The leader of a multi-jurisdictional team put together to make Mongolia’s first renewable energy independent power project a reality said the speed and ease of the deal makes for a strong contrast with the frustrations often faced in similar transactions in China.
In the key industry area of renewable energy, where China is intent on making competitive inroads, Michael Aldrich, managing partner of the Hogan Lovells’ Ulaanbaatar office, led a cross-border team that advised General Electric (GE) on the financing and equity aspects of a US$122 million 50MW wind farm in Salkhit, Mongolia, 70km southeast of the capital.
“[The deal ] consisted of equity and loan agreements – with our Singapore office assisting with the financing documents, and our Hong Kong office with the equity documents, and all that being co-ordinated and put into a final form here in Mongolia, along with addressing Mongolian legal issues. In essence there was co-operation with three offices on the project,” Aldrich told China Business Law Journal.
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“Actually it was extraordinarily straightforward, and it’s a reflection of the fact that certain members of the Mongolian private sector are extremely switched on. The project, from the time we were involved to closing, was seven months or so, which I think compares extremely favourably with some of the frustrations that people deal with in mainland China.”
Aldrich, who spent some 18 years in China before moving to Mongolia three years ago, said for investors familiar with China, “it is not unusual having to go through a detailed approval process in a strategic economic sector – one’s reaction depends on one’s point of reference”.
He said Mongolia “continues to have a comparatively light touch in dealing with red tape and regulatory matters when compared to other emerging jurisdictions”.
“On a comparative basis, things can be done much more rapidly in Mongolia than other jurisdictions in Asia. It’s an observation I had when I first came to Mongolia … and I still find myself tipping my hat to the Mongolians. While it’s never easy working in emerging jurisdictions, people can get to the business of their business here faster.”
Aldrich’s team included partner Jamie Barr and senior associate Laurence Davidson in Hong Kong, partner James Harris and senior associate Lawrence Low in Singapore, and partner Chris Melville, senior associate Anthony Woolley and associate Solongoo Bayarsaikhan in Ulaanbaatar.
The wind farm is part of a renewable energy programme intended to reduce the country’s dependence on coal. The project, which is expected to start operating this year, will supply almost 5% of Mongolia’s electricity.
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