Ulaanbaatar Urban Services and Ger Areas Development Investment Program - Tranche 3

Ulaanbaatar city is home to more than 1.44 million people. The central city core with comprehensive utility services is surrounded by vast, substandard, and unserved ger areas of about 100 square kilometers. Ger areas accommodate about 60% of the city's population (about 840,000 inhabitants) and have spread and expanded through successive waves of migration. These settlements of low- and medium-income households are characterized by loosely aligned plots, creating irregular unpaved pathways. The majority of households living here have land tenure. Lack of basic urban infrastructure and services in ger areas has caused severe pollution that threatens city residents' health. Obsolete household coal stoves for heating, and traffic congestion caused by unplanned road networks have helped generate some of the highest levels of air pollution in the world. Households exclusive reliance on open pit latrines and a poor solid waste collection system has led to poor sanitation, along with limited access to water supplied by water kiosks. There is a lack of basic social and public facilities, such as green spaces, parks, sports centers, kindergartens, and primary health centers. The upgrading of ger areas is constrained by inadequate urban infrastructure, lack of urban planning, poor urban services, and limited public spaces and facilities. On 12 December 2013, the Asian Development Bank (ADB) approved the Ulaanbaatar Urban Services and Ger Areas Development Investment Program using multitranche financing facility (MFF) modality, comprising three tranches. On 16 April 2020, the President approved the extension of the MFF availability period from 9 years to 10 years (or from 31 December 2022 to 11 December 2023) to ensure the timely implementation of tranche 3. The total program cost is $320.00 million, of which $163.70 million will be financed by ADB; $96.00 million by the Municipality of Ulaanbaatar (MUB); and up to 50.00 million euros ($60.30 million equivalent at the time of approval) parallel cofinancing by the European Investment Bank. This program is the result of a successful policy dialogue between ADB and the MUB that catalyzed the (i) integration of ger areas in the Ulaanbaatar city master plan for the first time in December 2013, and (ii) adoption of a priority service and economic hubs (subcenters) development strategy in ger areas as a catalyst for more polycentric and inclusive city development. Under this program, a road map has been developed to establish a network of well-developed city subcenters to provide jobs, housing, and economic opportunities with reduced soil and air pollution. The program has introduced a paradigm shift and replicable mechanism to systematically extend modern infrastructure and key social facilities to ger area. The framework financing agreement was signed on 9 December 2013 and ratified by the Mongolian Parliament on 23 May 2014. Tranche 3 of the MFF will align with the program strategic road map to support the redevelopment of two additional subcenters in the eastern and western ger areas (Sharkhad and Tolgoit).