Indian financed oil refinery expected to start construction in 2018
Mongolia’s first oil refinery is expected to launch construction in 2018 with funding from India’s one billion USD soft loan. Engineers India Limited (EIL) has developed the detailed project report of the refinery while the Mongolian Oil Refinery will work as the focal agency of the project.
India has provided a line of credit, which includes a 700 million USD loan for the oil refinery and 264 million USD for oil pipelines. The loan was announced during Prime Minister Narendra Modi's visit to Mongolia in 2015. The 20-year loan will have an interest rate of 1.75 percent and principal payments will be waived during the first five years.
The refinery will have a processing capacity of 1.5 million metric tons of oil per year and will annually produce 560,000 tons of gasoline and 670,000 tons of diesel fuel, as well as 107,000 tons of liquefied gas. The refinery could boost Mongolia's gross domestic product by 10 percent. Mongolia currently exports crude oil to China while importing petroleum from Russia.
"The oil refinery project will help Mongolia to eradicate or reduce the dependency. At the same time, we are very much hoping it would help to save a lot of foreign exchange and reallocate it for other necessities," G.Ganbold, the Mongolian Ambassador to India, said.