stoves have been developed to reduce fuel consumption and CO2 emissions. In the three targeted ger areas, almost all households, except some apartments-dwellers in the City Center Ger (Naran), use traditional stoves for heating. City Center Ger (Naran), 11th Khoroo, Bayangol District: At this moment, three different types of heating are represented in this area: small business water heaters; households with individual stoves; and apartment buildings and public organizations connected to district heating system (See Table 7.1). For households using individual stoves, the heat loss is considerably higher—two or three times the standard rate1. Average heat load for private houses is about 5.9 kW and for gers is about 4.8 kW. The CHAPTER 7 HEATING 61 TABLE 7.1. Current Status of Heating Supply in Selected Khoroos TYPES OF HEATING TOTAL DISTRICT HEAT ONLY WATER # KHOROO HOUSEHOLDS HEATING BOILER (HOB) HEATERS STOVES 1 Bayangol district, 2970 130 households 30 small 2840 11th khoroo 6 organizations businesses 10 apartment buildings 2 Songino Khairkhan 1677 N/A HOB at school 20 small 1677 district, 8th khoroo, #67 businesses Bayankhoshuu ger 15 small area businesses and 20 private houses 3 Bayanzurkh district, 2567 N/A N/A 43 small 2567 9th khoroo, Sharhad businesses ger area total current heat load for houses and gers is 16.8 MW, and these households use 11,930 tons of coal and 2,550 tons of firewood. Annual spending on fuel amounts to about Tg1 billion42 ($714,000). Approximately 30 small businesses, mainly service companies, use their own heaters. These boil- ers generate hot water for heating. There is also one bath house with four individial cabins and six common showers connected to the centralized heat networks. The community expressed that an additional two or three bathhouses need to be built in the near future. Their total design heat loads are 1,157.5 kW. In addition, one boiler house in this khoroo supplies heat to 46th secondary school (for 2,000 stu- dents) and the khoroo’s administrative building.The 46th secondary school was originally connected to the central heating system, but due to limited heating capacity, it was disconnected from the sys- tem in 1996; since then the school has operated its own boiler house. The heat load of the school is 400 kW. Mid-tier Ger (Bayankhoshuu), 8th Khoroo, Songino Khairkhan District: Broadly, there are three types of heating systems in the ger area: a) larger consumers, such as schools and kindergarten connected to boiler houses; b) small businesses and services with their own heaters and c) individ- ual houses or gers with stoves. The 67th secondary school and 117th kindergarten are connected to and receive heating from the boiler house operated by the ANU Service Company. The design heat load is 920 kW, heating is billed per cubic meter of space, and the heating charge is Tg462 per cubic meter. Also, approxi- mately 20 small businesses and services have their own heaters. The total design heat load is 1,378 kW. Most of the small businesses are located at Bayankhoshuu’s bus station and use inefficient stoves from local and Chinese manufacturers. Similar to Naran, most households that use stoves suffer from high heat loss—two or three times the standard rate1. The average heat load for private houses is about 5.9 kW and for gers is about 62 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR 4.8 kW.The total current heat load for houses and gers is 13.7 MW; these households use 7,044 tons of coal and 1,510 tons of firewood annually, spending about Tg593.8 million (~$424,000) for heat- ing and other purposes43. One bathhouse in this khoroo near family hospital “Eeltei” is not working, and the community has requested at least 2 or 3 new bathhouses. Fringe Ger (Sharhad), 9th Khoroo, Bayanzurkh District: Similar to the other two, the follow- ing heating systems are in this khoroo: a) larger consumers, such as schools and kindergarten con- nected to boiler houses; b) small businesses and services with their own heaters and c) individual houses or gers with stoves. Within this khoroo is the 79th elementary school with 1,160 pupils, the 3rd kindergarten with 190 children and the National Centre of Psychological Health (Psychoneurological hospital). The kin- dergarten and school have their own boiler houses. The Psychoneurological hospital boiler house has two sections: heating and hot water supply.Their total design heat loads are 2760 kW.The com- mercial service facilities within this khoroo are located close to each other near the Sharhad Bus terminal. Also, near the bus terminal is also an old boiler house building which stopped function- ing due to the lack of maintenance. It would be possible to use this building and site for a modern boiler house. Of 2,567 household in this khoroo, about 70 percent have wall stoves. Heat loss for almost all houses is 2–3 times the standard rate. The households consume over 10,000 tons of coal per year and another 2,300 tons of wood for heating. The wholesale price of one ton of coal is about Tg65,000 ($46) and its retail price is about Tg130,000 ($93). The wholesale price of one ton of wood is about Tg90,000 ($64), which amounts to Tg200,000 ($143) in retail price. The “Khuslen” service center has one bath house with 10 common showers. Price of service is Tg1,600 ($1.14) per one person. The community requested 2 or 3 bath houses in the near future. OPTIONS FOR SERVICE IMPROVEMENT AND FINANCIAL IMPLICATIONS City Center Ger (Naran), 11th Khoroo, Bayangol District: This area will be connected to dis- trict heating given its proximity to the district heating network, but the following factors need to be taken into account: TABLE 7.2. Total Investment Costs of Installation New Heat Sub-Station with Heat Network LOCATION AND PROPOSED INVESTMENTS UNIT UNIT COST2, VOLUME TOTAL, $ 1 Installation of new heat substation in MW 15,000.0 $/MW 10.0 150,000.0 east side of Maternal and Children’s Hospital. 2 Installation of new heat pipe line from 2xD200 mm 310.0 $/m 150 m 46,500.0 main line to new heat substation 3 Installation of new heat pipe from new 2xD250 mm 330.0 $/m 730 m 240,900.0 heat substation to apartments Total 437,400.0 CHAPTER 7 HEATING 63 For newly developed apartment areas. There is 6.0 MW of heating capacity at the 728th substation, which is already planned to be connected to buildings located in neighboring khoroos. The con- struction of some of these buildings has already started, with plans to build a heating substation with a capacity of 10 MW capacity on the east side of the Maternal and Children’s Hospital. This sub- station will supply the heating to a new apartment complex, which is planned to be built by 2010. The complex will have 900 apartment units; some of these will serve about 120 households that have lived in the area and will receive apartments in exchange for their land. The cost to provide a centralized heating system in the apartment area is around Tg612 million ($437,400), including the installation of new heat substation for around Tg210 million ($150,000) and a heat pipe network for Tg402 million ($287,400), or around Tg680,400 ($486) per connection of each apartment unit. The cost of connecting existing small businesses to a district heating network is high, even if district heating capacity is available. There is a limited technical possibility of connecting about 20 small private businesses located near secondary school # 46 to district heating.The total connection cost would be $170,000 or about $8,500 per connection. A recent survey conducted among small busi- nesses shows that they all are interested in being connected to district heating. The cost of connecting existing detached houses and gers to the district heating is also high. The cost per individual connection will be about Tg3.4 million ($2,415), including Tg476,000 ($340) for construction of the main heating pipeline, Tg1.2 million ($850) for construction of boiler and Tg1.8 million ($1,250) for installation of indoor heating and water system. The total cost of con- necting to district heating network will be around Tg9.2 billion ($6.6 million) for a heat network of 4.6 km and a boiler house with capacity 16.0 MW. To connect new apartment areas into the district heating, the capacity of existing district heat- ing would have to be enhanced. Ulaanbaatar district heating networks have already reached maxi- mum heating capacity. Unless the new heating sources are in place, it is technically not feasible to allow new connections. The total available heating capacity from the three power plants in UB is 1,585 Gcal/h, and the applications for new connections would add 283 Gcal/h, creating a defi- cit of 1,37.4 Gcal/h if connected. Starting in 2010, the UB city will not be able to make any new connections in district heating because of heat supply shortages. In addition, obsolete heating pipe- lines and networks require significant rehabilitation measures, without which the UB district heat- ing network cannot ensure reliable heat supply. The Ministry of Mineral Resources and Energy is in the process of tendering bidders to develop power plant PP#5, which is planned in the eastern part of the city, with heat capacity around 700 Gcal/h. Mid-tier Ger (Bayankhoshuu), 8th Khoroo, Songino Khairkhan District: Two options for service improvements are: expanding the capacity of local heat only boilers and connecting to them the local heating network, or connecting to the district heating system. Expansion of capacity at existing boiler house at the school 67th and connection of nearby users. This would increase the heating capacity of ANU Service Co. Ltd’s boiler at 67th secondary school from 1,170 to 1,470 kW and connect to its network all potential customers near Bayankhoshuu bus terminal. Total heat load of customers near the bus terminal is 300 kW, with 200 kW for customers located in the khoroo. The capacity of the heating boilers located in the 67th secondary school could be increased to allow connections to the small service buildings close to Bayankhoshuu’s former bus 64 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR TABLE 7.3. Total Investment Cost of Installation New Boiler House and Heat Network LOCATION AND PROPOSED INVESTMENTS UNIT UNIT COST VOLUME TOTAL COST ($) 1 Installation of new boiler kW 144.1 $/kW1 5,9*2720= 2,312,800 house in ger area 16050.0 kw 2 Installation of heat network 2xD250 mm 330.0 $/m 45.0 m 14,850 from new boiler house 2xD180 mm 300.0 $/m 545.0 m 163,500 2xD150 mm 260.0 $/m 400.0 m 104,000 2xD125 mm 220.0 $/m 700.0 m 154,000 2xD100 mm 150.8 $/m 1,100.0 m 165,880 2xD70 mm 145.8 $/m 866.4 m 126,320 2xD50 mm 135.0 $/m 950.0 m 128,250 Total 4606.0 m 856,600 3 Installation of indoor 1250.0 2720.0 3,400,000 heating and water system in $/one house private houses Total 6,569,400 1 Carborobot. 2 Investment costs for installation new heat pipelines, Tugrik per one meter pipeline(by 2008 year). terminal. Approximately 20 services companies have their own heaters, which generate hot water for heating. Technical data of heat consumers and boilers are shown in Table 7.3. Their total design heat loads are 1,378.0 kW. The capital investment to improve the heating capacity of this boiler by 300 kW, is Tg121.8 mil- lion ($87,000), including Tg58.8 million ($42,000) for upgrading boiler capacity, and Tg63 mil- lion ($45,000) for construction of new heating pipelines.The coal price is Tg84,000) ($60) per ton. After improvements to the boiler, the price for one Gcal heating will be Tg66,500 ($47.5). This price is less than the current expense of heating small buildings. The owners of the these services all accept this option. Total investment costs of installation new boilers and heating network are shown in Table 7.4. Expansion of capacity at existing boiler house at School 76 and the connection of nearby users. Customers located near Bayankhoshuu’s bus terminal can be connected to the heating network of Talst Echim TABLE 7.4. Total Investment Cost of Installation New Boilers and Heat Network LOCATION AND PROPOSED INVESTMENTS UNIT UNIT COST VOLUME TOTAL COST, $ 1 Installation of a new boiler at kW 140 $/kW1 300.0 42,000.0 the boiler house at 67th school 2 Installation of a heat pipe at the 2xD100 mm 150.8 $/m 105.0 m 15834.0 boiler house at 67th school 2xD 80 mm 145.8 $/m 200.0 m 29166.0 45,000.0 Total 87,000.0 1 Carborobot. 2 Investment costs for installation new heat pipelines, Tugrik per one meter pipeline(by 2008 year). CHAPTER 7 HEATING 65 TABLE 7.5. Total Investment Cost of Installation of Improved Boilers and Heat Network LOCATION AND PROPOSED INVESTMENTS UNIT UNIT COST VOLUME TOTAL COST, $ 1 Replacement of three BZIU- kW 140 $/kW1 1100 154,000.0 100 by Carborobot at the boiler house at 67th school 2 Installation of a heat pipe 2xD125 mm 220.0 $/m 387.0 m 85,150.0 at the boiler house at 76th 2xD100 mm 150.8 $/m 390.0 m 58,812.0 school 2xD 80 mm 145.8 $/m 110.0 m 16,038.0 Total 160,000.0 Total 314,000.0 1 Carborobot. 2 Investment costs for installation new heat pipelines, Tugrik per one meter pipeline(by 2008 year). Co., Ltd., boiler house at the 76th secondary school. There are three BZIU-100 and one ECO- 500 boilers in the boiler houses, with a capacity of 2,600 kW. Since the BZIU-100 units are quite inefficient, they should be changed to modern boilers of the same capacity and high efficiency.The actual heat load is 980 kW (0.84 Gcal/hour), and the designed heat load for new customers from the Fringe Ger is 500kW (15 commercial services and about 20 private houses) and from the Mid- Tier Ger is 100 kW. The capital investment for renewing the boiler located in Bayankhoshuu’s new bus terminal with a high effeciency version is Tg439.6 million ($314,000), including Tg215.6 million ($154,000) for renewal and Tg224 million ($160,000) for construction of new heating pipelines. The coal price is Tg 84,000 ($60) per ton, and the fuel-cost ratio of total operating and maintenance costs for Ulaan- baatar city is 0.6. After the improvement of the boilers, the price for one Gcal heating is expected to be around Tg66,500 ($47.5). This is less than the current heating expense of small buildings. TABLE 7.6. Total Investment Cost of Installation New Boiler House and Heat Network PROPOSED LOCATION IMPROVEMENT UNIT UNIT COST VOLUME TOTAL COST, $ 1 Boiler house in Installation of new kW 144.1 $/ 5,9*1,192= 1,425,725 Ger area boiler house kW1 9,894.0 kw 2 Heat network Heat pipes 2xD250 mm 330.0 $/m 52.6 m 17,360 from new boiler installation 2xD180 mm 300.0 $/m 311.0 m 93,300 house 2xD150 mm 260.0 $/m 236.0 m 61,360 2xD125 mm 220.0 $/m 440.0 m 96,800 2xD100 mm 150.8 $/m 670.0 m 101,036 2xD70 mm 145.8 $/m 540.0 m 78,732 2xD50 mm 135.0 $/m 590.0 m 79,650 Total 2840.0 m 528,240 Ger or private installation of 1,250.0 $/ 1677.0 2,096,250 houses indoor heating and one house water system TOTAL 4,050,000 1 Carborobot. 2 Investment costs for installation new heat pipelines, Tugrik per one meter pipeline(by 2008 year). 66 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR Total investment costs of installing new boilers and heating network are shown in Table VII.5. After implementing these options, the coal consumption is likely to be reduced by 922 tons annually, and greenhouse gas (GHG) emissions will be reduced by 1,250 tons annually. Cost of connection of existing houses to the district heating. About Tg5.67 billion ($4.05 million) would be required to connect these households to the centralized heating system (heat network of 2,840 meter and boiler house with capacity 9,894.0 kW).The investment amount per household is Tg3.4 million ($2,415), including Tg441,000 ($315) for construction of heating main lines, Tg1,190,000 ($850) for boiler construction and Tg 1,750,000 ($1,250) for installation of an indoor heating and water system. The annual heating cost for households will be 2.7 times higher than conventional system, or Tg 931,000 ($665) per year. Household income could not cover these expenses unless there is a significant government subsidy, which is at this point is unrealistic. A more realistic and effective option would be to improve building insulation. The insulation cost for a house of 36 square meters is Tg266,000 ($190). Once insulation is complete, the consump- tion of coal can be reduced by 2.2 times, to around two tons per heating season. In addition, it is likely that fuel expense will be reduced by Tg260,000 ($185.71) and GHG emission reduced to 2.7 tons per season. Residents expressed a strong interest in having hot water and showers in their houses or at a nearby area. In the middle of the ger, two bath houses with individual heaters can be built. The investment cost of installing one bath house, capable of serving 100 persons daily (35,000 annually), is Tg140 million ($100,000). If the service fee is Tg1,250 ($0.89) per person, the capital investment will be recovered in three years after the installation. Fringe Ger (Sharhad), 9th Khoroo, Bayanzurkh District: Options available to improve heat supply include: a) installation at the bus terminal of a new, high-efficiency boiler house larger than 1.6 MW; b) installation of a new heating network from a new boiler house; c) replacement of three old boilers (type BZIU-100) at Psychoneurological hospital with new, high-efficiency boilers; and d) installation of two new bath houses in the center of the ger area. Most of 43 small service buildings are located near the Sharhad bus terminal. There is no boiler house in this location. It is possible to build a new boiler with 1.6 MW capacity to connect these service buildings to the centralized heating system.The capital investment for this is estimated to be TABLE 7.7. Total Investment Cost of Installing New Boilers and Heating Network PROPOSED LOCATION IMPROVEMENT UNIT UNIT COST VOLUME TOTAL, $ 1 Sharhad bus Installation of new kW 140 $/kW1 1600.0 240,000 terminal boiler house with higher efficency 2 Sharhad bus Installation new Heat 2xD125 mm 220.0 $/m 230.0 50,600 terminal pipeline 2xD100 mm 150.8 $/m 284.5 42,910 2xD80 mm 145.8 $/m 264.0 38,490 132,000 1 by data of Carborobot CHAPTER 7 HEATING 67 Tg604.8 million ($432,000), including Tg420 million ($300,000) for improvements to the build- ing and installation of the new boiler, and Tg184.8 million) ($132,000) for the construction of new heating pipelines. The coal price is Tg 84,000 ($60) per ton. The fuel-cost ratio of total Operating and Maintenance costs for Ulaanbaatar city is 0.6. After the boiler is installed, the price for one Gcal heating will be Tg66,500 ($47.50). This price will be affordable to the small store owners.The total investment costs of installing new boilers and heating network are shown in Table VII.7. If this option is implemented, the coal consumption will be reduced by 1,000 tons, and GHG emission will be reduced by 1,360 tons annually. To replace three old boilers (type BZIU-100) at the Psychoneurological Hospital’s boiler house with high-efficiency new boilers, an investment cost of about Tg372.4 million ($266,000) is esti- mated. Upon running high effeciency boilers, the coal consumption will be reduced by 1,245 tons and the heating expenses will be reduced by Tg104.6 million ($74,700) annually. The capital investment will be recovered in three to four years due to the reduction of coal consumption.Total investment costs of installation new boilers are shown in Table 7.8. To connect households to the centralized heating system, an estimated Tg8.7 billion ($6.2 mil- lion) will be needed (the heat network of 4,320 meters and boiler house with capacity 15,145.0 kW).The investment amount per household would be Tg34 million ($2,412), including Tg436,800 ($312) for the heat network, Tg1.2 million ($850) for the boiler and Tg1.8 million ($1,250) for installation of the indoor heating and water system. Similar to the Mid-Tier Ger scenario, this option is not financially viable, and a better option would be to improve building insulation. Based on the analysis above, the following conclusions can be drawn: Integrating ger areas into the district heating system is costly even in the City Center Ger, where the central networks are already distributed nearby. The estimated cost per connection for a lim- ited number of small businesses to existing centralized heating system will be around Tg1.8 mil- lion ($8,500), and the cost per connection of individual households is around Tg3.4 million ($2,415). Connection to the district heating system does not make much sense without improv- ing the heating insulation of existing houses and small structures. In addition to scattered locations and low heat density, the existing individual houses and homes lose as much as 2–3 times more heat compared to national heat insulation standards. For the mid-tier and fringe gers, expanding or rehabilitating on-site boilers, improving hous- ing insulation and existing stoves (as well as providing public bath houses) seem to be more economical options. TABLE 7.8. Total Investment Cost of Installation New Boilers PROPOSED LOCATION IMPROVEMENT UNIT UNIT COST VOLUME TOTAL, $ 2 Psychoneurological hospital’s Replacement of kW 140 $/kW1 1900 266,000 Boiler house old boilers Note: For this table, 1 $=1450 tugrik 1 by data of Carborobot 68 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR TABLE 7.9. Total Investment Cost of Installation New Boiler House and Heat Network PROPOSED TOTAL COST, LOCATION IMPROVEMENT UNIT UNIT COST VOLUME $ 1 Boiler house in Ger Installation of new kW 144.1 $/kW1 5,9*2567= 2,182,440 area boiler house 15145.0 kw 2 Heat network from Heat pipes 2xD250 mm 330.0 $/m 40.0 m 13,200 new boiler house installation 2xD180 mm 300.0 $/m 515.0 m 154,500 2xD150 mm 260.0$/m 340.0 m 88,400 2xD125 mm 220.0 $/m 670.0 m 147,400 2xD100 mm 150.8 $/m 1030.0 m 155,325 2xD70 mm 145.8 $/m 825.0 m 120,285 2xD50 mm 135.0 $/m 900.0 m 121,500 Total 4320.0 m 800,610 Ger or private installation of 1250.0 $/ 2567.0 3,208,750 houses indoor heating and one house water system TOTAL 6,191,800 1 Carborobot. 2 Investment costs for installation new heat pipelines, Tugrik per one meter pipeline(by 2008 year). The ger residents will have no choice but to continue using stoves because alternative improve- ments such as district heating or local boilers are too expensive. Given this reality, technical options for energy-efficient stoves, alternative fuels and housing insulation would have to be further developed. Ger residents bear a high financial burden of heating costs. According to a recent Bank survey44, the estimated total expenditure per household during the heating season is Tg174,767 ($125) for raw coal and Tg84,853 ($61) for firewood. More importantly, the same survey reveals that lower income households in the ger districts spend a significant amount of money to heat their gers or homes.The financial burden is extremely high for households in the bottom fifth income quintile; they spend as much as 40 percent of their monthly winter income on heating fuels, compared to similar expenditures of only 9 percent by households in the top income quintile. 8 Electricity OVERVIEW OF CURRENT STATUS OF ELECTRICITY Ulaanbaatar city is growing rapidly, both as the ger areas swell due to the influx of migrants from rural areas, and with the rapid construction of the urban center and housing developments. The World Bank-financed Energy Sector Project (ESP) has produced good results in reducing technical and non-technical losses in ger areas in UB, improving revenue collection, and commercializing the distribution business of the Ulaanbaatar Electricity Distribution Network Company (UBEDN). The project has successfully lowered technical and non-technical losses from an average of 31 per- cent to 20 percent in Ulaanbaatar ger areas. Billing and revenue collection have improved dramati- cally (bill collection days have been reduced from 98 to 57 days in UB). Despite these improvements, the city’s electricity service still faces significant challenges. Nearly 70 percent of underground cables have exceeded their technical life spans, and some 425 cable faults are reported annually. Half of the 75 main substation transformers have been in service for more than 25 years; nine have been in use for more than 40 years. Because of the global financial cri- sis and the sharp drop in commodity prices for Mongolia’s major export commodities, the risk of compounding the economic crisis if the electricity system fails is very high. Mongolia’s current total installed electricity capacity is 878.4 MW. The recently updated Energy Sector Master Plan forecasted that power demand is expected to increase at an annual rate of 2.9 percent between 2001 and 2020. However, the actual average power demand growth for the last three years average was 5 percent. Due to reduced reliability and insufficient capacity of the dis- tribution network, the UBEDN has to stop new connections (almost 150 connections for new buildings in 43 locations). The Government had announced a bid to construct a new combined heat and power (CHP) plant #5 in Ulaanbaatar, but due to the lack of proper planning and due diligence process, the tender has been cancelled. The Government has requested additional financ- ing from the ongoing ESP for crucial investments in UB’s distribution and transmission networks. Immediate financing is needed to meet the increasing demands for expansion and rehabilitation of the distribution and transmission networks in Mongolia’s Central Region, estimated to be around $150–$200 million. While electricity tariffs are not low by international standards (on average $4.7 cents/kWh), they are below the level that is necessary to reflect the cost of service and particularly the system expan- sion. A World Bank study in 2007 revealed that electricity and heat tariffs need to increase by 60 percent in order to cover costs. Lack of capacity and political will to adjust tariffs in a timely man- ner reflecting increasing costs (for fuel, coal, imported spare parts, goods and equipment) have exac- erbated financial losses. 70 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR The Energy Regulatory Authority (ERA) of Mongolia also introduced a lifeline tariff rate to miti- gate the social impact on poor and low-income consumers. Though the ERA introduced lifeline tariffs a few years ago, very few households have subscribed for these tariffs largely due to the lack of registration (by newly migrated households) or outstanding payables for previously used elec- tricity. Paying electricity bills is not a problem for most ger area residents, but they would not be able to pay for new connections due to the high poverty incidence in ger areas. Because of the lack of proper planning and enforcement, it would be problematic to provide new connections, which need to be coordinated with district and city authorities. The tariff for electricity in ger areas is between 58 and 66 Tg/kWh without VAT, depending on monthly consumption. Households in ger areas pay around Tg8,000 to Tg12,000 per month for electricity; this represents about 4 percent to 5 percent of total income (Tg200,000 to Tg250,000 per month) (See Table 8.1). UBEDN’s Performance UBEDN’s overall operational performance has improved considerably over the past three years. Distribution losses (technical and non-technical) have declined progressively from 28.4 percent in 2005 to 21.7 percent in 2008. The average billing collection rate has been satisfactory, and has ranged between 100 percent (in 2007) and 95.9 percent (in 2008). The recent decline in the over- all collection rate suggests that older outstanding bills are becoming increasingly more difficult to collect, and also reflects the current economic downturn. The underlying growth in demand and reduction in network losses over the last three years has resulted in high sales growth averaging 12.3 percent per annum. Total number of customers as at December 31, 2008, reached 176,000, registering an average annual growth of just under 8,200 customers. The average number of customers per employee has gone up marginally from 114 in 2006 to 117 in 2008. The customer mix for 2008 is indicated in Table 8.2. Electricity tariffs increased by 27 percent effective July 15, 2008. The weighted average elec- tricity revenue has increased from 48.51Tg/kWh (0.041US$/kWh) in 2006 to 57.84Tg/kWh (0.049US$/kWh) in 2008, representing growth of 19.2 percent. However, the distribution and sup- ply component of the tariff (i.e. excluding bulk supply or power purchase costs) has risen by TABLE 8.1. Electricity Tariffs for Residential Consumers 40.4 percent from 9.71Tg/kWh (0.008US$/ # CUSTOMER GROUPS TARIFF (TG/KWH) kWh) in 2006 to 13.64Tg/kWh (0.049US$/ 1.1 UB apartment dwellers kWh) in 2008. The following chart illustrates the development of the retail tariff45 over the a <150 kWh per month 60.00 past three years. b 151–250 kWh per month 64.00 c >251 kWh per month 68.00 The overall financial performance of UBEDN 1.2 UB ger residents has improved over the last three years due to efficiency improvements (lower distribution A <150 kWh per month 58.00 losses and higher billing collections) and sharp B 151–250 kWh per month 62.00 increases in the distribution and supply compo- C >251 kWh per month 66.00 nent (i.e. UBEDN’s share) of the tariff.The col- CHAPTER 8 ELECTRICITY 71 TABLE 8.2. UBEDN Customer Mix SALES, REVENUE, AVERAGE TARIFF CUSTOMERS GWH MILLION TG (TG/KWH) Ger Area (peri-urban) 92,876 52.8% 222.5 11,452.9 51.6 (19.1%) (17.0%) Apartment 73,339 41.7% 167.7 9,768.6 58.3 (14.4%) (14.5%) Commercial & Industrial (CI) 9,791 5.6% 774.7 46,081 59.5 (66.5%) (68.4%) Total 176,006 100% 1,165 67,370 57.8 lected revenues compared with cash revenue requirements illustrate that the company has closed the financing gap and has lived within its means in the last two years. UBEDN’s distribution and supply costs, other than depreciation, have increased as percentage of operating revenue from 19.0 percent in 2006 to 19.7 percent in 2008. Payroll costs per employee have risen by 47 percent over the past three years, and total payroll costs accounted for 12.5 percent of operating revenue in 2008. Repairs and maintenance costs in 2008 were 86 percent higher than in 2006 and represented 12.5 percent of operating revenue; however, such costs are still far below system requirements. Depreciation charges are excluded because of a peculiar and unexplained drop, reflected in UBEDN’s income statements, from Tg4.1 billion in 2006 to Tg1.8 billion in 2008. Capital investments during the last three years amounted to $12.3 million. Of this amount, 49 per- cent was funded through long-term borrowing and 14 percent through government grants. The remaining 37 percent was financed from UBEDN’s internal resources and short-term bank bor- rowing. The company’s liquidity remains weak, although it has improved since 2006.The current ratio (the proportion of current assets to current liabilities) has gone up from 0.6 in 2006 to 0.8 in 2008.The debt/equity ratio has increased from 98 percent to 103 percent. The unsatisfactorily high ratio is mainly due to the fact that fixed assets have not been revalued for many years. A professional reval- uation of fixed assets is expected to be completed by end 2009. CURRENT STATUS OF ELECTRICITY IN GER AREAS Recent household surveys report that more than 95 percent of ger residents in Ulaanbaatar have electricity in their households46. Despite the extensive coverage of electricity in the ger areas, the lack of capacity of electricity supply and unreliable service remain as main challenges, often result- ing in power outages. The key issues with the electricity supply in ger areas are insufficient capacity of transformers and substations, and poor service quality due to the capacity shortage. Households without access to electricity tend to be those in the fringe ger areas. Though new con- nections were made in recent years in ger areas, financed from the state and municipal budget, about 8,000 families still do not have electricity in UB. The UBEDN estimated that about Tg2.8 billion 72 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR TABLE 8.3. Current Status of Electricity Supply in Selected Khoroos SERVICE TOTAL ELECTRICITY IMPROVEMENTS NO KHOROO HOUSEHOLDS SUPPLY NEEDED ELECTRICITY 1 Bayangol district, 11th khoroo 2970 2920 30 50 2 Songino Khairkhan district, 8th 1677 1677 50 N/A khoroo, Bayankhoshuu ger area 3 Bayanzurkh district, 9th khoroo, 2567 2497 48 70 Sharhad ger area would be necessary to provide electricity to these households. In the three ger areas under review, only about 120 households are reported to have no access to electricity (Table 8.3). OPTIONS FOR SERVICE IMPROVEMENT IN GER AREAS City Center Ger (Naran), 11th Khoroo, Bayangol District Consumers living in apartments pay slightly higher tariffs than residents in ger areas. The tariff for apartment areas is 68 MNT/kWh, compared to 66 MNT/kWh in ger areas. Connection costs of electricity to residences are presented in the next section. Mid-Tier Ger Area Bayankhoshuu ger area, 8th Khoroo, Songino Khairkhan District This khoroo has eight khesegs (micro-districts), six of which have undergone technical rehabilitation under the ESP in 2005–2007. This includes the installation of rubber-insulated aerial conductors (XLPE) cables and electricity tariff meters together with meter boxes. The project implementation in the two remaining khesegs is pending.Within the USIP project, street lighting has been improved and 51 lighting fixtures were installed at both ends of eight streets. Cadastre mapping of the khoroo was prepared, including the systematic mapping of hashaas of each kheseg. However, the actual loca- tions of hashaas and streets can be difficult to determine because of poor mapping and labeling in the cadastre system. In general, electricity supply in this khoroo has improved significantly with the implementation of ESP. There are voltage drop issues only on Streets # 8 and 9 of the Zuun Bayan Tsagaan area for about 40 households; also, some newcomers have not been provided with electric- ity due to the lack of official registration. Seven outdoor transformer stations (OTS) and indoor transformer stations (ITS) are in operation in this khoroo. This khoroo is located in the Nuur (lake) area, where four brick manufacturing fac- tories operate during summer months. Given the high density of the location, it has limited space for newcomers. Sometimes several families live in one hashaa and as a result may easily move to another place without paying their electricity charges. The installation of electricity meters under the technical part of ESP allows the use of time-differentiated meters, while the new XLPE cables help reduce non-technical losses, such as theft of electricity. Around 70 households of Eej khairkhan 8th street (or 4th Kheseg) do not have electricity. In addi- tion, around 47 newcomers in 7th Kheseg settled in swampy, low-lying area without registering; CHAPTER 8 ELECTRICITY 73 these households constructed a 0.4kV distribution line privately and have taken electricity only from one pole. In the 6th and 2nd khesegs, 20 households and 30 households, respectively, on 2nd street are taking electricity from one meter, thus increasing loading and causing voltage drops. On the other hand, the central khesegs have relatively reliable electricity supply where ESP is completed. In one particular situation, on 8th street of Eej Khairkhan or Belkh, area households are engaged in cattle breeding; the poor road condition makes the construction of distribution lines very difficult. Generally the territory of this khoroo has a muddy and craggy surface. Nine OTS’s and ITS’s are in operation in this khoroo, and the remaining customers are supplied from other OTS’s. Occasional electricity interruptions are reported in this khoroo during evening peak loading. The khoroo is located far from the city center and has a relatively high number of newcomers. Also, tem- porary households move into the area during the summer season to plant vegetables and to camp, thus increasing electricity demand. It is estimated that annual demand growth will be as much as 5 percent–6 percent per annum. During discussions, khoroo and kheseg leaders noted that the average monthly electricity consumption of ger area households is around 150 kWh or (Tg10,000 with- out VAT). The Western Distribution Center of UBEDN is responsible for technical aspects of electricity sup- ply, and the Bayangol district Customer Service Center (CSC) is responsible for customer billing and revenue collection, as well as day-to-day service and maintenance. In the Mid-tier Ger there is an issue of improving services for about 50 households who live in 8th and 9th streets of the Zuun Bayan Tsagaan area.The per capita cost of upgrading and rehabilitation is estimated to be about Tg336,742.6 (about $230). Current ger residents will a benefit from the improved and reliable supply of electricity, and so the consumption level is likely to rise. Recently, the Project Steering Committee of ESP decided to rehabilitate 38 transformer sub-stations in Songino Khairkhan district, at a total cost of around Tg545.5 million ($390,000). It is expected that non-rehabilitated khesegs of the 8th Khoroo will be included in this work. Fringe Ger (Sharhad), 9th Khoroo, Bayanzurkh District Of the eight khesegs in this khoroo, upgrades under the ESP werebeen implemented in six khesegs in 2005–2006, including installation of XLPE cables and electricity meters together with meter boxes. The cost of connections for households with- TABLE 8.4. Cost of Service Improvements out electricity will be around Tg712,500– in 8th Khoroo for 50 Households Tg956,783 ($500–$670), depending on the COST (THOUSANDS, distance from existing substations, topography, # COST ITEMS MNT) etc. The nearby UBEDN network does not have enough capacity, so there is a need to build 1 0.4 kV overhead lines, 12,014.6 0.5 km a new transformer substation with capacity 160 2 Meters, boxes and other 4,822.5 kVA and an associated distribution network of 10 kV and 0.4 kV overhead lines. Total 16,837.1 74 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR TABLE 8.5. Cost of New Connections in 9th Service improvements for about 48 households Khoroo for 60 Households in 7th Kheseg of this khoroo would cost about COST (THOUSANDS, Tg945,083 ($660) per household, including a # COST ITEMS MNT) transformer substation of 100 kVa, overhead 1 Transformer substation, 18,129.5 lines of 10 kV and 0.4 kV, meters, and associ- 160 kVa ated works. 2 10 kV overhead lines, 10,000.1 0.5 km 3 0.4 kV overhead lines, 21,127.6 CONCLUDING REMARKS 1.5 km 4 Meters, boxes and other 8,149.8 There are several major issues with electricity Total 57,407.1 supply in ger areas, including voltage drops due to capacity shortages, insufficient capacity of transformers and substations, as well as house- TABLE 8.6. Cost of Service Improvements holds without electricity. Electricity is provided in 9th Khoroo for 48 Households to most households of the three ger areas under COST review, except about 120 newly settled fami- # COST ITEMS (THOUSANDS, MNT) lies. Ger area residents who have connections 1 Transformer substation, 15,515.0 on average use about 100 kWh–110 kWh of 100 kVa electricity, for which they pay about 4 per- 2 10 kV overhead lines, 8,187.8 cent–5 percent of their monthly income, which 0.6 km is within the internationally recognized afford- 3 0.4 kV overhead lines, 16,033.1 ability limit. Service improvements for existing 0.8 km consumers, such as capacity improvements at 4 Meters, boxes and other 5,628.3 nearby substations and improved metering and Total 45,364.3 wiring would cost on average Tg280,000–Tg 560,000 ($200–$400) per household. The cost of new connections for households in the selected ger areas varies between Tg840,000 and Tg1,120,000 ($600–800) per connection depending on (among many variables) topography and distance from and available capacity of nearby transformers and substations of the distribution network. Households currently without connections would not be able to pay for new connections on their own. Even though the Energy Regulatory Authority (ERA) has introduced lifeline tariffs, very few households have subscribed for these tariffs due to the lack of registration (because they are newly migrated), or outstanding payables for previously used electricity. The lack of proper planning and enforcement among dis- trict and municipal authorities make it more difficult to provide new connections. 9 Education and Health Services S ocial services in education and health are generally in poor condition in ger areas, though are probably better in terms of access and availability than most other key infrastructure sectors. Similar to other transition economies, the government is traditionally responsible for providing basic health and education services, which are heavily subsidized. In light of a series of policy reforms in recent years, the private sector has played an increasing role in these sectors and the share of private out-of-pocket costs has steadily increased. However, the private cost of schooling and hospitals remains generally low compared with many other transition economies. Despite inefficiencies and structural issues embedded within these sectors, key indicators on edu- cational attainment and health suggest a gradual but steady improvement toward meeting the Mil- lennium Development Goal (MDG) targets. Improving service delivery in education and health would require addressing a set of related poli- cies, institutional structures and systems of financial incentives at the national level, which is beyond the scope of this report. This chapter describes some of the relevant sector background; diagnoses key issues in education and health sectors that were highlighted during the focus group discus- sion in three gers; and summarizes options for service improvement and the financial implications. CURRENT STATUS OF EDUCATION AND HEALTH SERVICE PROVISION IN GER AREAS Education. Overall, Mongolia ranks high among countries in the East Asia region in terms of enrollment rates and the percentage of students completing basic education47. Nevertheless, FIGURE 9.7. Highest Education Level Obtained in Ger and enrollment figures mask important dispari- Apartment Areas (%) ties in completion rates by geographic area and wealth. Educational attainment in ger areas is 80.0% lower than that in apartment areas, showing a clear correlation between income and educa- 60.0% tional levels. In ger areas, about 37 percent of 40.0% residents have completed secondary school, 14 20.0% percent of children recently have finished pri- 0.0% mary school and another 14.5 percent have None Secondary or Higher than dropped out of secondary school. In apartment lower secondary areas, by contrast, almost half of students have Ger Area Apartment area advanced past secondary school to vocational training or college education. Source: HIES, 2007 76 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR The share of government spending devoted to education remains relatively high. Since 1997, when the share of education spending reached a low of 16 percent of the total budget, education’s share of the budget has increased48, reaching 20 percent of total public expenditures in 2005. This is in line with the Government’s policy to maintain education’s share of total government budget at about 20 percent.This level of spending is relatively high compared to most low-income countries49.Total spending on education as a percentage of total public expenditure was 19.1 in 2004 compared with an average of 16.2 percent for other developing countries in the East Asia and the Pacific Region50. At the national level, primary and secondary education is given a high priority by the government with the view of achieving the MDG of Universal Primary Education. Strengthening basic educa- tion is listed as a priority area in the Government’s National Development Strategy Plan51.The bulk of funding for pre-tertiary education continues to come from the state budget. Since 1991, non- state participation in education has increased and schools have been more active in raising addi- tional sources of revenue. Nevertheless, state financing is by far the largest source of funding for the education sector. Funding via the state budget remains predominant; in 2006, it was an estimated at 98 percent. Primary and secondary education receive more than 50 percent of the overall educa- tion budget and account for 70 percent of all students in the education system52. The government also runs education aid programs, including tuition subsidies for the poor and the provision of free textbooks and school supplies. The evaluation of these programs indicates that while there is some leakage to the non-poor and room for improvement to expand coverage of the poor, the poor do greatly benefit and are the largest share of beneficiaries. The state financing and aid programs in primary and secondary education translate into relatively low-to-moderate household spending on education. According to the Household Income Expen- diture Survey (HIES) analysis, in ger areas nearly 70 percent of primary and secondary students TABLE 9.1. Average Annual Household do not pay any tuition, compared to less than 45 Expenditure on Primary and Secondary percent in apartment areas. Among those who Education (Tg) do pay for tuition in ger areas for primary and AREA GER AREA APARTMENT secondary school, the average annual tuition Rent 169 10,908 is Tg50,000 ($107) per student, compared to Tg350,000 ($250) per student in apartment Books and Supply 34,893 44,078 areas. Other than tuition, books and school sup- Uniforms 11,306 14,957 plies, food and transport are the major expenses Transport 27,178 34,228 for primary and secondary education. Food 29,207 55,611 Focus group discussions in the three ger areas Others 12,344 22,335 indicate that the distance and time spent on Total 115,098 182,117 commuting to school does not seem to be much % of Average income 7.2 7.0 of an issue, although it was often highlighted % of students enrolled 89 77 that students from newly settled, more distant in public school gers would have to walk more than one hour to % of HH who pay 30 44 get to school. About 60 percent–65 percent of tuition primary and secondary students walk to school; Source: HIES 2008 the rest rely on public transportation or fam- CHAPTER 9 EDUCATION AND HEALTH SERVICES 77 ily vehicles. On average, primary and second- TABLE 9.2. Secondary School in Three Ger Areas ary students are reported to spend about 25–35 CITY CENTER MID-TIER GER FRINGE GER minutes getting to school. This is similar to the GER (NARAN) (BAYANKHOSHUU) (SHARHAD) result of the HIES survey, which showed aver- age travel times of about 18 minutes for apart- Number of kindergarten 2 1 1 ment areas and 22 minutes for ger areas. Number of teachers at 21 18 18 kindergarten However, road safety and school transportation Enrollment at kindergarten 576 490 190 are often cited as main areas for improvement # of Secondary School 2 1 1 in schooling in ger areas. There are virtually no Total number of students 2781 500 4430 road safety measures in front of or near schools, in this khoroo enrolled in secondary school and this increases the incidence of traffic acci- dents.With almost half of the ger students taking Total number of students 4580 3200 1196 attending school(s) some kind of vehicle to go to school, unreliable and infrequent transportation services can add Pupil-teacher ratio (PTR) N/A 64 35 difficulties. Number of class shift per day 3 3 to 4 4 Average travel time 25 35 36 Considering the relatively low drop-out rates (minutes) and acceptable educational attainment (by Average travel distance 3.2 2.5 1.8 international standards) and the relative afford- Source: Based on survey with kheseg leaders during focus group discussion ability per household, the main challenge for primary and secondary schools in ger areas is to maintain or increase their capacity in response to urban migration and growth. The expansion of ger areas has put significant pressure on existing school facilities. In the three ger areas under review, there are one or two secondary schools with 1,200 to 3,200 students. The pupil-teacher ratio varies from 35:1 to 64:1, compared with 34:1 in Ulaanbaatar on average. In the Mid-tier Ger, the pupil-teacher ratio is far higher than Ulaanbaatar’s average mainly because it has to absorb about 2,700 students from neighboring khoroos that do not have a secondary school. Similarly, the City Center Ger (Naran) secondary schools accommodate an additional 1,800 students from neighboring khoroos. In the Fringe Ger, existing school facilities can only serve 30 percent of the total students in the khoroo.The rest attend schools in neighboring khoroos. All schools run three to four shifts per day to accommodate the growing number of stu- dents, appreciably limiting the length of school days for students. Focus group interviews with khoroo and kheseg leaders show that all schools in ger areas suffer from poor maintenance and a lack of adequate facilities. In case of the Mid-tier Ger, the kindergarten is shared with three neighboring khoroos (No. 17, 19 and 24) and is far too small. Many of these kin- dergartens are donor-funded and rely on external funding for operation and maintenance. If for some reason the budget support or external funding should fall short, most of these facilities will be closed. The absence of recreational centers for after-school activities is another problem facing ger resi- dents. Schools operate on three or four shifts per day, making after-school activities at school dif- ficult, if not impossible. In all three ger areas, there is no recreational center at the khoroo level. Lack of supervised leisure activities is often cited as a main factor contributing to juvenile crime. When school children have no constructive way to spend their spare time, they end up wandering in the 78 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR streets and getting into trouble. In fact, crime in ger areas is emerging as a social issue in Ulaanbaatar; this is a common social phenomenon in economies experiencing drastic social and demographic changes, along with rising income inequality. International donors have financed a number of youth centers across ger areas, providing various programs free of charge to children from disadvan- taged backgrounds. However, the maintenance of the facilities and programs that would continue to attract youth is the main challenge. This would require a small but steady and reliable budget allocation from district governments, which are often strapped for cash. Health Services: Health indicators in Mongolia fare well compared to countries at similar levels of development, reflecting the traditional role of the government as the main provider of health ser- vices. Infant and child mortality is low and has been declining steadily. The infant and under-five mortality rates were 35 and 43 per 1,000 in 2007, respectively,53 and mortality from communicable diseases has also decreased notably, especially for TB and other diseases that can be prevented with immunization programs54. While infant and child mortality seem to be declining, the adult mortal- ity rate is reported to be rising because of lifestyle-related diseases and non-communicable condi- tions such as heart attack, stroke, cancer, and diabetes. The Social Health Insurance introduced in 1994 provides compulsory coverage to people in Mon- golia. Revenues are based on payroll contributions by individuals in the formal labor market and a flat rate contribution of Tg500 ($0.36) by individuals in the informal sector labor market. In addition, full government subsidies apply for vulnerable groups such as the unemployed, children under 16, pensioners, and parents with children under two years old. According to the HIES sur- vey, almost 90 percent of ger residents have health insurance and slightly less than 95 percent of apartment residents have insurance. Health care is mainly financed from the government budget. Government expenditures accounted for approximately 63 percent of total health expenditures in 2003. From an international perspective, government spending on health as a share of GPD is high (6.9 percent), and private out-of-pocket expenses are considered low compared with other transi- tion economies. The government reform in the mid-1990s in the health sector shifted the emphasis of the system from hospitals to a primary health care (PHC) system with support from donors, including the Asian Development Bank and the UN agencies55. In line with the government’s decentralization policy, responsibility for the health care system was also decentralized to the local governments, who are now mainly responsible for the delivery of health services. Policy making, strategic plan- ning and evaluation remain as responsibilities of the Ministry of Health (MoH). In urban areas, PHC services are delivered by family group practices, consisting of community nurses who refer emergency patients to district health centers. Specialized care is delivered by urban district general hospitals, which cover all major clinical specialties and typically have capacities of 200–300 beds for delivering inpatient services.56 There are also state clinical hospitals and special- ized health centers, mainly located in the city area of Ulaanbaatar. One key issue in the health sector is the inefficient allocation of resources between curative hospi- tal services and preventive services. The level of expenditures for hospital care is high—the hospital sub-sector accounts for about two thirds of the health budget—compared with the level of spend- ing on public health and primary care.57 The above-mentioned policy change that emphasizes the CHAPTER 9 EDUCATION AND HEALTH SERVICES 79 PHC system and decentralization of responsi- TABLE 9.3. Primary Health Providers in Three Ger Areas bilities of health care system was not accompa- CITY CENTER MID-TIER GER FRINGE GER nied by the sufficient redirection of resources (NARAN) (BAYANKHOSHUU) (SHARHAD) to PHCs and local governments. Consequently, Population 12,245 7,979 11,130 the roles and responsibilities among the MoH and local governments remain unclear. It is Number of Clinics in 2 1 1 khoroo often noted that Mongolia has far too many Number of doctors and 6–7 6–7 11 hospitals: 23.4 hospitals per 100,000 people, nurses in the clinic more than twice the average in the European Number of patients N/A N/A 240 Union and other transition economies.58 These received per day hospitals, however, are concentrated in urban Source: Based on survey with kheseg leaders during focus group discussion areas, and PHCs in remote areas are left with- out adequate facilities and resources. Aside from an oversupply of hospital services, the provision of health services in Ulaanbaatar is inequitable and favors the non-poor areas of the city. Despite laws, regulations, and policies that underscore the importance of PHC, financial support for public health has been insufficient. PHC is known to receive only around 5.5 percent of total health funding; the hospital sector, by contrast, continues to account for about two thirds of the state health budget. The lack of health care quality and investment in infrastructure, facilities, and equipment are also well illustrated in the three ger areas. PHCs in the ger areas face problems in keeping up with the demand placed on the services. Each khoroo has one or two PHCs and the ratio of patients to doc- tors is high compared to a similar PHC in apartment areas. Due to limited budget allocations, the facilities in the areas are reported to have outdated equipment and are under-staffed, with less than ten staff per facility, including part-time workers.The health clinics in remote ger areas, in particular, tend to be over-crowded given the lack of alternatives that residents have for primary health pro- viders. In contrast, in the central ger area, the health clinic is usually under-utilized as the residents have alternative choices of primary and secondary hospitals as well as other primary health clinics in the city center. The focus group discussion highlighted dissatisfaction with the quality and accessibility of pri- mary health services, as well as a lack of trust in primary care providers. Most households would prefer to go to secondary or tertiary level hospitals in the city for better and more reliable services but are often discouraged from doing so because of the much higher cost that individuals have to pay themselves. While there is no hard data to support this in ger areas, community representatives expressed a concern that an increasing number of poor households do not have access to health services because they lack civil registration and are therefore not officially entitled to free health and education services or other social welfare benefits, nor are they eligible to register for the social health insurance scheme. OPTIONS FOR SERVICE IMPROVEMENT AND COST IMPLICATION Improving service delivery in education and health services in ger areas would require a set of pol- icy reforms which revisit the underlying institutional, financing, and incentive systems in the two 80 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR sectors at the national level. This goes beyond the scope of the present study. Hence, options dis- cussed here will focus on providing facilities and services in the three ger areas. For education, The most urgent problem in ger area schooling is a lack of facilities to absorb the increasing number of students. This can be partly addressed by providing additional primary and sec- ondary schools or expanding the existing ones to ease the burden on existing facilities. Either approach would require not only physical investments in facilities but also adding teachers and other supporting infrastructure such as roads, water supplies and sanitation. An initial assessment suggests costs would be around Tg1,820,000 ($1,300) per capita to pro- vide school facilities and supporting infrastructure operating on a normal single shift.This does not include costs associated with remuneration for school teachers, etc. Similarly, the provi- sion of youth and recreational centers should be considered in the ger areas. Around Tg175,000 ($125) per capita is estimated for the physical investment only. More importantly, maintaining existing facilities and programs, which are critical to ensure the long-term sustainability of the centers, will probably add another 10 percent–15 percent to the capital investment cost every year. In parallel, general improvements in road conditions and connectivity to schools can help improve school access. Increasing the frequency of public/mini buses, which students most fre- quently ride to schools, can be similarly beneficial. Related cost implications are discussed in detail in the Transport Chapter. For health, Expanding or adding primary care providers can be especially important in the remote ger areas where choice of other hospitals is rather limited.This will have to be accompanied by replacing some outdated equipment and ensuring enough staff are in place in order to prevent under- utilization of the facilities. An initial cost estimate for additional primary health care facilities suggests around Tg505,400 ($361) per capita, not including salaries and other variable costs. Some health clinics are often under-utilized because of a shortage of staffing and outdated facilities. This is especially common in the ger areas closer to the city center where people have more liberty to choose alternative primary care providers or secondary or tertiary hospitals. In this case, updating existing facilities and adding competent doctors and nurses should be given a priority. 10 Conclusion T he following policy directions and scenarios have emerged as a result of the above analyses. Smart Growth: It would make economic sense to adopt “smart growth” policies as prin- ciple directions in the long run, i.e. to increase density in the center of the city where appropriate while controlling further expansion at the outskirts of the city. In general, high den- sity development would make it easier to provide better urban services with higher efficiency and lower cost. The public also has the desire to live in high density development: low-rise apartments or collective housing with utility services. Realistically, however, the majority of ger areas will remain in their current conditions because achieving higher density development is very compli- cated, as elaborated below. Conversion of central gers to apartments will take time: Converting center ger areas into apartment complexes has not progressed as fast as the government had envisaged. One reason is that most ger area residents cannot afford the cost of apartments in the city center. The lack of mortgage finance also makes buying large assets (such as apartments) difficult for many people. A third reason is that the absence of a functioning real estate market—including proper methods for determining prices for private land transactions—has impeded the development of new housing. Retrofitting urban services in mid-tier gers is exorbitantly expensive: A majority of ger areas outside of the city center are older establishments. Many residents have lived there for a long time and have invested in their dwellings, a large number of which are detached houses. These residents are rela- tively content with their neighborhoods and would like to see improved urban services for their houses or development of low-rise, small-scale apartment complexes. These areas are not suitable for conversion to large high-rise apartment complexes—at least for the mid-term—mainly because they are not near network infrastructure, except along the major transportation corridors. While a minimum level of urban services have reached most of these areas, upgrading services to the full-fledged level now available in apartment areas would be exorbitantly expensive and almost impossible. The unit costs of services to individual houses are several times higher than for apart- ment units. Instead, improvements in housing—such as conversion to low-rise, smaller collective dwellings, which might make connection to network infrastructure feasible—could be envisaged if residents’ income increases. In the meantime, gradually improving services within the affordabil- ity limit of residents and public financial resources would seem the most practical approach for the majority of ger areas. Room for relocating fringe ger residents: The situation in the more remote fringe areas of the city is slightly different. Gers in these areas are inhabited by recent migrants. Their income level is even 82 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR lower than those of city center residents or the residents of long-established gers. They are farther away from the economic activities of the city and have little access to health and education services. Utility services also are even worse than for residents in established ger areas. Therefore, residents of these fringe gers are very dissatisfied with living conditions and are ready to relocate, if affordable better housing is available elsewhere. But again, affordability is a very serious issue for these resi- dents because of their economic circumstances. IMPLICATIONS FOR PLANNING AND DEVELOPMENT Given the situation above, seven priority areas require attention by the government: 1. Access roads within ger areas: The majority of the residents in ger areas are lower-income and are further disadvantaged by very poor access to markets, work places, education and other services. Modest improvements in the secondary access roads from major corridors to inside the khoroos (including basic drainage and street lighting) would give residents major benefits, including easier access by taxis or mini-buses and reduced dust, storm-water torrents and crime.Therefore, it would make sense to initiate planning for development of access roads within the khoroos. Community- driven initiatives on land re-plotting, if appropriate, would also make it easier to plan roads and provide access for utilities. 2. Better heating systems to improve efficiency and reduce air pollution. Because the development of apart- ment complexes is likely to take a long time and most ger areas will not be connected to central heating systems in the near future, short-term measures are needed to improve air quality in the city. Such measures could include better access to cleaner and more efficient stoves and fuels, as well as programs to increase the energy efficiency of houses. 3. Solid waste management and community infrastructure: Solid waste management is often listed by ger area residents as one of their most serious concerns. The current solid waste collection practices seem to be very inefficient and costly. Other community infrastructure and services, such as path- ways, foot bridges and community youth centers, also would be helpful in meeting day-to-day needs of many ger area communities, given the lack of proper site development and the shortage of schools and extracurricular activities in ger areas. 4. Research on affordable collective housing in mid-tier gers: So far, all apartment developments have been concentrated in the center of the city and been targeted only for higher-income residents. There- fore, the development of apartments has not benefited the majority of ger residents. On the other hand, some residents in the older, established mid-tier ger areas located along major roads seem will- ing to consolidate their individual plots and develop low-rise collective housing; this would provide easier and less costly access to utility services.Therefore, it would make sense to begin reviewing the feasibility of affordable collective housing development along transport corridors and utility supply lines in the established mid-tier areas. 5. Fringe gers: Providing networked utility services in the fringe ger areas is very expensive. Many residents in those areas are very dissatisfied with current living conditions (including the poor qual- ity and availability of public utility services) and might want to find better housing and economic CHAPTER 10 CONCLUSION 83 opportunities elsewhere. For these reasons, a major expansion of networked utilities in the fringe ger areas does not make much economic sense. Instead, services should be provided at the minimum humanitarian level. Since the future of these gers will depend, in part, on the social integration of new migrants, some lessons from social housing in Hong Kong or Singapore might help Mongo- lia develop clearer policies. 6. Utility capacity expansion and reforms: The more residents enjoy a higher standard of living, the higher the required capacity will be for utility services. However, most utility services—water sup- ply, heating and electricity—already have reached capacity limits. As gradual progress is made on housing and utility services, capacity also can be expanded. Because estimated investment require- ments are significant and utility services face considerable financial constraints, reforms of pricing and regulations of utility services will be essential prerequisites. 7. Further research in related sectors: The municipal budgetary resources of UB are quite limited, at around Tg30 billion–Tg60 billion ($21 million–$43 million) per year. Given the slow implementa- tion of pricing reforms, many infrastructure services in UB already receive large implicit subsidies. Furthermore, expansion of key network infrastructure will easily require investments of Tg30 bil- lion–Tg50 billion ($21 million–$36 million) or more. Other problems noted in this report, includ- ing inadequate housing development, the lack of mortgage financing and problems in the banking sector, create additional challenges for the housing sector. Further research on municipal finance and the banking sector, including mortgage financing, might help the government develop clearer policy directions. Endnotes 1 Angel Shlomo et. al., 2005 2 JICA, June 2008 3 JICA, June 2008 4 Population of nine districts where majority of ger areas are located. UB Census 2004 5 Unless otherwise referenced, the data for this sub-chapter was provided by the National Statistical Office’s Household Socioeconomic Survey (HIES). For a detailed description of the analysis methodology of the HIES data in this report, see Annex B. 6 Older than age 16, younger than 60 7 Paid out of the Development Fund, and contingent on there being money in the fund. 8 Child Benefits and Poverty Reduction: Evidence from Mongolia’s Child Money Programme”, UNICEF, 2007. 9 The total sample size of this survey was 440.The survey was carried out in four areas including three ger areas plus a representative apartment area with 110 sample size in each area, and some results, where appropriate, have been weighted and adjusted to reflect the overall dwelling types (apartment, detached houses and gers) in the ger areas. The sampling method was based on a random sampling. Given the small sample size, figures and findings here should be taken only as indicative references. 10 Law on Mongolia Land Fees, Article 3 11 Law on Mongolia Land Fees, 12 GTZ, “Land Management–Fiscal Cadastre in Mongolia”, April 2008 13 Generally speaking, the international benchmark for housing affordability is estimated with Price to Income Ratio (PIR). In most countries, PIR that is considered as affordable generally ranges from three to five. In the case of Mongolia, this ratio is much higher than the internationally accepted affordability ratio, even in the apartment area. 14 COWI Mongolia: exploring Options for Management Contracting-out in Water Supply and Sanitation Services for Ger Areas in Ulaanbaatar: Progress Report A, World Bank/PPIAF, March 2009 15 COWI, March 2009 16 Centre for Social Development, Mongolia The Current Situation of the Public Utility Services of the Ger Areas in Ulaanbaatar, Study Report (2006): 4.2. 17 COWI, March 2009: p. 18. 18 Centre for Social Development, Mongolia (2006): 4.2. 19 COWI, 2009, p. 16. 20 COWI, 2009 21 USUG financial data, management performance data, 2008 22 WB team estimate based on USUG 2008 financial statements for truck department and piped kiosk depart- ment 23 Centre for Social Development, (2006): Table 5.5. 24 USUG 2009, World Bank UISP2 Project 25 Present Serviceability Rating (PSR) is an assessment of pavement serviceability based on observation. This subjective scale ranges from 5 (excellent) to 0 (essentially impassable). 26 “The Study on City Master Plan and Urban Development Program of Ulaanbaatar City,” Japan Interna- tional Cooperation Agency, July 2008. 86 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR 27 The Sharhad bus station, which large buses can access, is located in Sharhad Ger, 9th Khoroo, Bayanzurkh District. 28 Throughout this chapter, figures used for the three Khoroos are approximations based on relatively small sample sizes. 29 Traffic counts, which were taken over a two-day period in April 2009, were observed at: Bayangol District, 11th Khoroo—Tasganii Ovoo Intersection; Songino Khairkhan District, 8th Khoroo—Zuunsalaa and Bayank- hoshuu Streets; and Bayanzurkh District, 9th Khoroo—National Health Center Intersection. 30 “Databook on Socio-Economic and Environmental Conditions of Ulaanbaatar City,” Japan International Cooperation Agency, May 2008. 31 Residents informed the team that the highest number of crimes occurred in areas without lighting. 32 “Databook on Socio-Economic and Environmental Conditions of Ulaanbaatar City,” Japan International Cooperation Agency, May 2008. 33 IBID. 34 Estimated costs include all materials, labor and equipment. 35 In Mongolia, the cost to construct a seven meter carriageway with 1.5 meter shoulders using hot mix pave- ment is about $275,000 per km. 36 Municipal guidelines call for a cement sub-base of 20 cm and two separate applications of asphalt binder material and mineral aggregate on a prepared surface of no more than 1.5 cm each (3 cm total). 37 This price excludes the cost of simple box culverts (10 meters), which range in cost from $1,500 to $2,000 each. 38 Street lights would be placed every 50 meters. 39 It is assumed that one-meter wide sidewalks and street lighting will be provided on at least one side of all improved roads. 40 GDP $3 billion / 50,000 km of network (international, state and local roads). 41 Using a rough estimate of 27 km of roads per Khoroo, one street light every 50 meters and $1,500 per Kho- roo per month to maintain street lighting equals $2.75 per street light per month. 42 Note: Fuel cost estimates has been done using wholesale prices. 1 ton of coal cost is Tg 65,000 per ton (wholesale) and Tg 130,000 per ton (retail). 1 ton of firewood is Tg 90,000 per ton (wholesale) and Tg 200,000 per ton (retail). 43 Note: Fuel cost estimates has been done using wholesale prices. 1 ton of coal cost is Tg 65,000 per ton (wholesale) and Tg 130,000 per ton (retail). 1 ton of firewood is Tg 90,000 per ton (wholesale) and Tg 200,000 per ton (retail). 44 Energy Efficient and Cleaner Heating in Poor, Peri-urban Areas of Ulaanbaatar, Summary Report on Activities, the World Bank, 2009 45 All tariffs quoted in this annex are exclusive of 10% value added tax (VAT) charged to electricity custom- ers.VAT is applied on the base cost. 46 HIES Survey 47 Mongolia, Consolidating the Gains, Managing Booms and Busts, and Moving to Better Service Delivery, A Public Expenditure and Financial Management Review,World Bank, 2008.The completion rate of basic edu- cation in Mongolia is 77%, which compares with 56% in Vietnam, 43% in Indonesia and 38% in Cambodia. 48 Ibid 49 Ibid 50 ibid 51 Mongolia Education Sector Reform, TA report, Asian Development Bank, 2008 52 Ibid 53 World Development Indicator, 2007 54 The Ministry of Health, National Center for Health Development, Health Indicators of 2004 55 Evaluation on the Health and Social Protection in Mongolia, Asian Development Bank, 2008 56 Ibid 57 Mongolia, Consolidating the Gains, Managing Booms and Busts, and Moving to Better Service Delivery, A Public Expenditure and Financial Management Review, World Bank, 2008. 58 Evaluation on the Health and Social Protection in Mongolia, Asian Development Bank, 2008 ANNEXES ANNEXES 89 ANNEX A List of People Met State Great Hural (Parliament) Mr. Batabayar Nyamjav Member of the State Great Khural; Cabinet Member, Ministry of Construction and Urban Development Dr. A. Bakey Member of the State Great Hural, Chair of the Standing Committee on Environment, Food and Agriculture Mr. Namjildorj Enkhabayar Senior Advisor, Prime Minister’s Office Mr. Tsogy Batbayar Member of the State Great Hural Ministry of Finance Mr. Khurenbaatar International Cooperation Department Mr. Davaasuren Angar Director, Debt Management Division, Treasury Department Mr. Khaltarpurev Mart Director-General, Procurement Policy and Coordination Department, MOF Ministry of Roads, Transport, Construction, and Development Mr. Jadamba Bat-Erdene State Secretary Mr. Zundui Tuul Officer, Construction and Public Utility Policy and Coordination Department, MCUD Mr. Gombo Myagmar Director of Construction, Housing and Public Utilities Policy and Coordination Department Mr. Badrakh Batbold Chairman, Dr. of Engineering, Ph. D, Department of Urban Development Mr. D. Bailikhuu Adviser, State Property Committee Mr. Sorogjoo Ochirbat Director, Doctor (Ph.D), Department of Urban Development Policy and Coordination Dr. Shairai Batsukh Director General, Administration of Land Affairs, Geodesy and Cartography, Regulatory Agency of the Government of Mongolia Mr. Jadambaa Davaabaatar Deputy Head, Administration of Land Affairs, Geodesy and Cartography, Regulatory Agency of the Government of Mongolia 90 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR Statistical Offices Mr. Oyunchimeg Head of Department, National Statistical Office Mr. Bayanchimeg Chair of Office, UB City Statistical Office Mr. Batbaya Senior specialist, UB City Statistical Office Municipal Government of Ulaanbaatar Mr. Tudev Bilegt Capital City Governor and Mayor Ms. Tsogzolmaa Tsedenbal Vice Mayor Mr. Munkhbaatar, Begzjav Vice Mayor Mr. Choimpog Bat General Manager of Ulaanbaatar City and Chief of the Mayor’s Office Mr. B. Bayanjargal Head, Urban Development Policy Department, Office of the Capital City Governor Ms. A. Zulgerel Urban Development Policy and Planning Department, City Government of Ulaanbaatar Mayor’s Office Mr. Tserenbyambaa Batkhuu Head, International Relations and Cooperation Department Mr. Gantulga Jigjidsuren Specialist, International Relations and Cooperation Department Mr. Garamyn Manaljav Head of the Property Privatization Department, Secretary of the Property Privatization Commission of the Capital City Mr. Delgerbayar Director, Management Department, Environmental Pollution, and Waste Mr. Natsagdorj UB General Architect Amgalan Governor, Bayangol District Mr. Natsagdorj Governor, 11th Khoroo, Bayangol District Ms. Buyankhuu Governor, 8th Khoroo, Songino Khairkhan District B. Mukhtseteseg Governor, 7th Khoroo, Songino Khairkhan Ms. Altantsetseg Governor, 9th Khoroo, Bayanzurkh District D. Tsogbadrakh NGO/JSDF coordinator Ms. Enkhtuya Social Worker, 9th Khoroo, Bayanzurkh District H. Tuvaanolory Community leader, Chingeltei District World Bank Project Implementing Units (PIUs) Second Ulaanbaatar Services Improvement Project (USIP2) Ms. Badamkhorloo, Director Lkhamsuren Ms. Tsendsuren, Dorjgotov Manager and Engineer ANNEXES 91 Mr. Enkhtuvshin Oidov Water Supply Engineer Mr. Batbuyant, Jamsranjav Accountant Ms. Purevsuren,Yura Translator Ms. Bayartuya, Gursanjid Communication Coordinator Mr. Nyamdorj, Damdin Land Management Specialist, Engineer Ms. Enkhbayar, Miyegombo Procurement Specialist Second Sustainable Livelihoods Project (SLP2) Ms. Khashtsetseg Project Director Water Supply and Sewage Authority Co. of Ulaanbaatar City (USUG) Mr. Purevjav, Bat-Ochir Director Mr. Baatarkhuyag, Buyantogtokh Deputy Director Ms.Yanjindulam, Zagdaa PIU Manager Ms. Lkhamaasuren, Ligdev Head, Financial Department Ms. Altantsetseg Zandanbol Economist Ms. Oyun, Bayanzul PIU Engineer Mr. Folkert de Jager Project Manager,Vitens-Evides International Solid Waste Companies (Tuk) Mr. Togtsaikhan Executive Director, Bayanzurkh Tuk Ms. Enkhjargal Executive Director, Songino Khairkhan Tuk Mr. Batsaikhan Executive Director, Bayangol Tuk Ulaanbaatar Electricity Distribution Network Company Customer Service Centers in Bayangol, Songinokhairkhan and Bayanzurkh Distribution Centers (Western and Eastern) Asian Development Bank (ADB) Mr. Shane Rosenthal Senior Portfolio Management Specialist GTZ Ruth Erlbeck Program Director, Integrated Urban Development, Construction Sector, and VET Promotion Program, GTZ Ralph Trosse Technical Director, Integrated Urban Development, Construction Sector, and VET Promotion Program, GTZ Sugarrangchaa Tserendash Senior Program Officer, Integrated Urban Development, Construction Sector, and VET Promotion Program, GTZ 92 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR KfW Dr. Battushig Officer Manager Embassy of Japan Mr. Takahiro Ishizaki First Secretary Japan International Cooperation Agency (JICA) Mr.Yujio Ishida Resident Representative, UB Ms. Ryuko Hirano Project Formulation Advisor, UB Consulting Firms Carsten Glenting Head of Department, Economics and Management, COWI A/S Michael Davidsen Representative, COWI A/S Leo F. Jensen Senior Water Supply Engineer, COWI A/S Kimiko Hibri Pedersen Consultant, COWI A/S Bumho Lee Hankuk Engineering Consultants Co. Tommy Zhang Project Manager/Team Leader, Easen International Kun Chen Team Coordinator, Easen International ANNEXES 93 ANNEX Bon Analysis of 2008 Technical Note Household Socioeconomic Survey T he detailed data referenced as “HIES” are from the Household Socio-Economic Sur- vey for 2008, conducted by the National Statistical Office of Mongolia. A total of 11,172 households were surveyed, of which 3,571 households are located in Ulaan- baatar. The data set provides information on general socio-economic characteristics and detailed income and expenditures, including monthly bills for key infrastructure costs. The survey also entails basic access data for electricity, water supply, heating and consumption. However, it does not include information on quality and reliability of most services, volume of consump- tion, spatial coordinates or sub-district (khoroo) identification, nor in-depth information for heat- ing, sanitation, and transportation access. In those areas where data was not available in the survey, the chapter was supplemented with data as referenced in footnotes. Since survey data does not specify individual sub-districts, or khoroos, it was not possible to deter- mine the location of individual households either in ger areas or the apartment-dominated city center. The survey does specify geographic clusters of ca. 10 households1, however. To establish a sub-sample of households located in ger areas, and to compare that to an urban sub-sample, the dwelling type in each cluster was further analyzed. Because the clusters were not selected based on the type of housing, there are clusters that overlap ger areas and urban apartment areas; in UB, 16 percent of the clusters contain this mix. There was no way of identifying these mixed areas as ger areas or apartment areas, the mixed areas were excluded from the report’s sub-sample; as a result, ger areas as defined by this report contain no apartments, and apartment areas contain no gers or detached houses. TABLE B.1. A Sample Size Summary for the 2008 Household Socio-Economic Survey Total Sample in Ulaanbaatar 3,571 - Total Households (HHs) living in apartment areas 1,392 - HHs living in gers 819 1 Each cluster - HHs living in detached houses 1,304 contains 7 to 10 households, though - HHs living in others 20 95 percent of Total Sub-sample for analysis (% of total UB HHs) 2,978 (83%) clusters contained 10 households. Total HHs surveyed in ger areas 1,808 There are 360 clusters in the - HHs living in gers (% of total UB HHs) 693 (20%) UB area. - HHs living in detached houses (% of total UB HHs) 1,103 (31%) HHs living in apartments (% of total UB HHs) 1,170 (33%) 94 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR C ANNEXGer Planning Illustrations City Center FIGURE C.1. Planning Illustrations Including the City Center Ger (Naran), 11th Khoroo, Bayangol District (West) ANNEXES 95 FIGURE C.2. Planning Illustrations Including the City Center Ger (Naran), 11th Khoroo, Bayangol District (East) 96 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR D ANNEXDistrict Statistics Ulaanbaatar DWELLING TYPE UNEMPLOYMENT (%) MODERN HOUSES) IN HOUSING DISTRICTS APARTMENTS (AND TOTAL AREA (km2 ) TOTAL FAMILIES HOUSES IN GER POPULATION NUMBER OF DISTRICTS KHOROOS GERS # DISTRICTS 1 Khan-Uul 484.7 94,670 14 23,214 62.4 31,373 40,711 21,586 2 Baganuur 620.2 25,969 4 6,525 55.3 10,424 4,478 10,701 3 Bayanzurkh 1244.1 221,565 24 51,857 51.7 74,258 75,158 70,347 4 Nalaikh 687.6 28,152 6 7,450 59.1 7,655 13,194 7,127 5 Bayangol 29.5 165,159 20 35,463 53.4 123,778 20,429 20,191 6 Sukhbaatar 208.4 129,486 18 30,137 54.3 58,695 40,338 29,709 7 Chingeltei 89.3 136,014 19 29,270 64 28,827 77,822 28,771 8 Bagahangai 140 3,864 2 876 55 2,062 751 1,034 9 Songinokhairkhan 1200.6 220,295 25 49,951 57.7 60,323 86,347 73,101 Ulaanbaatar 4704.4 1,025,174 132 234,743 56.99 397,395 359,228 26,2567 Note: Unemployment rate = proportion of the number of unemployed persons, registered in the Department of Labour and Social Welfare to the economically active population. ANNEXES 97 E ANNEXand Distances of Water Distribution Kiosks FIGURE E.1. Distance to Nearby Kiosks1 500 465 455 453 450 405 400 371 351 350 290 298 300 268 277 263 246 257 250 200 150 100 50 0 ai 9 10 11 a 17 18 7 8 9 10 11 h rja Ek st h Kh Kh Kh /K h h h h Kh Kh lia da ri- /K /K i/K i/K u/ u/ u/ an U Da u/ u/ ba an an sh sh sh lte lte ar sh sh m ho ho ho ar ar ge ge N ho ho Da N N nk nk nk in in nk nk Ch Ch ya ya ya ya ya Ba Ba Ba Ba Ba Average distance to nearest water point Est. Average 1 Center for Social Development, 2006 98 TABLE E.1. Distribution of Kiosks in Ger Areas of UB TOTAL TOTAL NUMBER TRUCK SUPPLIED PIPE SUPPLIED PRIVATE RED CROSS DISTRICT POPULATION GER AREA OF KIOSKS USUG KIOSKS USUG KIOSKS KIOSKS KIOSKS SPRINGS Khan Uul 59,088 53 10 37 3 3 12,611 Nisekh 2 16 23,322 Yarmaq 1 18 1 1,909 Blokombinat 3 1 116 Devshi SAA 1 1 3,552 Taini 2 3,006 Tuul Tosgon 1 2 1 Sonsgolon 1 Bayanzurkh 137,431 152 84 22 34 7 5 9,076 Amagalan 8 1 12 5,185 Attan-ulgil 9 1 1 9,576 Dar-ekn 17 5 3 2 30,391 Shar Khad 8 17 1 1 1 5,493 Tsaiz 9 1 15,785 Ulastal 13 1 10 1 1 2,804 Knonkhor 5 3 1 6,389 Ulaan-Khuaran 7 6,884 Tsagaan-Khuaran 4 7,840 Naran-tuul 4 1 2 6,600 Kino-Ulidver 2 Bayangol 40,688 44 35 6 3 6,830 Gandan 6 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR 11,526 Naran 15 10,274 Shine-Gemtel 9 2 10,547 1-r horpoloin ar 8 1 Sukhbaatar 65,530 46 39 7 17,236 Dambadarjaa 9 2 3 9,290 Belkhi 5 4 4,052 Salkhit 3 1 TOTAL TOTAL NUMBER TRUCK SUPPLIED PIPE SUPPLIED PRIVATE RED CROSS DISTRICT POPULATION GER AREA OF KIOSKS USUG KIOSKS USUG KIOSKS KIOSKS KIOSKS SPRINGS 1,679 Doloon Buudai 8 13,156 Guchinkhoyor 7 7,725 Nogoonnuur 3 3 Chingeltel 103,572 123 44 66 11 2 0 23,783 Chingeltel 23 1 4 25,327 Denjiln Myanga 4 22 2 2 39,152 Khallaast 8 43 3 1,083 Zuragt 9 1 Songino 149,294 143 91 21 26 3 2 Khairkhan 53,149 Bayanhoshuu 56 1 14 1 44,283 Tolgoit 23 23 6 2,745 Zuunsalaa 3 4 635 Zeel 2 2 1 7,243 Khaniln material 5 Total 555,603 561 297 161 84 14 5 ANNEXES 99 100 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR ANNEX F Pilot Project Plan of Water Supply in Dambadarjaa ANNEXES 101 G ANNEXDetailed Information Solid Waste PROPOSED COLLECTION/TRANSPORTATION EQUIPMENT TO IMPROVE WASTE COLLECTION SERVICE CURRENT PRESS PACK TRUCK HANDCART Analysis of costs spent to improve waste collection equipment: The analysis of costs to improve waste collection equipment is based on the price of equipment currently used in Korea. Price of equipment [$ 1 = 1,427.6Tugrug(Tg.) (Exchange Rate as of 20 April 2009)] 1. Press Pack Truck (5.0ton, 8.0 m3): 54,288 $/EA (77,502,085Tg/EA) 3 2. Container Box (2.5ton, 5.0 m ): 2,459 $/EA (3,510,492Tg/EA) 3. Handcart: 522 $/EA (744,650Tg/EA) Analysis of the operational cost for waste management personnel: For the analysis of the operational cost for waste management personnel, the labor cost is based on the wage surveyed in Mongolia. Standard of labor cost [$ 1 = 1,427.6Tugrug(Tg.) (Exchange Rate as of 20 April 2009)] 1. City Center Ger (Naran): Driver 3.2 $/capita.Race (4,500Tg./capita.Race) Assistant Worker 2.8 $/capita.Race (4,000Tg./capita.Race) Sanitary Worker 84 $/month (120,000Tg./month) 2. Mid-tier Ger (Bayankhoshuu): Driver, Assistant Worker 2.8 $/capita.Race (4,000Tg./capita.Race) 3. Fringe Ger (Sharhad): Driver, Assistant Worker 4.9 $/capita.Race (7,000Tg./capita.Race) Analysis of the operational cost to maintain waste collection vehicle: The standard of operational cost to maintain a waste collection vehicle is based on the price index surveyed in Mongolia. 102 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR Standard of operation cost [$ 1 = 1,427.6 Tugrug(Tg.) (Exchange Rate as of 20 April 2009)] 1. Oil charge: diesel in 0.95 $/l (1,350 Tg/L) 2. Capacity of collection/transportation vehicle: Press Pack Truck (5ton) 3. Average travel speed of collection/transportation vehicle: 50 /hr 4. Standard to apply distance (in 1 round trip) - Case 1, 2: distance to Landfill * Distance of each Ger: City Center Ger (Naran): 30km; Mid-tier Ger (Bayankhoshuu): 18km ; Fringe (Sharhad): 60km - Case 3: distance to landfill + travel distance of vehicle in the area * Collection distance of vehicle in the area : interval between household is assumed to be 10m. City Center: 30km; Mid-tier: 17km; Fringe: 25km * Distance of each Ger: City Center: 60km; Mid-tier: 35km; Fringe: 85km 5. Standard to apply times of transportation: waste to be transported in each month (ton/month) / transportation quantity per trip (5ton/trip) 6. Average fuel efficiency of collection/transportation vehicle: 10km/l Detailed Analysis of Annual Operational Costs for Waste Management Personnel CITY CENTER MID-TIER FRINGE ITEM UNIT GER GER GER Case Sanitary Req person person — 6 9 1 Worker Unit Cost $/month — 84 84 Cost $/year — 6,048 9,072 Driver Req person person — 1 1 Unit Cost $/month — 134 328 Cost $/year — 1,608 3,936 Assistant Req person person — 2 2 Worker Unit Cost $/month — 134 328 Cost $/year — 3,216 7,872 Total Cost $/year 10,872 20,880 Case Driver Req person person — 1 2 2 Unit Cost $/month — 134 328 Cost $/year — 1,608 7,872 Assistant Req person person — 2 4 Worker Unit Cost $/month — 134 328 Cost $/year — 3,216 15,744 Total Cost $/year 4,824 23,616 Case Driver Req person person 1 2 3 3 Unit Cost $/month 237 134 328 Cost $/year 2,844 3,216 11,808 Assistant Req person person 2 4 6 Worker Unit Cost $/month 207 134 328 Cost $/year 4,968 6,432 23,616 Total Cost $/year 7,812 7,812 35,424 ANNEXES 103 TABLE H.2. continued H ANNEX Landfill Development Approximate and Operating Costs TABLE H.1. Landfill Outline ITEM UNIT AMOUNT REMARK Landfill period Years 20 Population Population 1,030,000 Waste generation per capita kg/capita.d 0.7 Waste Generation Ton 5,263,300 For 20 years Landfill Capacity m3 7,519,000 Compaction Density 0.7 ton/m3 Landfill Height m 25 Landfill Area m2 300,760 TABLE H.2. Approximately Sanitary Landfill Development Cost UNIT COST COST ITEM SIZE QUANTITY UNIT ($) ($) Sanitary Landfill Development cost 37,379,880 I. Construction Cost 33,981,680 (1) Earth work 8,034,000 - Cutting the Ground soil 2,762,000 m3 1 2,762,000 - Transporting rest soil soil 2,636,000 m3 2 5,272,000 (2) Construction of landfill liners 15,827,680 a) Bottom Part 13,104,000 - Groundwater drainage layer t=30cm 75,600 m3 15 1,134,000 - Geotextile fabric filter 500g/m2 252,000 m2 3 756,000 - Compacted clay liner t=50cm 126,000 m3 30 3,780,000 2 - HDPE Sheet t=2mm 252,000 m 20 5,040,000 - Geotextile fabric filter 1000g/m2 252,000 m2 5 1,260,000 - Leachate drainage layer t=30cm 75,600 m3 15 1,134,000 b) Slant Part 2,723,680 3 - Groundwater drainage layer t=30cm 46,960 m 15 704,400 104 MONGOLIA – ENHANCING POLICIES AND PRACTICES FOR GER AREA DEVELOPMENT IN ULAANBAATAR UNIT COST COST ITEM SIZE QUANTITY UNIT ($) ($) - Bentonite Mat t=6mm 46,960 m2 12 563,520 Continued on next page - HDPE Sheet t=2mm 46,960 m2 20 939,200 2 2 - Geotextile fabric filter 1000g/m 46,960 m 5 234,800 - Leachate drainage layer t=30cm 46,960 m2 6 281,760 (3) Construction of stormwater removal system 1,538,000 - HUME concrete pipe _600mm 1,100 m 300 330,000 - HUME concrete pipe _800mm 660 m 400 264,000 - HUME concrete pipe _1,000mm 440 m 600 264,000 - U type ditch 0.5*0.5 2,200 m 200 440,000 - Collection well 0.9*0.9 120 EA 1,500 180,000 - Stormwater manhole D 1.2m 40 EA 1,500 60,000 (4) Construction of leachate collection system 2,062,000 - Leachate collection main line 400A 1,000 m 480 480,000 - Leachate collection branch line 200A 6,000 m 250 1,500,000 - Leachate extracton pipe 400A 50 m 300 15,000 - Leachate Vertical well 700A,800A 10 EA 700 7,000 - Leachate pumping station 4 EA 15,000 60,000 (5) Construction of groundwater removal system 1,220,000 - Groundwater collection main line 200A 1,000 m 250 250,000 - Groundwater collection branch 100A 6,000 m 150 900,000 line - Groundwater extraction pipe 200A 50 m 200 10,000 - Groundwater Pumping station 4 EA 15,000 60,000 (6) Construction of Leachate treatment facility 4,230,000 - Leachate treatment facility 300 m3 14,000 4,200,000 - Leachate transport line 100 m 300 30,000 (7) Construction of etc facility 1,070,000 - Administration building 1 Lot 400,000 400,000 - Road pavement 2,200 m 200 440,000 - Parking lot pavement 20 a 3,000 60,000 - Washing wheel station 1 Set 30,000 30,000 - Weigh-Bridge 1 Set 20,000 20,000 - Landscape 1 Set 120,000 120,000 II. Consulting Cost (Design & Supervision Cost) 3,398,200 ANNEXES 105 Approximate Sanitary Landfill Operating Cost Per Year UNIT COST COST ITEM QUANTITY UNIT ($/YEAR) ($/YEAR) Sanitary Landfill Operating cost per year 1,134,702 I. Landfill & Cover Annual landfill capacity standard 263,165 m3 3 789,495 II. Fixed cost 72,600 (1) Labor cost 66,000 - Office Manager 1 capita 6,000 6,000 - Clerk 2 capita 5,000 10,000 - Engineer 5 capita 4,000 20,000 - Technical Engineer 10 capita 3,000 30,000 (2) Management cost (10% of labor cost) 6,600 III. Variable cost 272,607 (1) Operating cost for facility & equipment 249,908 a) Operating cost for facility & equipment 80,000 - Backhoe (0.7 m3) 1 EA 15,000 15,000 - Dozer (19ton) 1 EA 35,000 35,000 - Watering Cart (5,500L) 1 EA 15,000 15,000 - Disinfection cart 1 EA 15,000 15,000 b) Maintenance cost (0.5% of facility 1 LOT 169,908 construction cost) (2) Electric charges 1 LOT 20,000 (3) Etc cost (1% of Variable cost) 1 LOT 2,699 THE WORLD BANK 1818 H St. NW Washington, D.C. 20433