“US$ 1-billion first ever Oil Refinery in Mongolia will be a milestone in India-Mongolia relationship”

The Mongolian Mining Journal /Apr.2019/

E. Odjargal meets Indian Ambassador M. P. Singh to find out about progress on the oil refinery project being implemented with Indian cooperation, and how the Indian economy keeps growing.

You are new to Mongolia. Can you tell us a little about where you have served earlier in the course of your professional career?
I have been in diplomatic service for 30 years and have served in Vietnam, Thailand, Cuba, Canada, the UAE and the UK and have travelled to 100 plus countries across continents in the course of my Protocol duties.  Immediately before assuming my position here just weeks ago, I was Director in the Ministry of External Affairs, New Delhi, in charge of international conferences and multilateral summit level meetings and ex-officio Chairperson of the Operations Committee of the prestigious Pravasi Bharatiya Kendra for the Indian diaspora spread around the world.

How do you like Mongolia?
It is a wonderful country known for its eternal blue sky -- and of course strong winter – and for its extremely warm, friendly and hospitable people.   India and Mongolia have strong convergence and respect for democracy and Buddhism and to most Indians, Mongolia is a ‘spiritual neighbour’.  I am excited to have this opportunity of working in Ulaanbaatar, a city thriving with life and activity despite the weather.  Our commonality of views and the goodwill for India and Indians in this beautiful nation reassure me that whatever irritants might be there would get surmounted with ease.

Our two countries have had a close cultural relationship for centuries. How do we expand the cooperation to the economy and mutual trade?
Mongolia and India have enjoyed friendly, cultural and civilizational heritage bonds with exchange of learned and intellectuals going back to about 2000 years. Even in my brief time here, I have seen and observed tremendous goodwill for India and Indians.  My mandate is to bring greater economic and trade content into our excellent relationship commensurate with this huge reservoir of goodwill. 

How do you plan to do this?
There are several ongoing projects like assistance in setting up the first ever $1 billion plus oil refinery in Mongolia, support in setting up an IT, communication technology and outsourcing centre in UB city aimed at capacity building and training, digitalization of rare manuscripts & historical records at the National Library of Mongolia and Gandan Monastery, defence cooperation etc.  Enormous potential exists in the mines and mineral sector, in dairy and animal husbandry, and in the ancillary industries for operation and maintenance of the refinery and the pipeline. We are certain that these ongoing and future initiatives will further intensify, deepen and strengthen India’s economic cooperation with Mongolia, our strategic partner and an important third neighbor.

Are Indian companies interested in coming here?
Mongolia is sure to be an interesting investment destination, given strong strides it has made in various vital economic sectors, a relatively steady GDP growth, stability of governance and its thrust and initiatives to promote investment friendly policies and creation of a facilitating and enabling environment for foreign investors, passing new laws and regulations to govern, protect and sustain foreign investment. That Mongolia ranks quite high at 74 out of 190 countries in the ‘Ease of doing business’ index published by the World Bank and has a very high gender equality index, are among the encouraging factors which Indian investors would certainly take note of in the coming times. We would need to bridge the present asymmetry of information by creating awareness in India about opportunities in Mongolia in mines & mineral, pharmaceutical, IT, Health sectors etc. The spin-off benefits generated by the Indian government funded Oil Refinery Project (ORP) and several other G2G projects have generated strong interest among Indian investors in Mongolia.  The participation of some 30-40 Indian companies related to oil refinery and mining sector in the ‘Oil & Gas Exhibition’ planned in UB City in May 2019, will also boost the Indian interest in Mongolia.

The oil refinery project is a landmark in the history of our two countries’ relationship. Have all decisions been taken on the terms of the loan?
The Oil Refinery Project is indeed a milestone in our relationship and will further expand and strengthen India-Mongolia cooperation. The terms and conditions of the $1-billion Line of Credit (LoC) have been successfully finalized and a broad timeline has also been drawn for timely completion of this vital project for securing energy independence for Mongolia. I would like to add that in February 2019, the Mongolian Government issued a Letter of Award to a highly reputable Indian firm, Engineers India Ltd (EIL), as project management consultant (PMC).  

What about additional financing for the project?
A request from Mongolian Government for an additional funding of $236 million has been received by us and is being sincerely examined in New Delhi.  We are hopeful of reaching an early decision in this regard.

EIL also did the feasibility study. Did the company have any international experience?
EIL is a highly reputed company with a strong track record in the hydrocarbon sector internationally. It has emerged as a global player with the execution of a number of prestigious assignments for international energy majors in West Asia, Africa and South East Asia. These included turnkey projects in the UAE for ADNOC; in Kuwait and Bahrain for oil & gas giants like EQUATE, KNPC, BAPCO, and BANAGAS; and in Oman for ORPIC for their Liwa Plastics Project in Sohar. In North Africa, EIL has been providing services for various refinery and gas processing projects in Algeria since 1978.  EIL has also acted as PMC for a 460,000-BPSD refinery and a 600,000 TPA Polypropylene Plant of Dangote Oil Refining Company in Nigeria.  With such proven credentials, we are sure EIL will also successfully execute the ORP here in Mongolia. 

India is a a powerful economy, attracting global investors. What’s the secret of its constant, stable and strong growth? What investment policy do you follow? Is it true that the government has completely reformed the tax system?
India has been posting a steady average GDP growth of 7% for the last several years.  The present government has successfully pushed several economic reforms that have stimulated industrial, financial and service sector growth and development and stimulated foreign direct investment in India. During the last 4 years, the fiscal deficit came down to 3.5% from 4.8%. We have a strong skilled work force, robust R & D facilities, average annual export stands at $300 Billion, tax reforms have been completed and unified tax structure and GST have been rolled out. 

India’s demonetization was able to check unaccounted money in the economy.  India now permits 50% FDI in insurance, defence and retail e-commerce sectors. There is a single-window time bound clearance mechanism for specified projects. A strong legal structure and arbitration laws are in place. The fact that India received $52-billion average FDI flow over the last four years is an ample proof of the commitment of our government to make India among the best investment destinations in the world. Combined with these strong economic reforms, 650 million youth population under 25 years, will be the drivers of rapid economic progress in the coming years.

How are India’s economic and investment relations with Russia and China?
All three countries are members of BRICS and SCO. Russia has been a longstanding and time-tested strategic partner for India for several decades now. Our economic and trade relations with Russia cover a wide variety of sectors including defence, space, science & technology, nuclear energy, education etc. India-Russia annual bilateral trade is about $9.3 billion and growing progressively. Regular summit and high-level exchange of visits between the two countries has further steadied our relationship.

China is India’s 3rd largest trade partner, with bilateral trade standing at about $85 billion a year ago.  The last two decades have recorded exponential trade growth covering IT, communication technology, heavy machinery, pharmaceutical and other sectors.  From 2018, the world has witnessed an upward swing in the momentum of ties and currently there are 30 dialogue mechanisms with China at various levels, covering political, economic, consular issues, and dialogues on regional and global issues and bilateral relations are growing steadily.

What has been India’s experience in equal sharing of its resources among the people?
The national development agenda of the Indian Government called “Sabka Saath Sabka Vikas” (Collective Effort, Inclusive Growth) amply demonstrates the assurance and promise of inclusive and equal growth opportunities for all sections of the 1.3 billion population in India.  The Prime Minister’s special scheme ‘Jan Dhan Yojana (PMJDY) is the world’s largest financial inclusion programme.

By leveraging PMJDY, Aadhaar (a biometric-based national identity system) and mobile telephony, the Government has disbursed a cumulative amount of INR1.62 trillion ($25 billion) to 329 million beneficiaries through Direct Benefit Transfers.

This has helped significantly enhance the efficiency of Government programmes. India has unfolded the world’s largest healthcare scheme Ayushman Bharat covering 500 million Indians with free medical care for up to $7500. Further, special efforts have been made to invigorate the federal governance structure of the country through cooperative and competitive federalism. With a strong focus on equality of opportunity, reduction of divide between the rich and impoverished sections of the society, promotion of greater gender equality and resource mobilization for Sustainable Development Goals, India has made great strides in this direction.

As India produces more steel, it is becoming the world’s biggest importer of coking coal. Will your steel sector keep growing?
In 2017, India emerged as the world’s third-largest steel producer with production of 101 million tonnes and also as the third-largest steel consumer with consumption of 90.68 MT last year. India is expected to overtake Japan soon to become the world’s second largest steel producer. The National Steel policy adopted in 2017 envisages steel production capacity to reach 300 million tonnes in the coming 10 years.  Given sustained regular economic and industrial growth propelled by ‘Make in India’ drive of the government, steel sector is most likely to register rapid growth in the times to come.  

Do you think your country can import coking coal from Mongolia?
In 2017, India imported coal worth about $15 billion, with Indonesia accounting for more than 60% of the thermal coal import.  India has large coal reserves and they are yet to be fully utilized.  Understandably, costs are a major factor in choosing an import source. Experts would need to work out details about the possibilities of coal imports from Mongolia.