RETA 7918 Ulaanbaatar - Mongolia Water and … · June 2013 . RETA 7918 Final report Page 2 RETA...

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RETA 7918 Ulaanbaatar - Mongolia Water and Wastewater Operation Improvement Project Final Report June 2013

Transcript of RETA 7918 Ulaanbaatar - Mongolia Water and … · June 2013 . RETA 7918 Final report Page 2 RETA...

RETA 7918 Ulaanbaatar - Mongolia

Water and Wastewater

Operation Improvement Project

Final Report

June 2013

RETA 7918 Final report Page 2

RETA 7918

Ulaanbaatar Water

and Wastewater

Operation

Improvement

Project

Final Report

Version 1.0 Status Final

Sponsor Asian Development Bank Project

manager

G. Soppe

Date June 10, 2013

Authors

G. Soppe, S.T. Jarigsma, C. Rix, L.P. Mecksenaar,

F. Hollebekkers, D. Apon, B. Hulstein, A.Tsetsgee,

D.Odsuren, E. Oidov, T. Dalai, O. Norovjav,

Review A. Doppenberg

RETA 7918 Final report Page 3

ABBREVIATIONS

ADB –Asian Development Bank

BOD - Biochemical Oxygen Demand

CI - Cast Iron

COD - Chemical Oxygen Demand

CTP - Customer Transfer Point

CWWTP – Central Waste Water Treatment Plant (of Ulaanbaatar)

DI - Ductile (Cast) Iron

dia - Diameter (of a pipe)

DMA - District Metering Area

DMF - Design and Monitoring Framework

DMZ - District Metering Zone (larger than DMA)

DO - Dissolved Oxygen

FDPC - Flow Dependent Pressure Control

GoM - Government of Mongolia

GPRS - General Packet Radio Services

HDPE - High Density Poly Ethylene (plastic pipe material)

ICB - International Competitive Bidding

JICA – Japan International Cooperation Agency

l/c/d - Liter per Capita per Day

mio - million

MLSS - Mixed Liquid Suspended Solids (measure of bio-mass in aeration tanks)

MoF – Ministry of Finance

MRTCUD – Ministry of Roads, Transportation, Construction and Urban Development

MSL - Mean Sea Level

MUB – Municipality of Ulaanbaatar City

mwc - meters water column (a measure for hydraulic head and pressure)

NCB - National Competitive Bidding

NRW - Non-Revenue Water

OCC - Operational Control Centre

OSNAAG – Housing and Public Utilities Authority of Ulaanbaatar City

PPP - Public-Private Partnership

PPTA – Project Preparatory Technical Assistance

PS - Pumping Station

Q - Quarter

RETA – Regional Technical Assistance

SC - Steering Committee

SCADA – Supervisory Control and Data Acquisition

SVI - Sludge Volume Index

₮ - Tugrik, or Tögrög, or MNT, Mongolian currency (1 USD ~ ₮1380)

UB - Ulaanbaatar

UEIF - Urban Environment Infrastructure Fund

UFPF - Urban Financing Partnership Facility

USUG – Ulaanbaatar Water Supply and Sewerage Authority

VEI – Vitens Evides International

WSP - Water Safety Plan

WOP - Water Operators Partnership

YTD - Year To Date

RETA 7918 Final report Page 4

Table of contents

SUMMARY ........................................................................................................... 7

I. INTRODUCTION ........................................................................................ 20

A. BACKGROUND ................................................................................................ 20

B. THE PROJECT ................................................................................................. 21

C. RETA 7918.................................................................................................. 21

D. THIS REPORT ................................................................................................. 22

II. SCOPE OF THE TECHNICAL ASSISTANCE RETA ......................................... 23

A. PROJECT OBJECTIVES ....................................................................................... 23

B. TASKS AND DELIVERABLES OF THE TECHNICAL ASSISTANCE RETA .................................. 23

C. RELATION WITH THE INVESTMENT PROGRAM PPTA 7970-MON ..................................... 24

D. RELATION TO OTHER PROGRAMS ........................................................................... 24

III. SHORT DESCRIPTION OF ULAANBAATAR .................................................. 26

A. GENERAL ...................................................................................................... 26

E. SOCIAL AND NATURAL ENVIRONMENT .................................................................... 27

i. Social conditions ..................................................................................... 27

ii. Natural Environment ................................................................................ 27

IV. WATER SUPPLY – DESCRIPTION OF THE SYSTEM ..................................... 29

A. CURRENT MASTER PLAN ..................................................................................... 29

F. DESCRIPTION OF USUG’S WATER SUPPLY SYSTEM ...................................................... 29

G. WATER SAFETY PLAN ........................................................................................ 32

V. WATER SUPPLY – ENERGY SAVING........................................................... 34

A. ENERGY SAVING AT THE UPPER PUMPING STATION ..................................................... 35

B. ENERGY SAVING AT THE CENTRAL PS ..................................................................... 39

C. ENERGY SAVING AT PS INDUSTRIAL ...................................................................... 44

i. Introduction ............................................................................................ 44

ii. Energy saving through reduced pressure .................................................... 46

D. REDUCTION PUMP-PRESSURE AT MEAT PUMPING STATION ............................................. 47

i. Introduction ............................................................................................ 47

ii. Current pressures in the Meat distribution system ....................................... 48

iii. Proposed pressure reduction ..................................................................... 49

E. SUM OF ENERGY SAVING AT THE 4 MAIN DISTRIBUTION PS ............................................ 51

F. THE COMBINATION CENTRAL-UPPER CAN SAVE MORE ENERGY ......................................... 51

G. ENERGY SAVINGS AT THE DISTRIBUTION BOOSTER PUMPS IN UB ..................................... 53

H. ENERGY SAVINGS AT THE DEEP WELL PUMPS IN UB ..................................................... 53

I. IMPLEMENTATION OF ENERGY SAVINGS PROPOSALS ..................................................... 53

VI. WATER SUPPLY - OPERATIONAL IMPROVEMENTS .................................... 55

A. INTRODUCTION ............................................................................................... 55

B. ACTIVITY 1: EQUIPMENT FOR OPERATIONAL CONTROL ................................................. 56

C. ACTIVITY 2: OPERATIONAL CONTROL CENTRE .......................................................... 59

VII. WASTEWATER TREATMENT OPERATIONAL IMPROVEMENTS..................... 61

A. INTRODUCTION ............................................................................................... 61

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B. SEWERAGE .................................................................................................... 61

i. Short description of the sewerage ............................................................. 61

ii. Flows through the sewerage and pollution loads .......................................... 62

C. WASTEWATER TREATMENT FACILITIES IN ULAANBAATAR ............................................... 67

D. THE CENTRAL WASTEWATER TREATMENT PLANT (CWWTP) .......................................... 67

i. Introduction ............................................................................................ 67

ii. Performance of the CWWTP ...................................................................... 69

E. CWWTP –REVIEW OF OPERATIONS ...................................................................... 73

i. General .................................................................................................. 73

ii. Influent pumping stations ......................................................................... 74

iii. Mechanical pre-treatment: Screens & Primary Sedimentation ....................... 75

iv. The aeration tanks................................................................................... 75

v. Secondary clarifiers ................................................................................. 79

vi. Sludge return pumps ............................................................................... 79

vii. In-line BOD, COD & SS-measurements ...................................................... 79

viii. Output of the proposed improvements ....................................................... 80

ix. Sludge digestion and methane production .................................................. 80

x. Bio-ponds ............................................................................................... 80

xi. Overview of proposed improvements for the CWWTP ................................... 81

xii. The future of the CWWTP – Possibilities for investments ............................... 81

VIII. INDUSTRIAL WASTEWATER ..................................................................... 83

A. INTRODUCTION ............................................................................................... 83

B. INDUSTRIAL WATER CONSUMPTION ........................................................................ 83

C. INDUSTRIAL WASTEWATER PRODUCTION.................................................................. 84

D. POSSIBLE ACTIONS TO REDUCE INDUSTRIAL WASTEWATER ............................................ 86

E. INDUSTRIAL WASTEWATER CHARGES ...................................................................... 87

i. Current wastewater charges ..................................................................... 87

ii. Thoughts on a future system of wastewater charges .................................... 88

iii. Flow metering equipment for the (bi-) annual pollution surveys .................... 90

IX. REDUCTION OF NRW AND WATER CONSUMPTION ................................... 92

A. CURRENT SITUATION ........................................................................................ 92

i. Introduction ............................................................................................ 92

ii. NRW in USUG’s main network ................................................................... 93

iii. OSNAAG’s distribution systems and their NRW ............................................ 94

B. COMPONENTS OF USUG’S NRW .......................................................................... 95

i. NRW caused by metering inaccuracies ....................................................... 95

ii. Illegal connections ................................................................................... 96

iii. Real losses ............................................................................................. 96

C. NRW AT OSNAAG’S AND KANTORS’ DISTRIBUTION SYSTEMS ........................................ 98

D. PAST NRW-REDUCTION EFFORTS IN UB ................................................................. 98

E. OBJECTIVES FOR AN INTERVENTION PROGRAMME - GENERAL .......................................... 99

F. PROPOSALS TO REDUCE USUG’S NRW ................................................................ 101

i. Apparent losses ..................................................................................... 101

ii. Real losses ........................................................................................... 102

G. PROPOSED NRW-REDUCTION PILOT IN AN OSNAAG COMPOUND .................................. 104

H. WATER CONSUMPTION REDUCTION ...................................................................... 106

I. PUBLIC AWARENESS ....................................................................................... 108

J. INSTITUTIONAL ASPECTS.................................................................................. 114

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X. CAPACITY DEVELOPMENT/INSTITUTIONAL STRENGTHENING ............... 115

A. INTRODUCTION ............................................................................................. 115

B. INDIVIDUAL CAPACITY DEVELOPMENT .................................................................. 117

H. ORGANIZATIONAL CAPACITY DEVELOPMENT ........................................................... 117

I. INSTITUTIONAL CAPACITY DEVELOPMENT .............................................................. 119

J. SUMMARY AND BUDGET IMPLICATIONS .................................................................. 122

XI. PROPOSED INTERVENTIONS AND THEIR ESTIMATED COSTS ................. 124

XII. PACKAGING ............................................................................................ 125

XIII. FINANCIAL AND ECONOMIC ANALYSIS .................................................. 127

A. INTRODUCTION ............................................................................................. 127

B. FINANCIAL STATE OF USUG ............................................................................. 127

i. Financial Indicators ................................................................................ 127

ii. Operational Indicators ............................................................................ 132

iii. Balanced Score Card .............................................................................. 133

C. THE PROPOSED PROJECT .................................................................................. 134

D. RECOMMENDATIONS FOR FINANCIAL REFORMS ......................................................... 136

XIV. LONG-TERM INVESTMENTS..................................................................... 138

A. BACKGROUND .............................................................................................. 138

B. PRIORITY INVESTMENTS .................................................................................. 138

C. INVESTMENTS IN IMPROVED OPERATIONS (NEAR FUTURE) ........................................... 139

XV. DESIGN AND MONITORING FRAMEWORK ............................................... 140

A. BENEFITS ................................................................................................... 140

B. DESIGN AND MONITORING FRAMEWORK ................................................................ 141

APPENDIX 1 PROPOSED IMPROVEMENTS – WATER SUPPLY.......................... 142

A. PUMPING STATIONS ....................................................................................... 142

B. DISTRIBUTION NETWORK OF ULAANBAATAR ........................................................... 144

C. OPERATIONAL CONTROL CENTRE (OCC) AT USUG’S MAIN OFFICE ................................ 145

APPENDIX 2 PROPOSED IMPROVEMENTS - WASTEWATER ............................ 146

A. PROPOSED IMPROVEMENTS AT THE CWWTP .......................................................... 146

B. FOR MEASUREMENT OF INDUSTRIAL WASTEWATER FLOWS ............................................ 146

APPENDIX 3 LARGEST INDUSTRIAL WATER USERS ...................................... 147

APPENDIX 4 DESIGN AND MONITORING FRAMEWORK .................................. 153

APPENDIX 5 IRR TABLES ................................................................................ 155

RETA 7918 Final report Page 7

Summary

i. Background

1. The Municipality of Ulaanbaatar (MUB) supported by the Asian Development Bank

(ADB) is currently preparing an ambitious investment program for urban services and

development of the Ger areas (PPTA 7970-MON). In parallel, a Regional Technical

Assistance (RETA) funding was provided for a contract with Vitens Evides International

(VEI), Royal HaskoningDHV and individual national consultants to identify a “Water and

Wastewater Operation Improvement Project”. Implementation of the project will be

carried out through a grant from the Urban Environment Infrastructure Fund to the

amount of USD 3.7 million.

2. The project will deliver through three components. The components were

validated during an inception workshop on August 6th, 2012. This report shows the three

components as follows:

(i) Component 1: Energy saving and operational control improvement in chapters:

IV Water supply – Description of the system

V Water supply – Energy Saving

VI Water Supply - Operational improvements

VII Wastewater Treatment Operational improvement

(ii) Component 2: Non-revenue water and consumption reduction in chapter IX; and

(iii) Component 3: Capacity development and institutional strengthening: chapter X.

3. RETA 7918 started on July 16, 2012. It has operated in close coordination with

the PPTA consultants. It is the intention that this Final Report will be incorporated in the

outputs of the PPTA Consultants. The final report was completed April 30th 2013.

ii. Water supply – Energy saving

4. UB depends entirely on groundwater that is mainly pumped from the four well

fields Central, Upper, Industrial and Meat. Current abstractions, at less than 6,300 m3/h,

are well below the capacity of ~10,000 m3/h of these four well fields. From the wells,

water is pumped into reservoirs, chlorinated and then pumped into the distribution

system. An exception is the Upper Source, located 40 km upstream of Ulaanbaatar,

where the water from the source is first pumped towards X-reservoir, from where it is

supplied towards the city by gravity.

5. Energy consumption per m3 of water distributed varies considerable from one

location to another. It is higher at the Upper and Central distribution pumps as a result

of throttled valves at the pumps. Energy saving can be achieved by making changes to

the pumps at these two locations. At the Industrial and Meat pumping stations, some

energy can be saved by reducing the outgoing pressure set points at the distribution

pumps. This can be done at any time against no investment. Energy saving for the four

PS is estimated at USD 290,000 per year, as summarized in the table below.

RETA 7918 Final report Page 8

Table S1 Energy saving in distribution pumping at the four main PS

Station Current Possible Save

kWh/day ₮ mio/yr USD/yr kWh/day ₮ mio/yr USD/yr %

Upper PS 24,300 780.5 565,598

20,868 670.3 485,711 14.1%

Central 19,462 625.1 452,980

11,449 367.7 266,477 41.2%

Industrial 4,594 147.6 106,937

4,118 132.3 95,844 10.4%

Meat PS 2,270 72.9 52,832

1,607 51.6 37,398 29.2%

Total 50,626 1,626.1 1,178,348 38,042 1,221.9 885,430 24.9%

Possible saving 12,585 404.2 292,918 24.9%

6. A higher saving can be achieved by reducing output from the high energy Upper

Source (with limited scope for energy saving) and increasing supply from Central, where

large energy saving is possible. This will require some adjustments to the distribution

operations, but will increase the annual energy saving by an additional USD 80,000 to

USD 370,000 per year (see the table below).

Table S2 Energy saving with supply zone adjustments for Central & Upper

Station Current Possible Saving

kWh/day ₮ mio/yr USD/yr kWh/day ₮ mio/yr USD/yr %

Central 43,762 1,406 1,018,578

28,863 927.1 671,791 34.0%

Upper Industrial 4,594 147.6 106,937

4,118 132.3 95,844 10.4%

Meat PS 2,270 72.9 52,832

1,607 51.6 37,398 29.2%

Total 50,626 1,626.1 1,178,348 34,587 1,110.9 805,033 31.7%

Possible saving 16,039 515.2 373,315 31.7%

USUG agrees with the proposed changes at Meat and Industrial station and has also

agreed with the installation of a new impeller in one of the pumps at Upper. However,

USUG would not agree with the installation of new pumps at Central and has instead

opted for the more expensive option of providing the 3 large pumps with frequency

converters, using money from a loan or from its annual budget. USUG will apply for a

loan or will allocate funds for frequency converters at Central as soon as its budget

allows. Thus, energy saving shown in Table S1 can be achieved. However, the option

outlined in Table S2 was not palatable to USUG.

iii. Water supply – Operational improvements

7. Operational improvement of the water supply systems in UB involves installation

of Equipment for Operational Control and enhancements at the OCC (Operational Control

Centre). Priority was given to the most important assets, in terms of functionality.

Table S3 Proposed improvements per location

Location Proposed Improvements

Upper PS Two way communication with OCC;

Industrial PS Operational control system and telemetry, frequency controlled pumps,

16 submersible pumps, communication means, measurement

equipment (flow, pressure, reservoir level), automated chlorine dosing,

connection with OCC;

RETA 7918 Final report Page 9

Location Proposed Improvements

Meat PS Telemetry and communication means between pumping station and

OCC, communication between extraction wells and pumping station,

connection with OCC;

Bayangol PS Connection with OCC;

Nisekh PS PLC, SCADA and telemetry system, measurement/monitoring devices

Tolgoit booster station PLC and telemetry system to connect to OCC;

Sharkhad reservoir and

booster station

Measurement equipment, PLC and telemetry system to connect to

OCC;

North-east reservoir Connection with OCC;

Chingeltei booster

station

Connection with OCC;

Distribution Network 20 control valves (pressure and flow control), 10 flow/pressure

measuring points, reconstruction of 10 existing measuring points;

At OCC Operational control equipment: telemetry, servers, computers,

software

8. Technical Assistance/Capacity Building was provided to USUG as part of RETA

7918. In 2010, VEI assisted USUG in the establishment of the OCC and provided training

to its staff. In October 2012, VEI organised a workshop with all staff of the OCC and

engineering department employees present. During this workshop presentations were

given and many aspects of the OCC tasks were discussed. Future possibilities for the

network were discussed and from sample scenarios further improvement of the network

and pumping station set points were discussed. During the entire period of this

feasibility study, VEI has provided technical assistance and training to USUG, including

coaching of USUG´s staff at technical and project management level, assisting with

implementation, on-the-job training with PLC-programming, SCADA software, etc., and

providing project support and assistance.

iv. Operations improvements at the CWWTP

9. The CWWTP (central wastewater

treatment plant) is located at the far western

end of the city. The main units are shown in the

simplified schematic of the CWWTP. The CWWTP

does not have a very good reputation and is

generally described as an underperforming and

very smelly plant. Surprisingly, in the period

October-December 2012, it was working quite

well and there was virtually no smell.

10. Earlier during 2012, there had been

serious problems at the CWWTP. In the period

May-July, the incoming COD-load at the CWWTP

doubled from the usual 100-115,000 kg/day for

this period to an average of 200,000 kg/day in

early July, with many days of much higher loads

arriving. The biological treatment section

collapsed and COD-removal ratios took a dive

(from 80-90% to less than 60%). It is not clear how the COD-load could double in such

RETA 7918 Final report Page 10

a short period. The industries are widely blamed but, considering that industries

contribute less than 20% to overall COD-loads, there may be another reason. The plant

management decided to allow only part of pre-settled water to continue to the biological

section and diverted the remainder to the effluent channel. The biological section

(aeration and clarifiers) improved again and COD-removal efficiencies recovered. BOD-

removal efficiency in the plant even reached a respectable average of 94%, in August

and September 2012.

11. The CWWTP is already old and close to being obsolete. An entirely new

wastewater treatment plant could well be constructed within the next ten years. Any

improvements proposed for the current plant should not cost too much money,

therefore. This warrants the replacement of mechanical and electrical/electronic

equipment, usually with a lifetime of 10-15 years, but not any serious investments in

civil works.

12. The main obstacle to a sturdy treatment process at the CWWTP is the insufficient

hydraulic capacity of the 5 secondary clarifiers. When incoming flows increase, water

velocities in the clarifiers are becoming (too) high and bio-mass, instead of settling to

the bottom of the clarifiers (for return to the aeration tanks), disappears together with

the effluent. Adding 2 or 3 clarifiers would hugely improve the sedimentation process.

USUG has made available a budget for a construction of 2 additional clarifiers in 2013.

13. Also the biological processes in the aeration tanks are not optimal and sludge

easily bulks1, making it difficult to settle it in the secondary clarifiers. Many of the

improvements proposed below address this problem.

14. Improvement measures proposed are:

i. Improvement of existing SCADA system, including new PCs. The SCADA

system will be designed as a local system (no connection to OCC);

ii. Construction of selectors in each of the aeration tanks;

iii. Procurement of 10,000 new air diffusers for the aeration tanks2;

iv. Procurement of new Dissolved Oxygen sensors in the aeration tanks;

v. Supply and installation of ultrasonic sludge level sensors in the sedimentation

tanks.

15. Existing bio-ponds once helped in polishing effluent. They are less suitable as

facultative lagoons to treat raw or pre-settled sewage.

v. Industrial wastewater

16. Judging from available data, industrial wastewater plays a less prominent role

than generally believed. Industries used only 6% of USUG’s water in 2011 and it is

estimated that, of the COD-loads arriving at the CWWTP only just over 17% has an

industrial origin. It is possible that there are large industrial polluters that have escaped

USUG’s attention. A JICA study team believes that industrial pollution plays a larger role

than can be based on the available data.

17. Many industries produce only small amounts of domestic-type wastewater.

Exceptions are breweries, distilleries and manufacturers of soft drinks, which use

extraordinarily large amounts of water. Tanneries and intestine cleaning companies

produce highly concentrated wastewater. As the treatment process at the CWWTP is

1 Bulking: the sludge becomes lighter, less dense, and no longer settles well. 2 Changing to 6,000 larger diffusers, instead of 10,000 diffusers of the current type is being investigated.

RETA 7918 Final report Page 11

sensitive to high COD loads, it is worthwhile clamping down on the relatively few

severely polluting industries.

18. Tanneries discharge more wastewater during the period mid-November to mid-

March than in the other months. Almost all discharge their wastewater to the Khargia

pre-treatment plant. This plant is not working well, but seems to improve. Cooperation

with Khargia is recommended, first of all to ensure that Khargia’s plant is operated

properly and discharges an acceptable effluent, but also to convince the company that

batch-wise discharges should take place during the night, when wastewater flows by

others are low and which would spread the arriving COD-loads at the CWWTP more

evenly.

19. Current wastewater charges are based on the water supplied, not on the amount

of wastewater discharged. The charges are a good start, but it could be argued that they

are far too low for some types of industry, like distilleries, breweries, tanneries and

intestine cleaning. The present system of fees does not provide an incentive to reduce

pollution. The most important argument to change the fee system would not be to

collect more money, but to reduce overall industrial pollution loads, for the protection of

the treatment processes at the CWWTP.

20. With the new polluter pays law, adopted in 2011, fees should gradually switch

from being water consumption based to pollution based. For small industries, fees could

be based on standard pollution factors, as is the case in many countries. The larger

polluters, say the top-50 (but not the tanneries that discharge to Khargia), should be

monitored and their wastewater fees based on actual pollution. For this purpose,

wastewater flow measuring equipment is included in the project. Tanneries should no

longer be charged a fee. All fees (which should be much higher than the ones applied at

present) should be made payable by the Khargia Company. The fees should be based on

size (and timing) of pollution discharged by Khargia and should include a fee component

for Chromium. Khargia should distribute this fee proportionally over its tannery

customers.

vi. NRW-reduction

21. With only 4,147 customers and all of them metered, USUG’s NRW was low, at

22% in 2011, and 19.2% in 2012, equal to around 10 Mm3/year. In monetary terms

this NRW represents a value of approximately ₮582 million per year (~USD

416,000/year), a relatively low value representing only lowered energy costs as most of

USUG’s other costs would remain unchanged. NRW of the distribution pipes within

OSNAAG’s housing estates could not be determined accurately as a large number of

customers are still unmetered (52,3 % in August 2012). However OSNAAG charges a

fixed rate (equivalent to a consumption of 285 l/c/d), which is higher than the actual

consumption. Thus, theoretically, NRW for OSNAAG is actually negative.

22. With a low monetary value and with many NRW-reduction activities in UB being

costly, return on such activities is relatively low. For this reason, focus in UB should be

on cheap and easy measures that yield quick results. Such measures would be

increasing checks and balances in the area of apparent losses and reducing pressures in

the network. This last measure will not only reduce NRW, but also energy costs per m3

of water pumped. More costly NRW-reduction efforts should be made only after having

precisely pinpointed the source and location of such NRW.

23. A USD 564,000 NRW-reduction programme is outlined in this report. It is

expected to have an internal rate of return of almost 9%, lower than usual for NRW-

RETA 7918 Final report Page 12

reduction projects, but acceptable. The programme will include separation of the

network into District Metering Zones and some smaller District Metering Areas. It will

also include an NRW-reduction pilot at one of OSNAAG’s housing estates with high

suspected NRW.

24. Metering of apartment buildings is an important measure to create “water

awareness” amongst customers. After starting to meter household consumption, with

now almost 50% of customers metered, water use has come down to an average202

l/c/d. At fully metered apartment buildings consumption has become less than 130 l/c/d.

How to meter the remaining 41,000 households was the subject of a stakeholder

meeting in October 2012 agreed that OSNAAG should install meters in all of its

apartments, which it is required to do by law, and that customers should pay a fixed

meter fee on top of the costs for water consumption.

vii. Capacity Building/Institutional strengthening

25. Technical assistance and capacity building that builds further on the foundations

laid by the WOP will enable USUG to absorb and anchor the envisaged institutional

changes and to further increase its (financial) autonomy, resulting in improved service

delivery and operational performance. An Institutional Strengthening Program is

recommended that can cater to the organizational and institutional changes and can

supply sufficient technical knowhow. The following aspects need to be taken into

consideration:

- Provide input and assist MUB, USUG and other stakeholders in the sector to

develop suitable options for institutional reform, and to decide the most preferred

and adequate option (e.g. by revision of laws and contracts, PPP models etc.);

- Organizational development with an emphasis on midterm enterprise planning

processes to establish improved financial planning and tariff development

- Training of higher and middle management in regards to utility management and

HR management based on performance indicators and output. For this a 2 year

Management Development program should be designed and executed.

26. In order to transform USUG into a performance oriented and financial healthy

water utility it needs a concerted action of all key players. This will create a perspective

for USUG to develop itself into a more(financial) autonomous utility thereby reducing

their demand for financial government support, while improving their high quality water

services to the public and the economy at large. Training on performance management

is therefore preferably to take place in mixed composition of WSRC, MCUD and USUG

staff. To cater for instrumental human capacity a budget of € 196,000 would suffice.

27. For the long run a more structural remediation program is needed for the

departments already referred to in the ADB Report TA 7591.

viii. Proposed interventions, costs & packaging

28. Costs of all of the above proposals are estimated at approximately USD

4.7 million, higher than the available grant of USD 3.7 million. To facilitate selecting the

most productive interventions, they are listed below, ranked in order of decreasing

priority. All prices were adjusted to a 2014 level, the expected year of implementation.

RETA 7918 Final report Page 13

Table S4 Cost estimate in US Dollars of items proposed

Intervention items 2012 2014

Base costs Rounded

1 Industrial Pumping station 686,300 800,000

2 Measuring in distribution 170,000 196,000

3 CWWTP 750,510 858,000

4 Meat Pumping station 188,500 223,000

5 Four Booster stations 52,000 63,000

6 Sharkhad Booster station 59,550 70,000

7 Tolgoit Booster station 35,500 42,000

8 OCC and communications 235,500 279,000

9 Nisekh Pumping station 134,350 156,000

10 Upper source Pumping station 50,000 56,000

11 Capacity Building 196,000 216,000

12 Sewer flow meters 130,000 136,000

13 Add distrib. measuring 520,000 604,000

14 NRW-related items 609,000 714,000

15 Central Pumping station 1,104,369 1,238,000

16 Spare parts 100,000 105,000

Total USD 5,021,579 5,756,000

29. Considering the character and locations of the components, four bid packages are

proposed, with a total value below USD 3.7 million. Bid documents have been elaborated

for each of these packages. In addition, a capacity building component is included in the

grant financing. Details of the packages and their costs are shown in the table below.

Regarding the character of the works, it was deemed best if Package B would be an ICB-

contract, while all others should best be NCB. However, with Package A (SCADA)

exceeding the USD 1 million limit, it will probably have to become ICB. The other

packages are below the limit and could be executed as NCB contracts.

Table S5 Cost estimate of packages proposed

Type Package USD (rounded)

Cost level 2014

GRANT Package A: SCADA 1,169,000

Package B: Mechanical and electrical works 717,000

Package C: Distribution improvement and NRW 604,000

Package D: CWWTP 858,000

Capacity building 216,000

Sub-total 3,564,000

Contingencies 136,000

Grant total 3,700,000

LOAN Package B: Mechanical and electrical works Central 1,238,000

Package C: Distribution improvement and NRW 714,000

Package E: Equipment 240,000

Sub-total 2,192,000

Contingencies 219,000

Loan total 2,411,000

Overall total 6,111,000

RETA 7918 Final report Page 14

ix. Possible future investments for USUG using ADB-loans

Table S6 Envisaged future investments in water and wastewater

Description Details ~2020 ~2025 ~2030 Water Source

Development Surface dam development 188 188

Underground dam development

24 25

Water supply Rehab distribution 35

Strengthen w/s facilities 75 49 30

Wastewater CWWTP 145 57 384

Nisekh WWTP 49 10 42

Industrial area/transfer to Emeelt 39

Reuse of effluent / sludge

58

TA Capacity building CWWTP 4

Sewer rehab 12 12 55

Sewer improvement 27 4

Sewer extensions 28 28 76

TA Industrial wastewater 4

Ger improvement Pipe connection to kiosks 2 10 16

Discharge pipes from sub-centers 11 8 9

Water supply & sewerage dev. 190 190 190

Totals Water Supply 110 261 243

Wastewater 308 111 615

Ger areas 203 208 215

621 580 1,073

Grand Total 2,273

30. The total investments required are well over USD 2 billion over a period of about

20 years, of which almost half is earmarked for wastewater collection and treatment.

The largest single investment identified is for the Central Wastewater Treatment Plant

CWWTP, with a capital requirement of almost USD 600 million. Much of the capital

investment earmarked for the CWWTP is for a large-scale renewal around the year

2030-240. It is felt that the current CWWTP is rather old and should be replaced with a

new treatment plant in the coming 5-10 years, requiring large funding much earlier.

31. Some smaller investments, mainly for operational improvements, are

summarized in the table below. They are all related to USUG’s water supply operations.

Table 1 Possible investments in operational improvements (next 10 years)

Location Description USDm

Industrial PS Renewal electrical installations 1.0

Upper Frequency converters 1.3

Booster stations Pumps and frequency converters 1.5

Distribution system Measuring equipment 2.0

Pressure and flow control 1.0

Smart metering at large customers 1.5

RETA 7918 Final report Page 15

Location Description USDm

Asset management and spare parts 0.5

Operation Control Centre Real time control software 0.3

Pressure control/reservoir operation 0.5

Expansion of SCADA 0.5

Total operational improvement next 10 years 10.1

x. Finance

32. The balance sheet shows that USUG is strongly dependent on long term loans for

its operations and that its operations are now less sustainable than several years ago.

This trend is troublesome for future development of USUG as a sustainable organization

which should be fit for the future.

Table S6 USUG’s Balance Sheet 2010-12 (thousands of USD)

31-Dec-10 31-Dec-11 30-Sep-12

ASSETS Current Assets Cash 5,547 7,355 7,998

Accounts debts (Net sums) 2,739 3,045 3,252

Inventory 2,100 3,040 3,084

Prepaid costs 188 142 280

Total Current Assets 10,574 13,581 14,614

Noncurrent Assets Assets (Net) 34,339 48,190 55,172

Intangible Assets (Net) 50 55 245

Construction in process 2,191 210 348

Total Noncurrent Assets 36,579 48,455 55,765

TOTAL ASSETS 47,153 62,036 70,379

LIABILITIES Short term liabilities Accounts payable 103 129 1,926

Tax payable 1 87 3

Other payable 150 194 98

Prepaid income 118 116 106

Total Short term liabilities 372 526 2,133

Long term debts

Long term loan 27,641 45,130 52,052

Other long term loan 8,280 10,436 10,436

Total long term loan 35,922 55,566 62,488

Total Liabilities 36,294 56,091 64,622

Equity

State Equity 634 634 634

Revaluation funds 21,106 21,080 21,080

Other Equity 11,536 11,820 14,703

Accumulated revenue (loss) -22,416 -27,589 -30,660

Total Equity 10,859 5,945 5,758

TOTAL LIABILITIES 47,153 62,036 70,379

RETA 7918 Final report Page 16

33. It is USUG’s intention to turn long term debt into equity. Three loans are

currently registered as long term liability on the Balance sheet of USUG (USIP I, Spanish

Loan and USIP II). Until now USUG has neither paid interest nor amortization on these

loans pending a decision by the UB Municipality on a World Bank suggestion to turn the

loans and accumulated interest into equity.

34. However, USUG should also invest time and effort in sound financial management

in order to ensure that sub sequential losses will become a thing of the past and that

total cost recovery can be achieved. The charts below shows that sales are, in fact,

increasing every year. While this is a good sign, more needs to be achieved.

Figure S1 USUG’s sales (equivalent in million USD/year)

35. Despite the increase in tariffs and sales, earnings have been poor in the past

years, except for the year 2010. It should be noted that the chart below shows earnings

before interest and tax.

Figure S2 USUG’s earnings (before interest and tax)

7.0

9.110.4

11.212.4

13.415.0

17.4

0

2

4

6

8

10

12

14

16

18

20

2004 2005 2006 2007 2008 2009 2010 2011

USDm/yr Sales from Operations (USDm/yr)

-3.75

-7.13

4.55

-4.93

-8

-6

-4

-2

0

2

4

6

2008 2009 2010 2011

USD mio Earning (before Interest & Tax)

RETA 7918 Final report Page 17

36. In order to monitor USUGs progress, VEI made an effort to introduce a balanced

score card in 2010. Although the score card itself has fallen out of favor due to changes

in personnel and is no longer in use, USUG keeps track of many indicators and reports

them diligently to the management on a monthly basis. The table below shows a

number of key performance indicators (kpi) and their values in the past years.

Table S7 Key Performance Indicators monitored by USUG

USUG KEY PERFORMANCE INDICATORS

Unit 2008 2009 2010 2011 Q1-3 2012

Financial Performance Indicators

F1 Net result ( before tax) 000 MNT -5,174,610 -9,835,328 6,278,815 -6,796,773 -5,376,592

F2 Net cash flow 000 MNT -748,457 2,132,968 1,674,084 2,494,326 2,303,960

F3 Operating ratio

1.09 1.02 1.05 1.04 1.27

F4 Av. billed tariff dr. water MNT/m3 243 274 308 346 351

F5 Av. billed tariff w.water MNT/m3 135 157 176 197 200

Commercial Performance Indicators

C1 Collection ratio % 95% 96% 92% 98% 98%

C2 Average debt per client Months 2.4 2.3 2.2 2.0 1.9

C3 Av. consumption dr. water ( I /c/d) 268.2 261.2 236.2 209.5 202

C4 Av. billed tariff dr. water MNT 151 144

143 150 149

C5 Av. billed tariff w.water MNT 311 543 337 842 727

Operational Performance Indicators

O1 NRW water supply % 20.3% 20.4% 19.7% 21.8% 18.7%

O2 NRW wastewater % 21.6% 23.7% 23.8% 24.7% 22.8%

O3 Energy consumption kWh 58.38 67.70 68.01 66.92 68.70

O4 Readiness of equipment % 97.3% 97.8% 98.0% 99.1% 95.5%

O5 Breakdowns per month No. 193 88 157 89 84

Human Resource and Operational Indicators

D1 Drinking water quality

0.5 8.9 0.6 0.2 0.2

D2 Treatm. Eff. CWWTP % 87% 87% 75% 77% 76%

D3 Number of employees # 1348.6 1381.8 1421.4 1456.6 1483.3

D4 Sales per employee 000 MNT 1056.7 1142.5 1214.9 1375.8 1394.9

D5 Petrol consumption Liters 938,395 1,110,993

1,090,061 995,928 962,630

37. The proposed investments as recommended by VEI for the pumping stations

which include PS Upper and Central will have a significant reduction on energy costs for

USUG. It can lower the energy costs for pumping with 25% and, if PS Central would take

over part of a supply area from the inefficient Upper PS, the energy saving could even

reach 32%. USUG has agreed with the energy savings options, but could not appreciate

the last option which would require a significant restructuring of USUG’s operations. And

instead of changing one pump at Central, USUG has opted for the more costly

installation of frequency converters at Central PS. The investment will need to be

financed from a loan or from USUG’s annual budget.

38. Despite the higher investments through a loan, the internal rates of return are

high, regardless of the option selected. Three scenarios were investigated:

1. Only investing in energy saving measures at the Industrial PS and the Meat PS ;

RETA 7918 Final report Page 18

2. Investing in energy saving measures at all four main PS at Central, Upper,

Industrial and Meat;

3. The same scenario as 2, not agreed upon by USUG, with an increased flow from

Central and a reduced flow by Upper PS.

Table S8 Overview of IRR of each scenario

Scenario Option Ch. V Description IRR

1 A+B Industrial & Meat only 8.7%

2 E Upper, Central, Industrial, Meat 16.5%

3 F As 2, but Upper less water, Central more 19.6%

39. The IRR of each scenario is satisfactory, even for scenario 1 with only minimal

energy saving at the main Pumping Stations. For some serious energy saving, as per

scenarios 2 and 3, the IRR is very high, despite the fact that for the adjusted pumping at

Central USUG has opted for the expensive option with frequency controllers, rather than

the cheaper option of changing one pump that was contemplated before and despite the

fact that for this more expensive option a loan will be required. This calculation makes

clear that it is of added value for USUG to invest in Upper and Central regarding

distribution pumping and in an extra NRW program even when the additional investment

is financed by a commercial loan.

40. It is essential that the tariffs within USUG cover all costs. It is to be expected that

the proposed tariff adjustment which is now pending approval of the Municipality Tariff

Committee will be executed during 2013. It remains important to monitor if the tariffs

are high enough to pay not only for the operational costs but also the interest and non-

operational costs. Household income has sharply increased in the past few years and it

is expected that the envisaged increase of the water tariff is affordable for households.

Furthermore, the outstanding repayments and interest of the loans of USUG need either

to be paid, or to be transferred by the MUB into investment funding.

RETA 7918 Final report Page 19

MAIN REPORT

RETA 7918 Final report Page 20

I. Introduction

A. Background

41. The Municipality of Ulaanbaatar (MUB) supported by the Asian Development Bank

(ADB) is currently preparing an ambitious investment program (the investment

program), the Ulaanbaatar Urban Services and Ger Areas Development Investment

Program (PPTA 7970-MON), aiming at integrated and all inclusive improvement of

Ulaanbaatar’s Ger areas3. One of the key elements of this investment program relates to

the extension of municipal services provision, specifically water, wastewater and heating

to so-called ‘sub-centers’4. The MUB has adopted the sub-center approach and is

currently integrating the concept in its Urban Master plan for Ulaanbaatar City5.

42. Parallel to this extension of services into the Ger areas, the MUB, the Ulaanbaatar

Water Supply and Sewerage Authority (USUG) and the Housing and Public Utilities

Authority of Ulaanbaatar City (OSNAAG) have identified the need for modernizing and

upgrading current operations in the city’s core area allowing water and wastewater

operations to be better monitored, controlled, optimized and eventually expanded.

43. Only 40% of the entire population of UB live in the central city core area and has

access to improved water and sanitary services through household connections for water

and sewerage. Drinking water in UB is of fairly good quality. Consumption levels are

high, i.e. 202 l/c/d on average in 2011 but are decreasing because of increased

metering of apartment buildings. As described in chapter V of this report, operations of

the central drinking water distribution scheme in the hilly terrain of UB are rather

complex and inefficient, resulting in pressure fluctuations and high levels of energy

consumption.

44. By contrast, 60 % of UB’s population live in Ger areas and are inadequately

served for water and / or sanitation6. Although water supply in Ger areas has

tremendously improved over the years through construction and connection of water

kiosks, services are still poor, especially in truck supplied areas. Services from truck

supplied kiosks are infrequent and water contamination of tankers occurs and water

supplied from the trucks rarely complies with minimum WHO standards. Kiosk

operations pose a heavy financial burden on USUG, with operational costs of pipe-

connected kiosks three times higher than the revenues and those of truck supplied

kiosks four times higher than the revenues. The average water consumption in Ger

areas is low: 6.5 l/c/d for the truck supplied kiosk and 8.6 l/c/d for connected kiosks.

45. Operational improvements are feasible especially in the fields of energy

efficiency, non-revenue water and water conservation. Improvements in those fields will

allow the MUB, USUG and OSNAAG to conserve resources and reduce operational costs

while increasing the capacities for meeting Ulaanbaatar’s future demand for improved

water and wastewater services.

3Named after ‘ger‘ tents, the term ‘ger-area’ refers to peri-urban settlements around Ulaanbaatar’s formal

area. 4Subcentres are clusters of businesses and public facilities (in ger-areas) that are associated with a transportation hub providing basic living and social services, jobs and economic opportunities. 5Municipality of Ulaanbaatar, Ulaanbaatar City’s Development Tendency Till 2030, International Investment Forum Ulaanbaatar, March 23, 2012. 6 From “Outline for a Mid-term Development Strategy for Water Supply and Sanitation Services in Ulaanbaatar”.

RETA 7918 Final report Page 21

B. The Project

46. Within this context, the Ulaanbaatar Water and Wastewater Operation

Improvement Project (the project) aims to upgrade and modernize the existing assets

that are operated by USUG and to increase its operational and energy efficiency. The

project will finance some key activities that are included in the first tranche of the

above-mentioned investment program PPTA 7970-MON. The project itself is grant

financed by the Urban Environment Infrastructure Fund (UEIF) under the Urban

Financing Partnership Facility (UFPF) that is managed by the ADB; the grant amounts to

USD 3.7 million.

47. As Ulaanbaatar is in rapid transition the need for improved services is high and

the UFPF project can only be the start of a much larger improvement program of the

water and wastewater facilities. Several other projects are in their initial phase, or at

feasibility level, to either increase the supply of water or to improve wastewater

treatment. The project will increase the control and data gathering of USUG on the

production location, distribution of water in the network and treatment of wastewater. It

will increase awareness on water and energy saving possibilities which can also be

applied in future development of the infrastructure.

C. RETA 7918

48. The consortium of Vitens Evides International, Royal HaskoningDHV and seven

individual national consultants was awarded a contract to prepare the project (RETA).

The official starting date of the RETA, on July 16, 2012, was followed by a one-month

inception phase. Upon the approval of the inception report, international and national

consultants prepared an interim report, which was submitted before November 1st.

Another round of consultations and investigations was conducted in November-

December 2012, which resulted in a draft final report. After receiving comments, in

February 2013, this Final Report was completed.

49. Several consultation meetings were held at the MUB, OSNAAG, USUG, Ministries

and other relevant agencies and institutions during the different phases. In the period

between the inception phase and the interim stage the management of USUG changed,

which required additional efforts in order to achieve concurrence regarding the scope of

the project. Several presentations were given, to USUG’s management and staff, on the

contents and choices provided in the Interim report. Additional workshops were provided

on to clarify and enhance operations at the OCC (Operational Control Centre) during

various phases of the project.

50. Possibilities for large energy savings were described in the interim and draft final

reports, but hesitations to implement proposed energy saving measures soon became

clear. The most promising proposals, those with the largest reductions in energy use,

required drastic changes to the two large pumping stations at Upper and Central. After

extensive discussions it became clear that these pumping stations, built with Japanese

aid, were not allowed to be modified. All energy saving proposals are described in this

report, also those at these two large pumping stations, but costs for converting the two

stations Upper and Central are no longer included in the financing proposals.

RETA 7918 Final report Page 22

D. This Report

51. The project recognizes three main components. The components were validated

during the inception workshop on August 6th. After introductory chapters I, II and III,

this report describes the three components as follows:

(i) Component 1: Energy saving and operational control improvement in chapters:

IV Water supply – Description of the system

V Water supply – Energy saving

VI Water Supply - Operational improvements

VII Wastewater Treatment Operational improvement

(ii) Component 2: Non-revenue water and consumption reduction in chapter IX; and

(iii) Component 3: Capacity development and institutional strengthening in chapter X.

RETA 7918 Final report Page 23

II. SCOPE OF THE TECHNICAL ASSISTANCE RETA

A. Project Objectives

52. The Urban Environment Infrastructure Fund (UEIF) under the Urban Financing

Partnership Facility(UFPF) managed by the ADB will provide a $3,7 million grant

investment to finance (i) operations improvement of the central wastewater treatment

plant (CWWTP) and drinking water supply network; (ii) introduction of local control and

central operational control systems (SCADA7); (iii) implementation of a domestic and

industrial water metering program; and (iv) a program for Non-Revenue Water

(NRW)and water consumption reduction for apartment dwellers. This aims to (i) deplete

the need of primary energy resources for water and wastewater systems operations, (ii)

save water at both customer and supply level ensuring more sustainable use of available

water resources, (iii) decrease the wastewater pollution, and (iv) promote a more

reliable and more efficiently run utility.

B. Tasks and Deliverables of the Technical Assistance RETA

53. The RETA has developed proposals for improvement of operations and services

delivery of Ulaanbaatar’s water supply and wastewater management schemes. It

delivered a project feasibility study packaging for the three project components

mentioned above that is suitable for financing by the UFPF (with a total investment value

of US$3.7 million) and that is integrated into the investment program PPTA 7970-MON.

Implementation of the proposed improvement interventions and procurement,

installation and upgrade of equipment and infrastructure is not part of the RETA and will

be carried out under the investment program in 2013/2014.

54. The tasks executed included:

(i) Review and assessment of existing investment plans and designs for

rehabilitation and replacement of various assets/equipment aiming at

improvement of operational performance, energy efficiency, service delivery and

NRW reduction;

(ii) Development of a feasibility report assessing the technical, financial,

environmental, economic and social viability of the abovementioned three

components, assuring compliance with ADB’s requirements;

(iii) Compilation of the procurement list of items to be procured through the project,

including technical specifications, and cost estimations;

(iv) First outline of an institutional and capacity framework, highlighting a set of

recommendations and priority reforms needed for smooth implementation of the

three project components and the overall improvement of policies and

institutional arrangements, including identification of the training needs within

USUG and OSNAAG and conduction of workshops on project related topics.

55. Reports delivered by the RETA include (all reports were delivered by the RETA in

English and translated in Mongolian):

7Supervisory Control and Data Acquisition

RETA 7918 Final report Page 24

(i) Inception report: review of operations, documents and policies, collection of

baseline data, validation of the project components, stakeholder’s consultation

(submitted August 2012;

(ii) Interim Report: scenarios, options and feasibilities for the three indicated

components, preliminary designs for rehabilitation/modernization of infrastructure

and installation of various equipment, preliminary cost estimations and

provisional environmental, social and financial assessments (November 2012);

(iii) Draft-final Report: feasibility report with detailed technical designs, procurement

and financing plan, cost estimates, monitoring framework for impact assessment,

training needs assessment, implementation arrangements, environmental,

financial and social assessments (January 2013);

(iv) Final report: Final report (this report), including comments from stakeholders

(April 2013);

(v) Initial Environment Examination for the project components; and

(vi) Bidding documents for all identified works packages.

C. Relation with the Investment Program PPTA 7970-MON

56. The RETA has been conducted in parallel to the PPTA investment program: the

RETA designed and prepared the interventions and investments that are related to one

of the components of the investment program. Close coordination and cooperation with

the PPTA consultants’ team was therefore needed and was conducted through regular

consultations.

57. Coordination between the RETA and the PPTA has been done under the leadership

of the PPTA consultant. The RETA team reported directly to the PPTA consultant, who

included the RETA reports in the PPTA reports, and aggregated and consolidated all

related documentation, procurement lists and reports to produce one final Multitranch

Financing Facility (MFF) document, Report and Recommendation of the President (RRP)

and facility administration manual (FAM).

D. Relation to other programs

58. Within UB several other programs on water supply and wastewater are being

implemented. These are:

JICA

- Study on development of projects in the water and sewerage sector by NJS

Consultants and Tokyo Gesuido Service;

- Study strengthening the regulation of industrial wastewater;

- Planning for the reduction of NRW, improvement of the SCADA system and the

water distribution system (Bureau of Waterworks, Tokyo Metropolitan

Government).

Koica

- Master plan for water source development and to implement the survey upon the

potential of groundwater resources of UB city (Grant aid, completion year 2013);

RETA 7918 Final report Page 25

- Koica implementing a project in Yarmag district to develop 20,000 m3/day

groundwater and construction of a water supply facility (Grant aid, completion

2013).

WHO

- Water Safety Plan for USUG sponsored by the ADB (Grant aid, completion 2013).

KfW

- New Nisek Airport Treatment District. In this area water supply and wastewater

treatment will be built to provide for an estimated 170,600 residents in 2030.

World Bank

- Urban Services Rehabilitation Project (1990 – 1996);

- Ulaanbaatar Services Improvement Project in 3 phases.

RETA 7918 Final report Page 26

III. Short description of Ulaanbaatar8

A. General

59. Ulaanbaatar (literally "Red Hero") is the capital and by far the largest city

of Mongolia. An independent municipality, the city is not part of any province, and its

population as of 2008 is over one million and now estimated at 1.3 million (2012).

Located in north central Mongolia, the city lies in the Tuul River valley, at an elevation of

about 1,310 meters above mean sea level. It is the cultural, industrial, and financial

heart of the country. It is the center of Mongolia's road network, and is connected by rail

to both the Railway in Russia and the Chinese railway system. The city was founded in

1639 as a movable (nomadic) Buddhist monastic center. In 1778 it settled permanently

at its present location, the junction of the Tuul and Selbe rivers. Before that it changed

location twenty-eight times, with each location being chosen ceremonially. In the

twentieth century, Ulaanbaatar (UB) grew into a major manufacturing center. Many of

the industries are located in the Southern and South-western part of the city.

60. Owing to its high elevation, its relatively high latitude, its location hundreds of

kilometers from any coast, and the effects of the Siberian anticyclone, UB is the coldest

national capital in the world, with a monsoon-influenced, cold semi-arid climate that

closely borders a subarctic climate. The city features brief, warm summers and long,

bitterly cold and dry winters. Most of the annual precipitation of 216 millimeters falls

from June to September. It has an average annual temperature of −2.4 °C. The city lies

in the zone of discontinuous permafrost, which means that building is difficult in

sheltered aspects that preclude thawing in the summer, but easier on more exposed

ones where soils fully thaw. Suburban residents live in traditional Gers that do not

protrude into the soil.

61. UB is divided into nine districts: Baganuur, Bagakhangai, Bayangol, Bayanzurkh,

Chingeltei, Khan-Uul, Nalaikh, Songino Khairkan, and Sukhbaatar. Each district is

subdivided into Khoroos, of which there are 121. The “concrete” city consists of a central

district built in Soviet 1940s and 1950s-style architecture, surrounded by and mingled

with residential concrete tower blocks. In recent years, many of the tower block's

ground floors have been modified and upgraded to small shops, and many new buildings

have been erected. Many inhabitants of UB, especially those that migrated from the

rural areas, live in large so-called Ger quarters to the North of the central district.

Figure 1 Satellite image of Ulaanbaatar (Source: Google Earth).

8 Information to some extent from Wikipedia.

RETA 7918 Final report Page 27

62. Ulaanbaatar is stretching out over a length of approximately 27 km, from East to

West. Along the North-South axis, the “concrete” city is barely 4.5 km, but the Ger

areas extend an additional 6 km to the North, with some Gers to be found as far as 16

km north of the concrete city. Elevations in the East are slightly higher, at ~1,340 m,

than those in the West at 1,250 m. To the North and South elevations are rapidly

increasing, with some of the Ger areas built on the Northern hills at elevations of 1,600-

1,700 m. The airport is located in the South-western part of the city.

E. Social and Natural Environment9

i. Social conditions

63. The Mongolian economy has been in good condition (growth of 16.7 % year on

year in the first quarter of 2012). This economic growth however is also causing inflation

which touched 16% in April 2012, above the Bank of Mongolia’s inflation target of 10%.

Economic growth is being led by the expanding trade, growth of transport and

development of the Oyu Tolgoi mine. As for the fiscal balance, fiscal deficit reached

4.7% of GDP in March 2012, the highest level in the past 2 years. Mongolia has some of

the world’s largest untapped mineral deposits. However due to the international

economic slowdown capital investments in infrastructure are lacking and the riches are

not exploited yet.

64. Household income has increased rapidly, especially after 2005, from only 3.7

USD/household per month in 1992, to an average of 676,392 MNT or 490 USD per

month per household in 2011.

65. The population of UB has been increasing rapidly, mainly because of influx from

rural areas. Most of the migrants settle in the Ger areas. Whereas the central district

was established in accordance with the City Development Plan, the Ger areas develop

spontaneously, without much planning. The level and standard of services in the Ger

areas such as roads, water supply, sewerage, heating, etc., is significantly lower than

those in the central district.

ii. Natural Environment

66. UB is located in the Tuul river valley, with almost the entire city located on its

North bank. The Tuul River originates at the Henteyn Nuru mountain range, east of UB,

and has a total length of 819 km before it merges with the Orhon River, a tributary of

the Selenge River that feeds Lake Baikal. The Tuul River basin has an area of 49,774

km2. At UB the long term annual average discharge is about 26m3/s (1941 – 2010)10.

67. Downstream of UB the valley of the Tuul river widens, permanent tributaries are

scarce and the river starts losing water leading to an on average small reduction of

runoff in downstream direction. Approximately two thirds of the runoff occurs between

the start of June and the end of August of each year. The river is frozen during the

winter. Between December and March the river runoff is very low, less than one percent

of the annual total flow.

9 From JICA: Study on the strategic planning for water supply and sewerage sector in Ulaanbaatar City in Mongolia (interim report October 2012) 10 Integrated water management national assessment report (Ministry of Environment, 2012)

RETA 7918 Final report Page 28

68. The geomorphology of the Tuul river basin is included generally in a mountainous

area and formed from mountain range, its mountainside and foot, streams, river mount,

valley and narrow ravines. The mountains surrounding the river basin become a

recharge region of groundwater, the valley of UB is an accumulation, transference foot

region. The geological structure of the basin covers granite rock penetrated

sedimentary, magic rocks of Cambrian, Devon, Carbon periods frozen on depth at

Jurassic and Triassic periods that distributed. Tertiairy (Neogene, Paleogene) sediments

are averagely 80 m thick, mainly have clayish structure of not penetrated water. Modern

quaternary of Holocene aged alluvial, lake, and wind originated sediments distributed

along Tuul river valley contains comparatively high content of groundwater resources.

69. UB depends entirely on groundwater for its water supply and abstractions have

increased steadily in recent years. Studies by the Ministry of Environment (2012), the

Water Authority (2005 and 2010) and others estimate that a total installed capacity of

339,700 m3/d of groundwater is available, of which the installed capacity for USUG is

255,000 m3/d.

70. JICA carried out preliminary studies regarding the recharging of groundwater.

Assuming a 9% rate of recharge and an annual precipitation of 342 mm/year,

groundwater recharge is estimated at approximately 540,000 m3/day. This would show

that groundwater is not overused, at present, but that with increasing abstractions this

could soon be the case. The JICA study also conducted research on improving

groundwater resources, among others by creating an underground dam to store water.

In a recent more thorough study (2012) of the Ministry of Environment and Green

Development the renewable groundwater resources are calculated to be over 1 mio

m3/day which indicates that the urgency is not as high as calculated in the JICA study.

RETA 7918 Final report Page 29

IV. Water supply – Description of the system

A. Current Master plan

71. The existing Water and Wastewater Master Plan of Ulaanbaatar, developed in

2006 with assistance of AFD (l’Agence Francaise de Développement). It used the year

2020 as planning horizon. JICA is in the process of developing a new Master plan with a

2030 planning horizon.

72. Water demand is projected to double between now and 2030 as a result of

planned urban developments in the southern and western areas of the city. The existing

4 water abstraction areas will remain the major water sources, but two additional well

fields are identified as new water sources, at Yarmag (for the Airport area) and the 5th

Water Source (for Biokombinat and the New City Center).

73. The JICA master plan identifies three major adjustments that are required to

improve water distribution and transmission: the.

(i) Separation of distribution networks to ensure good pressure management. At the

moment water from different sources and reservoirs with various pump heads

and levels are mixed and distributed in a single network. This creates high

pressures in the low lying areas and low pressures in the areas with high

elevation. It is energy inefficient and it is proposed to separate the network in

such a way that water will flow to the areas that can be fed by using the natural

gravity. By doing so it is possible to decommission pumping stations at Tasgan

and Toirgiin and reduce electricity expenses;

(ii) Replacement of pipes (51 km) in Suvbaatar Plaza and the Meat and Industrial

supply areas to counter leakage and improve water quality;

(iii) Extension of the network in accordance with the new housing area development

planned in the “Ulaanbaatar Services Improvement Project 2” and the “40,000

households’ project”.

Only the extension of the network has been implemented, so far. The separation of the

network is still an important issue to be implemented, not only to improve energy

efficiency by managing pressures, but also to reduce leakage. Replacement of pipelines

is also still a priority as with age the amount of leakage of the network will increase and

resources will be wasted.

F. Description of USUG’s water supply system

74. The water supply network for the core of Ulaanbaatar consists of one integrated

system with pumping stations that supply groundwater from a number of well fields into

the distribution system.

75.

76.

77.

RETA 7918 Final report Page 30

78. Figure 2 provides a graphical overview of the locations of main assets in the

water supply scheme (pumping stations, reservoirs and booster stations, excluding

conduits and valves).

Figure 2 Overview of assets, pumping stations and reservoirs.

79. USUG’s water supply is entirely based on groundwater extracted from four well

fields located within the Tuul river valley at the southern side of the city (see Figure 1).

The names of the sources, starting from upstream side are: Upper Source, Central

Source, Industrial Source and Meat Source (also called Meat Complex). Central Source is

the most important as water distributed from this source accounts for approximately 42

% (63,600 m3/day) of the total distributed water in 2011. Nisekh and Bayangol stations

are two ‘stand-alone’ stations, supplying water locally, and are not inter-connected to

Ulaanbaatar’s main distribution network. Currently, the source water is of generally good

quality and sufficient quantity and is supplied to the distribution system without any

treatment, except that disinfection by chlorine is applied.

80. The main distribution network covers an area with approximately 1 million

inhabitants, with planned growth to over 1.6 million in the year 2030. The network of

predominantly looped configuration consists of approximately 547 km of pipes, laid in a

RETA 7918 Final report Page 31

hilly area with elevation differences of up to 160 m. Information on material, diameter,

age and length are presented in Table 2 and Table 3.

Table 2 Material, diameter and length of distribution pipes

Material Diameter (mm) Length (m) Remark

Cast iron 100 – 500 40,069

Steel 500 – 800 310,195

Polyethylene - 150 197,00 Ger area

Sum 547,264

Table 3 Age and length of distribution pipes

Age Length (m) Share (%)

1959 – 1972 (over 40 years) 75,493 13.8

1973 – 1982 (over 30 years) 149,832 27.4

1983 – 1992 (over 20 years) 82,618 15.1

1993 – 2007 (less than 20 years) 239,321 43.7

Total 547,264 100.0

81. A schematic layout of the main distribution pipelines is presented as Figure 3.

Figure 3 Schematic layout of UB distribution system.

82. The water pumped from deep wells at the sources is normally collected in the

storage reservoirs, where chlorination takes place. From there, it is pumped towards the

distribution area by the source pumping station. An exception is Upper Source, located

40 km upstream of Ulaanbaatar, where the water from the source is first pumped

RETA 7918 Final report Page 32

towards X-reservoir, from where it is supplied towards the city by gravity. The X-

reservoir functions as a break-pressure tank. Data on the capacity of the four sources

and the present level of abstractions are presented in the table below.

Table 4 Water production data (m3/h)

Location Capacity Average 2011 Currently

Central 4,750 2,634 2,653

Upper 3,75011 2,236 2,204

Industrial 1,500 895 924

Meat 625 480 485

Total 10,625 6,245 6,266

83. Due to the rather hilly configuration of Ulaanbaatar, a number of booster stations

and service reservoirs are located within the city area. The booster stations ensure

sufficient pressure in the network, especially in the northern areas located at higher

elevations. The actual existing reservoir capacity is 41,000 m3 and detention time is 5.7

hours. This is sufficient to be able to manage peak demand periods and there is no need

for additional reservoirs. There is no clear separation between transmission and

distribution pipelines and water flows in to the reservoirs during low demand periods

whereas it contributes to the supply in high demand periods of the day like early

morning and early afternoon. From the service reservoirs, water is supplied by gravity to

the customers. The main information about these components is given in Table 5, which

includes the above-mentioned X-reservoir.

Table 5 Reservoirs and booster pumping stations in Ulaanbaatar

Reservoir / Booster station Volume (m3) Pump capacity

(m3/h)

Hailast reservoir and booster station 1,500 m3 64 m3/h

Tolgoit booster station - 96 m3/h

Sharkhad reservoir and booster station 500 m3 10 m3/h

Taskhan reservoir and booster station 18,000 m3 630 m3/h

West reservoir and booster station 6,000 m3 950 m3/h

Toirgiin booster station - 520 m3/h

X-reservoir 6,000 m3 -

North-east reservoir 6,000 m3 -

Chingeltei 500 m3 110 m3/h

3rd – 4rd district reservoir 6,000 m3 -

84. Monitoring data about pressure, flow and energy consumption, which are needed

for daily adjustments in the operations of these assets, but also in case of emergencies,

are partly lacking for both the pumping stations, as well as in the water distribution

network, reservoirs and booster stations. Where data is available, it is often not

reviewed nor scrutinized for improvement purposes of the water supply scheme.

85. Due to the lack of standardized, automated operating systems and monitoring

routines, room exists for USUG to increase the efficiency of operations of assets in terms

of flow, pressure and energy consumption. By installation of monitoring devices,

11 The original Upper scheme was laid out for 4,000 m3/h. The current well capacity is slightly lower.

RETA 7918 Final report Page 33

operational control systems (SCADA) and flow control valves, USUG will be enabled to

better control the water supply scheme and prepare itself for the envisaged urban

developments.

G. Water Safety Plan12

86. Water Safety Plans (WSPs) are an increasingly recognized cost-effective,

management-oriented, preventive approach to drinking-water safety. Through the

development of a WSP, water supply systems are systematically assessed from source

to consumers, risks identified and control measures put in place to minimize the risks of

contamination. USUG, in cooperation with WHO and ADB, has worked on the

development of a WSP (2012-2013). The main findings are presented below.

87. USUG is committed to have a WSP for their water supply at UB. They have

established a WSP team within the organization and assigned a number of key personnel

to this group. The Central Laboratory has key responsibilities for the development of the

WSP for USUG. It is advisable that these responsibilities are more widely distributed to

include other members of the WSP team such as water supply engineers and operational

management at USUG.

88. The UB water supply provides water for 1.3 mio people from four sources, four

separate treatment plants and by way of three different delivery processes. The WSP will

eventually include all system components and processes under the control of USUG from

the catchment and source, through the treatment and storage processes, finishing at the

distribution end points where the consumers access the water. As the methodology of

risk assessment and WSP are new to staff of USUG, progress has been minimal, so far.

Staff will have to understand the processes, risks involved and priorities first, to be able

to decide on appropriate actions.

89. The key features of the risk assessment are as follows;

i. The disinfection processes and procedures currently in existence provide

inadequate protection against micro-pathogenic contamination of the water

supplied to customers, among others because the creation of disinfection by-

products “forces” USUG to reduce the residual level of Free Available Chlorine

(FAC) to insufficient levels;

ii. There is a high potential for disease outbreaks as a result of the rather

unsatisfactory filling procedures and practices at all kiosks;

iii. Operational monitoring is poorly controlled with incorrect reporting, as

witnessed by the consultant during on-site investigations. In addition,

there is inadequate training of operational personnel in the calibration of

important (and expensive) automatic monitoring equipment;

iv. The production of disinfection by-products, coupled with the lack of a

regular flushing program and the lack of pre-storage particle removal

process suggests a high likelihood of bio-mass build-up in both the

reservoirs and throughout the distribution system;

v. To protect public health, the handling and storage of water throughout the

truck operations needs to improve, to ensure that contamination pathways

are either sufficiently reduced, or eliminated altogether;

vi. There are a number of improvements that will require the development of

new or improved operational procedures, as well as staff training to

support these.

12 From Water Safety Plan (WSP) Report (Draft Version 3), March 2013

RETA 7918 Final report Page 34

RETA 7918 Final report Page 35

V. Water supply – Energy saving

90. At several pumping stations, valves downstream of pumps are throttled and at

some places in the distribution network pressures are found to be high, hinting at the

possibility to reduce USUG’s energy use in the water distribution. This section contains

proposals that aim at reducing the energy consumption of the UB water supply system.

Focus is on the high pressure distribution pumps at the four production sites Upper

Source, Central, Industrial and Meat.

91. The table below shows the energy consumption of the four main pumping

stations operated by USUG.

Table 6 Average energy consumption pumping stations

Pumping

station

Av. Energy consumption (kWh/m3)

Total Borehole Distribution

pumps pumps

Upper source 0.826 0.360 0.466

Central 0.582 0.250 0.332

Industrial 0.642 0.348 0.294

Meat 0.380 0.159 0.221

Average 0.661 0.296 0.365

The table shows that the distribution pumps at the Upper Source PS consume much

more energy per m3 of water distributed than the distribution pumps at the other

pumping stations. Initial energy saving efforts concentrated on the Upper PS, therefore.

92. Possible energy saving at each of the four Pumping Stations is presented below in

sections A, B, C and D. The sum of the energy savings is shown in Section E. As it was

found that, because of the layout of the transmission mains, energy saving at the Upper

PS would be minimal, at best, an additional option F was investigated whereby water

supply from Upper would be reduced and the supply by Central (where saving is

possible) increased. Thus, the options described in this section can be summarized as:

A. Energy saving at the Upper PS;

B. Energy saving at the Central PS;

C. Energy saving at the Industrial PS;

D. Energy saving at the Meat PS;

E. Sum of energy savings at the 4 stations Upper, Central, Industrial and Meat;

F. Sum of energy saving at the 4 stations Upper, Central, Industrial and Meat by

changing supply zones of Central and Upper PS.

93. It turns out that option F, the sum energy saving at all stations and changing

supply zones of Upper and Central, provides a much higher energy saving than option E

(sum of just the energy savings A, B, C and D). For reasons explained in Section V.I

USUG is not in favor of Option F. But as it values energy savings, it has agreed with

implementation of Option E, individual improvements at Upper, Central, Industrial and

Meat.

RETA 7918 Final report Page 36

94. This section concentrates on saving energy, among others by a reduction in the

pressures maintained in the distribution network. While this can provide a significant

reduction in energy consumption, it has another very favorable by-product, reduction of

water losses through leakage. Because pipes are buried at about 3.5 m (and often more)

below the surface level, leakage in the distribution network is hard to detect and costly

to repair. For this reason, the NRW-reduction program proposed in this feasibility report

concentrates on cheaper measures to reduce NRW, rather than through the difficult and

costly method of reducing physical leaks. But a pressure reduction helps to solve this

problem. Investigations in VEI-supported NRW-reduction projects have shown that the

reduction in leakage can be even more than proportional. For example, reducing the

pressure by 20% may reduce physical losses by more than 20%.

A. Energy saving at the Upper Pumping Station

95. A schematic of the Upper Source system is presented below. The energy

consumption at pumping station Upper Source is high mainly because the water has to

be pumped to the X-reservoir through a 28 km long transmission main that has to cross

several hills of which one of 1,510 m elevation.

Figure 4 Schematic layout of Upper Source and X-reservoir

96. Pumping station Upper Source pumps water to the X-reservoir water via two

28.65 km long parallel steel pipelines. A longitudinal profile of the transmission mains is

shown in Figure 5. From X-reservoir water is supplied to Ulaanbaatar city. The incoming

and outgoing main pipelines of the X-reservoirs are not connected, which means an

independent operation due to a ‘hydraulic cut’. Important technical details of the PS

Upper Source are:

i. The pumping station was built approx. in 1992;

ii. The level at Upper Source reservoir is 1,420 m+MSL;

iii. The level at X-reservoir is 1,426 m+MSL;

iv. The original design capacity was 4,000 m3/h;

v. The pumps were replaced with Kubota pumps in 2006;

vi. A total of five (5) pumps are now installed: 2 pumps of 2,100 m3/h and 3 pumps

of 1,200 m3/h, which all pump against a head of 140 mwc at their best efficiency

point;

vii. There are no frequency converters.

RETA 7918 Final report Page 37

Figure 5 Pipe profile between pumping station Upper Source and X-reservoir.

97. Pumps with high heads are required to conquer the high hill in the longitudinal

profile. The original (Russian) design capacity of the pumps of 4,000 m3/h was a

reasonable choice as it resulted in a hydraulic gradient without any unnecessary losses

(see Figure 6 below).

Figure 6 Hydraulic grade line with original design capacity of 4,000 m3/h.

1340

1360

1380

1400

1420

1440

1460

1480

1500

1520

1540

1560

Upper to X-reservoir: Pipeline

Ground level

Pipeline

Up

per

So

urc

e

X-r

eserv

oir

X-r

es

erv

oir High pump

pressure

Up

pe

r S

ou

rce

RETA 7918 Final report Page 38

98. During site visits in September and November 2012, it was observed that Upper

Source PS was pumping with much lower flows than the original design flow of 4,000

m3/h:

i. Generally, only one of the large pumps is in operation;

ii. Valves between the pumps and the transmission mains are throttled

(approximately only 20% open), to ensure that, with the lower flows, the pumps

operate within their preferred range; flows from the pump vary a little over the

day and from day to day, generally between 2,100 and 2,300m3/h and ~2,200

m3/h on average, to ensure that sufficiently high water levels are maintained at

the X-reservoir. Figure 7 shows the variations in flow in October 2012. Changes

in flow are achieved by adjusting the throttled valves a little;

iii. At the highest point, ~16 km from the pumping station, air enters the pipelines,

causing the water to flow in a free-fall over a length of ~4 km (see Figure 8

below;

iv. The control valves in the incoming lines at the X-reservoir are fully open

(information operator).

Figure 7 Flows from Upper PS to the X-reservoir (first half of October 2012).

99. Energy is lost in the current pumping process at Upper Source in two ways: 1)

valves are throttled (they have to be to avoid a very large flow) downstream of the

pumps; and 2) after the top of the hill, over 60 m of head is lost because the water in

the transmission pipes continues in free-fall (see Figure 8). The throttling of the valves

could be counteracted, and energy saved, through modifications to the pumps (for

example by changing impellers, or the entire pumps). However, the energy lost after the

top of the hill cannot be retrieved.

1800

1900

2000

2100

2200

2300

2400

2500

2600

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

m3/h Upper PS

Max

Av

Min

RETA 7918 Final report Page 39

Figure 8 Current hydraulic grade line transmission from Upper PS to X-

reservoir

100. The throttled valves cause an average pressure drop of ~19 mwc. Changing the

impeller could change the working point of the pump, whereby the pump would pump a

flow of 2,200 m3/h at 116 mwc, rather than the 135 mwc under which it now operates.

The energy saving will be approximately 3,432 kWh/day, as shown in the table below.

Table 7 Possible energy saving at PS Upper source

Upper Flows Currently Proposed Saving

Time m3/h H

(m) P (kW)

H (m) P (kW)

kWh

1 2230 132 1005

113 860

145

2 2230 132 1005

113 860

145

3 2203 135 1016

116 873

143

4 2200 135 1014

116 871

143

5 2203 135 1015

116 872

143

6 2203 135 1015

116 873

143

7 2206 135 1017

116 874

143

8 2177 136 1011

117 870

141

9 2160 137 1010

118 870

140

10 2153 137 1007

118 868

140

11 2149 137 1005

118 866

139

12 2158 137 1010

118 870

140

13 2191 136 1017

117 875

142

14 2188 136 1016

117 874

142

15 2198 135 1013

116 870

143

16 2188 136 1016

117 874

142

17 2218 134 1015

115 871

144

18 2236 132 1008

113 863

145

1340

1360

1380

1400

1420

1440

1460

1480

1500

1520

1540

1560

Upper to X-reservoir: Now 2200 m3/h

X-r

es

erv

oir

Energy loss

from free-fall

Energy loss from throttled valves

Up

pe

r S

ou

rce

RETA 7918 Final report Page 40

Upper Flows Currently Proposed Saving

Time m3/h H

(m) P (kW)

H (m) P (kW)

kWh

19 2228 132 1004

113 860

145

20 2234 132 1007

113 862

145

21 2239 132 1009

113 864

145

22 2250 131 1007

112 861

146

23 2241 135 1033

116 888

145

24 2222 135 1024

116 880

144

Totals 52,901 135 24,300 116 20,868 3,432

101. The current energy use as shown in the above table is 24,300 kWh for 52,901

m3/day of water pumped, or 0.459 kWh, slightly less than the actual energy use of

0.466 kWh/m3 recorded at Upper.

102. The possible energy reduction of 3,432 kWh/day, corresponding with a 14%

saving, translates to an annual saving of ₮110 million per year, equivalent to almost

USD 80,000 per year (see the table below). Changing the impeller of one of the pumps

would cost approximately 50,000 USD, so its cost would be recovered within one year.

Table 8 Energy saving at PS Upper Source

Upper PS kWh/day kWh/year ₮ mio/yr USD/yr

Currently 24,300 8,869,610 780.5 565,598

Possible 20,868 7,616,835 670.3 485,711

Saving 3,432 1,252,775 110.2 79,887

B. Energy saving at the Central PS

103. A schematic diagram of the Central PS is shown in Figure 9 below. Two pumping

groups can be distinguished in the Central PS. Pumping group 1 consists of four pumps

(1 to 4 in Figure 9), each with a capacity of 630 m3/h against a head of 90 mwc (at the

best efficiency point). These pumps are provided with a frequency converter. Pumping

group 2 consists of three large pumps (5-7 in Figure 9), each with capacity 2,000 m3/h

against a head of 100 mwc (at best efficiency point). Normally, only one large pump is

in operation. The large pumps are not provided with a frequency converter. The

discharge header of both pump groups is connected (through a throttled valve).

RETA 7918 Final report Page 41

Figure 9 PS Central with two pumping groups

104. From the Central PS three outgoing pipelines (see Figure 9) supply water to the

Central supply zone, a 400 mm pipeline, one of diameter 600 mm and one of diameter

800 mm. All three outgoing pipelines supply water to the Central supply zone with a

pressure of 51 mwc. This is achieved in a different way for the small pumps and the

large pumps. The small pumps at pump group 1 are provided with a frequency converter

for which set points of 51 mwc are used. For the large pump group, the pressure of 51

mwc is achieved by throttling the valves immediately downstream of the pumps.

105. It turns out that a pressure of 51 mwc in the outgoing mains of the Central PS is

exactly enough to maintain a minimum pressure of 20 mwc in the distribution system at

the CTPs. A pressure of 20 mwc is the minimum required by the contracts between

USUG and OSNAAG, the housing authority of UB. Pressure data of some CTPs in the

Central supply zone are shown in the charts below (see Figure 10). Judging from the

high pressures at night, there needs to be no fear that the 51 mwc pumping pressure

used at night is insufficient. Lowering the night set point to 46 mwc, or even lower,

would probably be acceptable. There is probably scope to increase set points during the

day with a few metres, especially if demands are increasing in the future.

Throttled valve

Throttled valves

RETA 7918 Final report Page 42

Figure 10 Pressures at CTPs in the Central supply zone (1st half October 2012)

106. Water demand varies over the day (see Figure 11 for flows supplied by Central

PS over the first 14 days of October 2012). During the night, from about 20h00 to

07h00, the flow varies between 2,200 and 2,600 m3/h, with an average of

approximately 2,400 m3/h. During the daytime demand increases to an average 3,000

m3/h (variations between 2,500 and 3,300 m3/h) from 08h00 to about 14h00. After

14h00, demand slows down gradually. The average flow supplied by Central PS was

2,653 m3/h, or just over 64,000 m3/d, during the first half of October 2012.

Figure 11 Flows delivered by PS Central during the first half of October 2012

107. During the night, from about 20h00 to 07h00, only one large pump is in

operation. A large pump can supply water with a flow between 2,200 and 2,600 m3/h.

Generally, during the daytime a small pump must be added. It happens occasionally that

the water demand is only just a little higher than what the large pump can supply on its

own. The operator then decides to add a small pump but, to avoid it would run too

slowly, at the same time increases the pressure set point from the usual 51 to 58 mwc.

15

20

25

30

35

40

45

50

55

60

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

mwc Pressures in Central PS supply zone

CTP1 CTP2 Apt 15

Apt 23 West side CTP 40

1800

2000

2200

2400

2600

2800

3000

3200

3400

3600

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

m3/h Central PS

Max

Av

Min

RETA 7918 Final report Page 43

The higher set point increases water demand from Central PS, as some supply to the

area that normally is derived from the X-reservoir will be taken over by the supply from

Central. With the increased set point and increasing water demand, the small pump

supplies more, making its operation sufficiently stable.

108. The small pumps are equipped with a frequency converter and operate as energy

efficiently as is possible. However, energy is wasted in the way the large pumps are

operated, whereby pressures are reduced by throttling valves. The energy currently

used is shown in the calculation table below. The flows shown are the average hourly

flows for each hour of the day during the first 2 weeks of October 2012.

Table 9 Energy use by the pumps at PS Central

Present Total Large pumps Small pumps Total

Time Flows Flows H (m) P (kW) Flow H (m) P (kW) kWh

1 2459 2459 89 748 748

2 2401 2401 91 747 747

3 2364 2364 93 752 752

4 2354 2354 93 749 749

5 2347 2347 93 746 746

6 2376 2376 93 756 756

7 2440 2440 90 751 751

8 2930 2500 90 769 430 51 91 860

9 2935 2500 90 769 435 51 92 861

10 3034 2500 90 769 534 51 113 882

11 3071 2500 90 769 571 51 120 890

12 3014 2500 90 769 514 51 108 878

13 2925 2500 90 769 425 51 90 859

14 2984 2500 90 769 484 51 102 872

15 2902 2500 90 769 402 51 85 854

16 2793 2500 90 769 293 58 85 855

17 2816 2500 90 769 316 51 67 836

18 2653 2500 90 769 153 58 45 814

19 2617 2500 90 769 117 58 34 804

20 2630 2500 90 769 130 58 38 807

21 2627 2500 90 769 127 58 37 806

22 2582 2500 90 769 82 58 24 794

23 2500 2500 90 769 770

24 2477 2477 91 771 771

Totals 64,229 59,217 90.5 18,332 5,011 55.4 1,130 19,462

109. Total energy used in one day, according to the above table is 19,642 kWh for a

total of 64,229 m3/day of water pumped. This amounts to 0.303 kWh/m3, slightly less

than the 0.332 kWh/m3 actually recorded.

110. Energy saving can be achieved by avoiding the throttling of the pressure mains

just after the large pumps. This would normally be achieved by installing frequency

converters at each of the pumps. However, for 6 kV pumps, frequency converters had

been tried at the CWWTP wastewater treatment plant, with disappointing results:

RETA 7918 Final report Page 44

Because of voltage fluctuations, the frequency converter operations became unstable

and the converters burned out within a few months and were never used again.

Therefore, energy saving efforts focused initially on replacing the pumps by new 6 kV

pumps that would pump an average 2,500 m3/h at 51 mwc. This would save energy

over the 24 hour period that the large pumps are running and would cover water

demand during most of the off-peak hours. The Q-H curve of the pumps should cover

operations up to a flow of 2,800 m3/h. For higher flows, one of the smaller pumps of

group 1 should pump at the same time, as well. Details of such an arrangement are

shown in the table below.

Table 10 Energy savings with a different large pump at Central

Proposed Total Large pumps Small pumps Total

Time Flows Flows H (m) P (kW) Flow

H

(m) P (kW) kWh

1 2459 2459 52 433 433

2 2401 2401 53 431 431

3 2364 2364 54 432 432

4 2354 2354 54 430 430

5 2347 2347 54 429 429

6 2376 2376 54 434 434

7 2440 2440 52 429 429

8 2930 2500 51 432 430 51 91 522

9 2935 2500 51 432 435 51 92 523

10 3034 2500 51 432 534 51 113 544

11 3071 2500 51 432 571 51 120 552

12 3014 2500 51 432 514 51 108 540

13 2925 2500 51 432 425 51 90 521

14 2984 2500 51 432 484 51 102 534

15 2902 2500 51 432 402 51 85 516

16 2793 2500 51 432 293 51 75 507

17 2816 2500 51 432 316 51 67 498

18 2653 2500 51 432 153 51 39 471

19 2617 2500 51 432 117 51 30 461

20 2630 2500 51 432 130 51 33 465

21 2627 2500 51 432 127 51 33 464

22 2582 2500 51 432 82 51 21 453

23 2500 2500 51 432 432

24 2477 2477 51 428 428

Totals 64,229 59,217 51.7 10,351 5,011 51 1,098 11,449

Saving 41.2% 8,013

111. The saving is quite high at 8,013 kWh per day, or 41% of energy used by the

distribution pumps. It reflects how much energy is wasted by throttling the valves just

downstream of the pumps. The table below shows what it means in financial terms.

RETA 7918 Final report Page 45

Table 11 Energy saving at PS Central

Central PS kWh/day kWh/year ₮ mio/yr USD/yr

Currently 19,462 7,103,593 625.1 452,983

Possible 11,449 4,178,881 367.7 266,479

Saving 8,013 2,924,712 257.4 186,503

112. For a number of reasons, USUG could not agree with changing the pumps at

Central. With USUG hesitant to change all pumps, as there would be no way back, it was

suggested to change one large pump first, as one large pump can handle the required

flow, with the remaining large pumps remaining standby. Supply and installation of such

a large pump is estimated to cost 180,000 USD (2012 cost level), which would be

recovered within one year.

113. After lengthy discussions, USUG declined to change one pump at Central, but

would agree to an option involving frequency converters. Providing the three large

existing 6 kV pumps with frequency converters would provide a much desired flexibility

and would keep all options open at the same time. VEI investigated this option in much

detail, fearing a repeat of what happened to the converters at the CWWTP. Fortunately,

pumping pressure management is much in vogue, not only for energy saving reasons

but also to reduce NRW, and frequency converters improve fast with prices coming

down.

114. The latest 6 kV models of ABB, but other firms will have similar models, are much

improved and can handle voltage fluctuations well, especially with slightly over-sized

models. They do not require a Cosine Phi adjuster and are able to cope with lower

voltages, a recurrent problem of the power supply in UB. For the new models, the high

summer temperatures of UB are no problem also. De-rating is only necessary for

temperatures above 40 0C. By the selection of the oversized model, this will be

accommodated, even at extreme temperatures.

115. The costs of frequency converters are higher than those for replacing the pumps:

- Changing one pump would cost UDSD 180,000 (2012 cost level);

- Changing 3 pumps would cost USD 540,000 (2012 cost level);

- Keeping existing pumps, but adding 3 6 kV frequency converters would cost

approximately USD 1.19 million (2013 cost level). The costs include

installation and the costs of shielding the power cables to the existing pumps.

The internal rate of return is less than before, but still a respectable 13.2% over a 15-

year period.

C. Energy saving at PS Industrial

i. Introduction

116. The PS Industrial supply area is only small (see Figure 12), but it should be noted

that the area shown is not hydraulically isolated from adjacent supply areas. There is a

hydraulic connection with water supply areas Upper Source and Central. The elevation of

the Industrial water supply area varies between 1,280 and 1,286 m+MSL.

RETA 7918 Final report Page 46

Figure 12 PS Industrial - distribution area

117. Four pumps are installed at pumping station Industrial. Generally, two pumps are

in operation (and two pumps are standby). The pumping station is equipped with two

frequency converters. In October 2012, flows varied between 600 and 1,100 m3/h, with

an average of 924 m3/h (see the chart below).

Figure 13 Industrial PS - Flow variation over the day (October 2012)

118. There are no CTP pressures recorders installed in the water supply area of

Industrial. Taking into account recorded outgoing pressures at PS Industrial, the

calculated pressure at the highest en farthest customer would be ~32 mwc during the

day, a little higher at night.

400

600

800

1000

1200

1400

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

m3/h Industrial PS

Max

Av

Min

RETA 7918 Final report Page 47

ii. Energy saving through reduced pressure

119. The current pressure can be reduced to the OSNAAG contract of minimum 20

mwc. As margin for the energy saving-calculation a pressure of 25 mwc will be

assumed. To save energy, it is proposed to drop the minimum pressure in the supply

area by 7 mwc, from 32 to 25 mwc. Pressure set points for the pumps should be

lowered by 7 m also, during the day, to 51 mwc and a little lower at night,

conservatively estimated at 49 mwc. Calculation tables are presented below.

Table 12 Energy use at PS Industrial

Industrial Currently

Proposed

Time Flows H (m) P (kW)

H (m) P (kW)

1 789 52 151

49 142

2 678 52 130

49 122

3 641 52 123

49 116

4 614 52 117

49 111

5 615 52 118

49 111

6 637 52 122

49 115

7 707 52 135

49 128

8 944 58 202

51 177

9 1009 58 215

51 189

10 1065 58 227

51 200

11 1101 58 235

51 207

12 1076 58 230

51 202

13 1071 58 229

51 201

14 1057 58 226

51 199

15 1047 58 224

51 197

16 1049 58 224

51 197

17 1072 58 229

51 201

18 1065 58 227

51 200

19 1065 58 227

51 200

20 1061 58 227

51 199

21 1018 58 217

51 191

22 1025 58 219

51 192

23 925 52 177

49 167

24 852 52 163

49 154

Totals 22,181 55.8 4,594

50.3 4,118

120. Current energy use is calculated at 4,594 kWh for a pumped flow of 22,181 m3/d,

which equals an energy use of 0.207 kWh/m3. The actual energy use for the distribution

pumps, as measured in October 2012, was much higher at 0.294 kWh/m3. It should be

noted that all pumps at Industrial PS are old, which may well explain the higher than

expected energy use. All pumps at PS Industrial will be replaced under this project and

the new pumps should require less energy per m3 pumped.

121. The energy saving achieved by lowering the pump pressure set points is only just

over 10%. In practice, the pump pressure could probably be lowered more. Lower

RETA 7918 Final report Page 48

pressures not only reduce energy costs, but also lower water losses (less water leaks

from the same holes in the pipes) and some actual consumption (taps produce less

water at lower pressures). When demand is indeed less, flows decrease and, with them,

head losses. How much the set points at the PS can indeed be reduced is a matter of

careful operation, whereby the set points are lowered step by step, while checking the

effect of pressures in the network. This lowering of set points can be tested at any time.

122. The calculation of the energy saving in monetary terms is shown in the table

below.

Table 13 PS Industrial – Energy saving distribution pumps

Industrial PS kWh/day kWh/year ₮ mio/yr USD/yr

Currently 4,594 1,676,973 147.6 106,937

Possible 4,118 1,503,006 132.3 95,844

Saving 477 173,967 15.3 11,094

123. As there was quite a discrepancy between calculated and actual energy use at

Industrial, energy saving could be higher than what is shown in the table. In addition, it

may be found that, after the pumps have been replaced, as foreseen under the ADB-

grant, energy use could be reduced further.

124. To reach an optimized pump operation, it is recommended to control the pump

pressures using the principle of ‘Flow Depended Pressure Control (FDPC)’. The purpose

of FDPC is to maintain a constant (minimum required) pressure at the water consumers

independent of the flow. With FDPC, the outgoing flow will be measured. Based on the

measured flow, the system determines an ‘optimal’ outgoing pressure (set point) instead

of a fixed pressure. The resulting outgoing pressure is low at low water demands and

high at high water demand.

125. It should be noted that the above changes will indeed result in an energy saving

for USUG, but others, notably OSNAAG may require additional energy to pump the water

from the delivery points to the levels they require.

D. Reduction pump-pressure at Meat pumping station

i. Introduction

126. Energy per m3 of pumped water at PS Meat at 0.221 kWh/m3 is the lowest of any

USUG operated pumping station. Also the energy costs related to the pumping at the

boreholes is lower than at any other pumping station in UB. However, as pressures in

the Meat PS distribution area are high, there may be some scope for energy saving. This

section describes an energy saving proposal for the Meat PS through a pressure

reduction in the distribution system.

127. The Meat supply area is relatively small and amounts of water from the Meat PS,

at an average 485 m3/h (October 2012) against an average pumping pressure of 53

mwc, are also not very high. Flow variations over the day are shown in Figure 14 below.

Three pumps are installed at pumping station Meat. Generally, one pump is in operation,

with two pumps standby. The Meat PS is equipped with a frequency converter.

RETA 7918 Final report Page 49

Figure 14 Daily flow variations at PS Meat

128. The configuration of the Meat supply area is shown in Figure 15. The Meat water

supply area is supposedly separated from other supply areas. However, considering high

pressures found at some locations, there may be some influence in the Meat supply zone

from other pumping stations.

Figure 15 Overview of the Meat supply area

ii. Current pressures in the Meat distribution system

129. Elevations in the Meat supply area vary between 1,267 and 1,284 m+MSL.

Pressures in three locations, at CTPs, are shown in the charts below. Their locations

within the distribution area are shown in Figure 15 above.

0

100

200

300

400

500

600

700

800

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

m3/h Meat PS

Max

Av

Min

RETA 7918 Final report Page 50

Figure 16 Recorded pressures at resp. Ti-2, Ti-10 and Ti-21

130. Tolgoit ink-2 bair and Tolgoit ink-10 bair are CTPs located close to PS Meat. The

elevation of both is 1,270 m+MSL. Recorded pressures are resp. 60 mwc and 50-55

mwc. Tolgoit ink-21 horoolol is located in the northern section of the Meat distribution

area. Its elevation is 1,284m+MSL. The night pressure is well above 50 mwc; in the

morning a short pressure drop to 25 mwc was observed, but between 07h00 and

midnight, pressure consistently remains 40 mwc. It seems unlikely that these pressures

are caused by only the Meat PS. Influence from other PS and other booster stations

probably plays a role.

iii. Proposed pressure reduction

131. Minimum pressures in the system should be 25 mwc, 5 m higher than the

minimum pressure that USUG has to provide for supplies to OSNAAG. With present

minimum pressures at ~40 mwc, the pumping pressure at PS Meat could be lowered by

15 mwc, possibly somewhat more during the night. The pump curves below show that

this can be realized using the existing frequency converter.

Figure 17 Pump curves for PS Meat (current and proposed)

RETA 7918 Final report Page 51

132. It turns out that the pump efficiency will be a little bit better after reducing the

speed in combination with the same discharge. The current theoretical actual pump

efficiency is approximately 78%. The theoretical actual pump efficiency - after reducing

the speed - will be 80%. For the calculation of the energy saving, this small

improvement is ignored.

133. Consequences for the energy use at PS Meat are shown in the table below.

Table 14 Energy use PS Meat distribution pumps

Meat Current Proposed

Saving

Time Flows H (m) P (kW)

H (m) P (kW)

kWh

1 320 53 62

36 42

20

2 273 53 53

36 36

17

3 245 53 48

36 32

15

4 226 53 44

36 30

14

5 223 53 44

36 30

14

6 244 53 48

36 32

15

7 402 53 78

36 53

25

8 551 53 108

38 77

30

9 615 53 120

38 86

34

10 624 53 122

38 87

34

11 626 53 122

38 88

35

12 608 53 119

38 85

34

13 585 53 114

38 82

32

14 610 53 119

38 85

34

15 580 53 113

38 81

32

16 572 53 112

38 80

32

17 578 53 113

38 81

32

18 586 53 114

38 82

32

19 600 53 117

38 84

33

20 575 53 112

38 80

32

21 563 53 110

38 79

31

22 547 53 107

38 77

30

23 477 53 93

36 63

30

24 401 53 78

36 53

25

Totals 11,631 53.0 2,270 37.3 1,607

663

134. The calculated current energy use is 2,270 kWh for a pumped flow of 11,631

m3/d of water, equal to 0.195 kWh, slightly less than the 0.221 kWh actually measured

in October 2012. Lowering the pressure results in 663 kWh/day reduction, equal to

approximately 29% of the calculated current energy use. That is a high percentage, but

it is possible that after lowering the pressure in the way suggested, the influence of

other pumping stations with higher pressure increases. That would be counterproductive

as the energy costs related to water from all other sources are higher than those of

water supplied by the Meat PS. USUG can test the proposed measures for PS Meat and,

if flows decrease at Meat, while those of other stations increase at the same time,

reverse the process. In that case Meat supply zone can be separated from the system to

prevent this from happening.

RETA 7918 Final report Page 52

135. Table 15 below shows the energy that can be saved, based on a flow of 485

m3/h, in monetary terms.

Table 15 PS Meat – possible energy saving

Meat PS kWh/day kWh/year ₮ mio/yr USD/yr

Currently 2,270 828,508 72.9 52,832

Possible 1,607 586,467 51.6 37,398

Saving 663 242,041 21.3 15,434

136. It should be noted that the energy reduction shown above will indeed be a saving

for USUG, and can be tried instantly at no cost. But others, including OSNAAG may

require additional energy to pump the water from the delivery points to the levels they

require.

E. Sum of energy saving at the 4 main distribution PS

137. The sum of energy savings in distribution pumping at the four main production

locations described above in sections A, B, C and D is presented below.

Table 16 Energy saving in distribution pumping at the 4 main pumping stations

Station Current Possible Save

kWh/day ₮ mio/yr USD/yr kWh/day ₮ mio/yr USD/yr %

Upper PS 24,300 780.5 565,598

20,868 670.3 485,711 14.1%

Central 19,462 625.1 452,980

11,449 367.7 266,477 41.2%

Industrial 4,594 147.6 106,937

4,118 132.3 95,844 10.4%

Meat PS 2,270 72.9 52,832

1,607 51.6 37,398 29.2%

Total 50,626 1,626.1 1,178,348 38,042 1,221.9 885,430 24.9%

Possible saving 12,585 404.2 292,918 24.9%

F. The combination Central-Upper can save more energy

138. More energy saving can be achieved at Central and Upper combined by lowering

the supply for Upper PS, by reducing its supply area and, at the same time enlarging the

supply zone for the Central PS, where significant energy can be saved. An adjustment of

1,000 m3/h is proposed. This would reduce the Upper supply from an average 2,200

m3/h to an average of 1,200 m3/h (varying between 1,100-1,350 m3/h) and increase the

flows at Central from 3,200 to 4,200 m3/h. With a Central well capacity of 4,750 m3/h

such a supply should be no problem. How to handle the proposed new supply flows at

Upper and Central PS is described in the following paragraphs.

139. The current water supply areas of pumping stations Central (in yellow) and Upper

Source (in red) are shown in Figure 18, together with the proposed re-sized supply

areas. The dotted orange line marks the boundaries of high elevation areas.

RETA 7918 Final report Page 53

Figure 18 Areas supplied from Central PS and Upper Source

140. In the proposed situation, only the high located areas (red) will be supplied with

the reduced flow from Upper Source. The elevation of the X-reservoir is high enough and

provides sufficient pressure to supply these high elevation areas by gravity. The low

elevation area on the East, previously supplied from the X-reservoir, will now be

supplied by the Central PS. This will increase flow from the Central PS with the 1,000

m3/h mentioned above.

141. The current and proposed energy consumption for the combined Central-Upper

sources is presented in the table below. The calculation was made using flow data for

each of the 24 hours in the day but, in order to minimize the tables, only the summary

values are shown. It should be noted that, in order to pump the lower quantity from the

Upper PS, a switch would be made from the large pumps to the small pumps. Their

working point is 950 m3/h against a head of 140 m, but they can well pump the larger

quantities required.

Table 17 Energy saving at combined PS Central/PS Upper source

PS Large pumps Small pumps Total

m3/d H (m) P (kW)

m3/d H (m) P (kW)

m3/d kWh/d

Current: Central 59,217 90.5 18,332

5,011 55.4 1,130

64,228 19,462

Upper 52,901 135 24,300

0

0

52,901 24,300

Total 112,118 42,632

5,011 1,130

117,129 43,762

Proposed: Central 83,217 51.7 14,548

5,011 51.0 1,098

88,228 15,646

Upper 0

0

28,901 131 13,217

28,901 13,217

Total 83,217 14,548 33,912 14,315 117,129 28,863

Saving 14,899

Upper source

Central PS

Current Proposed

RETA 7918 Final report Page 54

142. The energy saving of 14,899 kWh/day is considerable and would be as much as

34% for the two pumping stations combined. The annual saving in energy costs for the

four distribution pumping stations would increase from the previous USD 292,918 (see

section V.E above) to USD 373,315 (see table below).

Table 18 Energy saving all four PS for a combi Central & Upper

Station Current Possible Saving

kWh/day ₮ mio/yr USD/yr kWh/day ₮ mio/yr USD/yr %

Central 43,762 1,406 1,018,578

28,863 927.1 671,791 34.0%

Upper Industrial 4,594 147.6 106,937

4,118 132.3 95,844 10.4%

Meat PS 2,270 72.9 52,832

1,607 51.6 37,398 29.2%

Total 50,626 1,626.1 1,178,348 34,587 1,110.9 805,033 31.7%

Possible saving 16,039 515.2 373,315 31.7%

G. Energy savings at the distribution booster pumps in UB

143. Energy savings in booster pumping stations will be much less than the savings

described above for the main distribution pumps at the four water production locations.

Once applied, fine-tuning of pumping pressure set points at booster stations may result

in some additional energy saving.

H. Energy savings at the deep well pumps in UB

144. Deep well pumps pump with an almost constant head with slight variations

depending on the draw-down in the wells. Energy savings, like those described above for

distribution pumps, are not possible, therefore. However, if the above proposals will be

applied, NRW is likely to become less as a result of lowered distribution network

pressures. That will provide lower flows, thus lower energy requirements at the deep

well pumps and at the distribution pumps.

I. Implementation of energy savings proposals

145. Depending on the options selected, large amounts of energy can be saved and

USUG is keen to implement some of the options. Lowering pressure set points at

Industrial and Meat (options C and D) is not controversial and will be implemented by

USUG in the near future.

146. Option A, changes at Upper Source, is a little more controversial: USUG has

indicated that Upper PS was renovated under a JICA grant a few years ago and changing

the pumps so soon would not be feasible. However, after several discussions on this

matter USUG agreed to change the impeller at one of the large pumps, as proposed in

this report. The measure is relatively safe: If more flow would be required, USUG could

at any time re-install the old impeller.

147. Option B, energy saving at Central is favored by USUG, but by adding frequency

controllers, not by changing the pumps as was proposed originally. Because of new

developments in the technology this would now be possible, while only a few years ago

USUG had a bad experience with similar frequency controllers at the CWWTP. The costs

RETA 7918 Final report Page 55

are a multiple of the estimated costs for the replacement of one pump and the current

proposal cannot be financed from the grant. However, USUG has agreed to finance

frequency converters for Central from a future ADB-loan or from its annual budget.

148. Thus, the summary option E (A+B+C+D) is acceptable to USUG and will be

implemented over time, in stages. However, energy saving option F, with highest energy

saving benefit, requires a re-structuring of the distribution network and lowering the

flows from Upper PS. The issues are very important to USUG and it has objected to this

option as:

• There is fear that, during the winter time, the reduced flow through the transmission

pipes from Upper Source to the X-reservoir would cause a freezing of the water in

the pipes and, thus, damage to the pipes. Such concerns should not be taken lightly.

It is understood that USUG would not mind testing this option during the summer

months, but that changing the pumping during the winter is out of the question;

• Increasing abstractions from the Central wells would be unacceptable and result in

larger drawdowns that would encourage replenishment of the well fields with more

polluted city water. USUG has indicated that not only does it want to maintain the

flows from Upper, but that new well fields will be developed in the future.

RETA 7918 Final report Page 56

VI. Water Supply - Operational improvements

A. Introduction

149. One of the goals of this project is to upgrade and improve the operational control

of the water distribution scheme, leading to a reduction of energy consumption and an

improved service delivery to USUG’s customers. Measures proposed to improve

operational control of the UB water supply are described in this section. The operational

improvement under this feasibility study involves two main activities, as follows:

Activity 1: Installation of Equipment for Operational Control

Activity 2: Operational Control Centre

Figure 19 Proposed asset control scheme by the Operational Control Centre (OCC)

150. The future, targeted situation is displayed in the above Figure 19: all assets are

monitored and controlled by USUG from the Operational Control Centre (OCC) that is

located in USUG’s headquarters. This OCC maintains an accurate and up-to-date

overview of the performance of the supply scheme, and is capable of adjusting the

operations as required (e.g. in case of an emergency). The main task of this OCC is to

control and optimize the water distribution processes (in terms of flow, pressure and

energy) and to ensure constant and reliable water services delivery to the customers.

Operational control and data acquisition systems (SCADA) for various assets will be

installed, including pumping stations, reservoirs, booster stations. Furthermore, control

valves and monitoring/measurement devices in the distribution network will be installed

to regulate the flow and pressure. Finally, communication means for data exchange

between the field and the Operational Control Centre will be established.

RETA 7918 Final report Page 57

B. Activity 1: Equipment for Operational Control

151. Equipment standards for operational control of USUG´s assets are lacking.

USUG’s six pumping stations (Meat station, Industrial station, Upper station and Central

station, Bayangol station and Nisekh station) are operated by utilizing various types of

equipment, often installed by a variety of donors-projects, with different functionalities

and specifications. The equipment is not always functioning satisfactory and often not

mutually compatible. Furthermore, monitoring data about pressure, flow and energy

consumption, which are needed for daily adjustments in the operations, are partly

lacking for both the pumping stations, as well as in the water distribution network,

reservoirs and booster stations. Where data is available, it is often not for improvement

purposes of the water supply scheme. Due to the lack of standardized, automated

operating systems and monitoring routines, room exists for USUG to increase the

efficiency of operations of assets in terms of flow, pressure and energy consumption.

152. One of the objectives of this project is improve the data storage for the pumping

stations and other assets in the OCC database giving staff of the OCC access to this data

for analyzing. By upgrading the SCADA system on the pumping stations and introducing

better telemetry system between the pumping stations and other assets and the OCC

data will automatically be stored in the database system of the OCC. Also the technical

conditions of the ICT equipment is in need of improvement, this is also in het scope of

this project.

153. USUG and VEI have made an inventory of the needs and requirements for each

of the locations and assets to be upgraded. The activities to be implemented and the

equipment that needs to be changed at each location is outlined in Table 19 and Table

20 below; the tables provide an overview of the current status of each of the assets, as

well as the proposed activities to improve the operational control of each asset. A more

extensive overview of equipment per location is included in Appendix 1 Proposed

Improvements – water supply.

RETA 7918 Final report Page 58

Figure 20 Overview of USUG’s assets

It has to be noted that priority is given to the most important assets, in terms of

functionality. Several assets are functioning more or less satisfactory (the green

coloured assets in Figure 20); what remains at these well-functioning assets is the

establishment of a connection with the Operational Control Centre.

Table 19 Proposed activities per location (Pumping stations).

Pumping

station

Current Situation Proposed Activity

Upper Source Well-functioning station;

Connection with Operational Control

Centre not available.

Establish two way communication between

Upper source and Operational control

centre by means of a satellite connection.

Central Source SCADA/telemetry available

(Installation of operational control

system and all communication

means was covered by World Bank

funded UBSIP project);

No SCADA action required.

Energy saving possibilities!

Industrial

station

Operational control system SCADA

and telemetry not available, PLC not

functioning;

No connection with Central Control

Installation of operational control system

and telemetry;

Installation of frequency controlled pumps;

RETA 7918 Final report Page 59

Pumping

station

Current Situation Proposed Activity

Centre;

Old pumps without pressure control;

Submersible pumps not functioning

well;

No measurement/monitoring

equipment;

Chlorine dosing system not safe and

out of order.

Installation of 16 submersible pumps;

Communication means;

Installation of measurement equipment

(flow, pressure, reservoir level);

Installation of automated chlorine dosing;

Connection with Operational Control

Centre.

Meat Complex

Station

Operational control system

functioning locally and satisfactory;

No connection with Central Control

Centre;

Communication between extraction

wells and pumping station is

missing.

Installation of telemetry and

communication means between pumping

station and Operational Control Centre;

Installation of communication between

extraction wells and pumping station;

Connection with Operational Control

Centre.

Bayangol

Station

Operational control system

functioning locally and satisfactory;

No connection with Central Control

Centre.

No action required, except for connection

with Operational Control Centre.

Nisekh station Operational control system not

available;

No connection with Central Control

Centre.

Installation of PLC, SCADA and telemetry

system;

Installation of measurement/ monitoring

devices for flow, pressure and reservoir

level.

Table 20 Proposed activities per location (Reservoirs/booster stations). Reservoir/

Booster Current Situation Proposed Activity

Tolgoit booster

station

Operational control system not

available;

No connection with Operational

Control Centre.

Installation of PLC and telemetry system

to connect to the Operational Control

Centre.

Sharkhad reservoir

and booster station

Operational control system not

available;

No connection with Operational

Control Centre.

Installation of measurement equipment for

flow, pressure and reservoir level;

Installation of PLC and telemetry system

to connect to the OCC.

Taskhan reservoir

and booster station

Working satisfactory;

Connection with Operational

Control Centre is available.

No further action required.

West reservoir and

booster station

Working satisfactory;

Connection with Operational

Control Centre is available.

No further action required.

RETA 7918 Final report Page 60

Reservoir/

Booster Current Situation Proposed Activity

Toirgiin booster

station

Working satisfactory;

No connection with Operational

Control Centre.

No further action required.

X-reservoir Working satisfactory;

Connection with Operational

Control Centre is available.

No further action required.

North-east reservoir Working satisfactory;

Connection with Operational

Control Centre is available.

Reconstruction of two communication with

OCC will be carried out.

Chingeltei booster

station

Working satisfactory;

No connection with Operational

Control Centre.

No further action required, except for

connection with Operational Control

Centre.

3rd – 4rd district

reservoir

Working satisfactory;

Connection with Operational

Control Centre is available.

No further action required.

Table 21 Proposed activities per location (Distribution and USUG’s head office)

Location Current Situation Proposed Activity

Distribution Network

Ulaanbaatar –

various locations

Flow and pressure control

valves missing to regulate flow;

Not enough monitoring points

(pressure, flow) available.

Installation of 20 control valves in the

network for pressure and flow control;

Construction of 10 measuring points in the

network;

Reconstruction of 10 existing measuring

points in the network.

USUG’s

Headquarters and

OCC

Operational Control Centre is

not yet fully functional and

equipped.

Installation of operational control

equipment: telemetry, servers, computers,

software.

C. Activity 2: Operational Control Centre

154. VEI assisted USUG in the establishment of an Operational Control Centre (OCC)

and coaching of this center’s staff. The OCC, a new department in USUG established in

2010, is made responsible for overall management and control of USUG’s integrated

water supply network. The main tasks of the OCC are:

i. Daily monitoring and evaluation of water supply and distribution in

Ulaanbaatar;

ii. Adjustments of operations as required (e.g. emergencies);

iii. Data collection, database validation and database management;

iv. Management reporting on performance indicators;

v. Analysis of water balances and non-revenue water (NRW);

vi. Preparation of demand-forecasts and future production/distribution plans;

RETA 7918 Final report Page 61

vii. Designing further improvement/optimization measures for the operational

control of assets;

viii. Calculation of set points for pumping stations and flow regulating valves;

ix. Development of contingency plans for failing pumping stations and

transportation mains;

x. Epanet modeling and scenario development for network extensions.

155. VEI identified the need to establish such a center when it became apparent that

USUG was not operating its assets efficiently, that monitoring data were missing and

that there was no department that could be held accountable for the overall

management and control of USUG’s supply schemes.

156. During the past Water Operation Partnership, VEI has advised USUG regarding

the establishment of this center. Now the network and pumping stations are being

upgraded Training and coaching of USUG´s staff can be provided by experienced

operators from Vitens and Evides introducing the skills required for adequate and

sustainable operations.

157. In October 2012, VEI organized a workshop with all staff of the OCC and

engineering department employees present. During this workshop the aspects of the

tasks were discussed, a presentation was given. Also the future possibilities for the

network were discussed and from sample scenarios further improvement of the network

and pumping station set points were discussed. Also a strategy for further optimization

of USUG’s water supply scheme was discussed and optimization cycles were introduced

(see Figure 21). The OCC will take USUG through these optimization cycles.

Figure 21 Strategy for further optimization of USUG’s

water supply scheme.

RETA 7918 Final report Page 62

VII. Wastewater Treatment Operational improvements

A. Introduction

158. This section describes the operational improvements proposed for the Central

Wastewater Treatment Plant (CWWTP) of Ulaanbaatar. For a better understanding, short

descriptions are presented on the existing situation with regard to the sewerage and

other wastewater treatment plants facilities in Ulaanbaatar.

B. Sewerage

i. Short description of the sewerage

159. The sewerage of Ulaanbaatar consists of the central core system, with a total

length of approximately 136 km, and four smaller local systems of sewers with a total

length of ~10.4 km. The core system is a separate system, which conveys domestic and

industrial wastewater to the wastewater treatment plant, but not storm water. Small

amounts of groundwater tend to infiltrate the sewers, adding a little to the flows.

160. All wastewater in the core system reaches the Central Wastewater Treatment

Plant (CWWTP), located 17 km to the west of the city center, by gravity and there are

no wastewater pumping stations in the city. The core system consists of two primary

sewers, the “Central” and “Southern” sewers, which run in an East-West direction

towards the CWWTP. Just before they reach the CWWTP these two primary sewers are

interconnected, which helps to balance the capacities of the sewers and of the two

influent pumping stations at the CWWTP. Basic data of the core system are presented in

the table below.

Table 22 Lengths of sewers in the Core System of Ulaanbaatar

Type Diameter Central Southern

(mm) Length (km) Length (km)

Primary sewers 500-1400 20 21

Secondary sewers 150-500 71 24

Total 91 45

161. The largest conduits (> 800 mm diameter) are made of reinforced concrete.

Small sewer pipes are made of vitrified clay, asbestos cement and cast iron. The Central

system was constructed in 1963 and renovated in 1970. The Southern system was

completed in 1980. Although the sewers are generally assessed to be of good quality,

groundwater infiltrates the sewers, especially those running along the Tuul and the

Selbe rivers. USUG carries out regular cleaning of the sewers, especially to remove solid

waste that enters through manholes with their covers missing. Since 2004, USUG also

carries out CCTV inspections of the sewers.

RETA 7918 Final report Page 63

ii. Flows through the sewerage and pollution loads

162. Incoming flows are measured in real time with electromagnetic flow meters at the

influent pumping stations of the CWWTP. These flows are well recorded and the CWWTP

has used them to show trends in wastewater flow development. COD-concentrations are

measured on a daily basis through grab samples. The concentrations determined on the

basis of these grab samples are used to calculate the daily pollution loads arriving at the

CWWTP. Occasionally, also BOD-concentrations are determined. As the sample volumes

taken are not proportional to the incoming flows, and as flows vary considerably over

the day, the COD/BOD-loads reported, may not always be representative for the

pollution loads that arrive in reality. They provide a good indication, however.

163. At the CWWTP, wastewater quantities are routinely compared with the amount of

drinking water that USUG abstracts from its well fields. Generally, wastewater flows are

below the amount of water abstracted from the wells during the first half of each year.

But in the second half of the year, wastewater flows exceed the abstractions of water by

USUG (see chart below for a 12-year average). There is, of course, a relationship

between water supplied and wastewater generated. The chart below does give some

indication, but is not so accurate: not all water from the wells reaches USUG’s customers

(NRW is over 18%, much of it presumably leakage) and a portion of the water actually

used does not end up in sewers because there may be none nearby, because of

evaporation and some is used for car washing or watering plants. On the other hand,

many industries, and presumably some individuals, abstract water from their private

wells adding to the wastewater flows. Furthermore, flows could increase from accidental

connections to the sewers of storm water fixtures and from infiltration of groundwater.

Figure 22 Water abstractions by USUG and wastewater flows at CWWTP.

164. While there are many unknowns, this report has made an attempt to quantify

wastewater flows from the other end, based on water sales by USUG and estimates of

private wells abstractions. Similarly, an estimate was made of COD-loads, based among

RETA 7918 Final report Page 64

others on COD emissions by the top-140 industrial polluters (see also xii.C of this

report) and others. The results are summarized in the table below. It should be noted

that these are very much estimates and that some of them may be somewhat

“speculative”.

Table 23 Relation between water supply and wastewater produced

(Data of 2011, volumes in M m3/yr)

Description Total Domestic Industries

Mm3/yr

& non-industrial

total top-140 small

USUG water supply 42.99 40.37 2.62 0.84 1.79

From private wells 14.40 13.73 0.68 0.22 0.46

Total water supply 57.39 54.09 3.30 1.05 2.25

Percentage to wastewater 90% 90% 86% 77% 90%

Volumes of wastewater 51.51 48.68 2.83 0.80 2.02

COD mg/l 800 700 2,530 6,882 800

ton/yr 41,234 34,079 7,155 5,536 1,619

% 100.0% 82.6% 17.4% 13.4% 3.9%

165. The table shows that water supply to industries, including supplies from private

wells, makes up only 3.30 out of an estimated 57.39 Mm3/yr, or less than 6% of the

total. But because of the kind of wastewater discharged by industries, their pollution

(measured as COD) accounts for 17.4% of the total pollution load transported through

the sewers to the Central Wastewater Treatment Plant (CWWTP). Taking into account

other pollutants, like Chromium from Tanneries, would increase the percentage further.

166. Based on the table above, the flow to the treatment plant could thus be

summarized as 51.51 Mm3/yr in 2011, with a COD-load of just over 41,000 tonnes/year.

This translates to an average flow of ~142,000 m3/d, with a COD of approximately 800

mg/l, or 113,000 kg/day. Actual wastewater inflows vary per month and per day. A

variation of the flows in 2011 is shown in the chart below. The lowest (blue) line is the

wastewater flow estimated using USUG’s water supply pumping data and making

assumptions on water use through private boreholes as shown in the table above. The

higher (red) line shows the actual inflow to the treatment plant. The difference can be

explained by the fact that during the warmer months of the year, the underground frost

is diminishing, allowing some groundwater to trickle into the sewers through imperfect

joints. This adds ~25,000 m3/d, or ~17.5%, to the incoming wastewater flow at the

treatment plant during the second half of each year. The maximum flow to the CWWTP

thus reached ~165,000 m3/d in October 2011. These peak flows create problems at the

CWWTP, as they cause an overloading of the secondary clarifiers.

RETA 7918 Final report Page 65

Figure 23 Inflows to the Central Wastewater Treatment Plant (CWWTP)

167. COD measurements of the influents at the CWWTP confirm the COD of the

wastewater with generally an average of approximately 800 mg/l (see Figure 24 below).

However, occasionally, wastewater flows have a much higher COD, up to 3,600 mg/l.

High COD values occurred during January and part of February, in early April and two

extreme COD peaks occurred in June 2011. Industrial discharges are blamed for the

sudden peaks in COD.

Figure 24 COD concentrations of inflows to the CWWTP

168. Combining the COD-concentrations from grab samples and the measured flows of

incoming water at the CWWTP, COD-loads were calculated to verify if they were

comparable with the estimated average value of 113,000 kg/day shown above. It turns

out that average incoming COD-loads in 2011 were 10% higher than estimated above,

at ~125,000 kg/day. The chart below shows COD-load fluctuations over the year 2011.

It should be noted that the COD-loads are based on grab samples taken once a day only

and that the values thus found may not be representative for the actual COD-loads

arriving daily at the CWWTP. Average COD-loads vary between 120,000 and 150,000

kg/d, with the higher values occurring during the winter months. It is striking that on

100,000

110,000

120,000

130,000

140,000

150,000

160,000

170,000

Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

De

c

Infl

ow

in m

3/d

(m

on

thly

ave

rage

)Influent (m3/d) to CWWTP in 2011

Total, incl infiltration

Wastewater

500

1000

1500

2000

1-Jan 31-Jan 2-Mar 2-Apr 2-May 2-Jun 2-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec 31-Dec

mg/l CWWTP - influent COD-data 2011

RETA 7918 Final report Page 66

some days extreme COD-loads arrive at the CWWTP, up to 450,000 kg/d, or 3.6 x the

normal daily load. Although any treatment plant has some buffering capacity, such loads

are hard to handle at the CWWTP. It seems to be unknown which industries cause the

extreme pollution. It is, in fact, hard to imagine that even a very large industry, like a

distillery or brewery, could have such an impact on the incoming COD-loads, considering

that all industries combined account for less than 17.5% of total COD-loads13.

Figure 25 COD loads of inflows to the CWWTP, 2011

169. COD-loads increase during the winter months, from an average 125,000 to

~150,000 kg of COD per day. This may have something to do with the tannery high

season, which runs from mid-November to approximately mid-March of each year when

more hides are available than during the remainder of the year. Tannery waste should

be pre-treated at the Khargia treatment plant, a private treatment plant especially

established for that purpose. It is understood that this plant does not always function

very well. During a visit in October 2012, the plant was not in a very good state, but

appeared to be operational. The plant collects wastewater in a storage tank and starts

treating operations once the tank is full. As a result of this batch type operation, high

pollution loads are discharged to the sewers during a relatively short time. It would be

worth discussing operation methods with the Khargia management and verify if a more

regular discharge, or a batch discharge at night when other wastewater flows are less,

would be feasible. Also other large industries may discharge their wastewater in batches.

170. BOD is a better measure for the pollution loads arriving at the treatment plant,

but determining BOD is more complicated and takes more time. For these reasons, BOD

tests are conducted less frequently at the CWWTP. The data over 2011 show a different

picture, with peaks in pollution loads much less pronounced (see chart below).

Generally, BOD is in a “reasonable” range, between 300 and 380 mg/l, but with peaks

up to ~530 mg/l. The COD/BOD-ratio is approximately 800/320 = 2.5, not an

unreasonable figure. On an average day a BOD-load of about 53,000 kg can be expected

(see second chart below), only in December, the trend is upward. Incoming BOD-loads

vary between 35,000 and 80,000 kg of BOD per day.

13It would be well worth checking the sampling methods and testing equipment to exclude the possibilities that reported values were not representative, or plainly wrong.

50,000100,000150,000200,000250,000300,000350,000400,000450,000

1-Jan 31-Jan 2-Mar 2-Apr 2-May 2-Jun 2-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec 31-Dec

kg/d CWWTP - influent COD-loads in 2011

RETA 7918 Final report Page 67

Figure 26 BOD concentrations of inflows to the CWWTP

Figure 27 BOD loads of inflows to the CWWTP

171. A large JICA-supported team studies USUG’s water supply and wastewater

operations in the framework of a water supply/wastewater master plan preparation.

Without much of a base, the team has assumed that the portion of industrial wastewater

in the flows arriving at the CWWTP is much higher than estimated above.

Table 24 CWWTP - Estimated flows and pollution loads

Type of Converted from table above Estimates by JICA-team

wastew. Flow (m3/d)

COD (kg/d

Flow (m3/d)

COD (kg/d

Domestic 133,370 95%

93,367 83%

116,250 84%

33,701 22%

Industrial 7,753 5%

19,603 17%

22,250 16%

120,963 78%

Total 141,123 100% 112,970 100% 138,500 100% 154,664 100%

172. While flows are not so different, the JICA-study has attributed much more of the

wastewater flows to industries and have assumed much higher industrial COD-

concentrations than were shown in Table 24 above. While we have not found evidence of

such high industrial flows and pollution loads, and the data available at USUG point in a

different direction, the JICA estimate would explain the large fluctuations in COD-load

arriving at the treatment plant. Extreme fluctuations are unusual for domestic

wastewater, but could well occur as a result of irregular industrial wastewater

discharges. The truth will probably be somewhere in between the two estimates.

200

300

400

500

1-Jan 31-Jan 2-Mar 2-Apr 2-May 2-Jun 2-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec 31-Dec

mg/l CWWTP - influent: BOD-data 2011

0

20,000

40,000

60,000

80,000

1-Jan 31-Jan 2-Mar 2-Apr 2-May 2-Jun 2-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec 31-Dec

kg/d CWWTP - influent: BOD-loads 2011

RETA 7918 Final report Page 68

C. Wastewater treatment facilities in Ulaanbaatar

173. Besides the large CWWTP, USUG owns and operates other, smaller, treatment

plants. This report deals only with operational improvements of the CWWTP. In addition,

the privately owned Khargia plant was designed to pre-treat wastewaters from the

tanneries in Ulaanbaatar before discharging them to the USUG sewer. More information

on the Khargia plant will be provided in paragraph 230 of this report.

Table 25 Treatment plants and their hydraulic capacities

Name of WWTP Hydraulic capacity

(m3/d)

Central WWTP 160,000

Airport/Nisekh 2,600

Bahaghangai 250

Bayangol/Nairamdal 450

Dambadarjaar 90

Biokombinat 400

Khargia (pre-treatment) 13,000

D. The Central Wastewater Treatment Plant (CWWTP)

i. Introduction

174. The central wastewater plant was built in several stages. The first stage was

completed in 1964, and consisted of a mechanical pre-treatment followed by ground

infiltration. In 1968, a lifting station and mechanical treatment for the Central Sewer

was added and a primary treatment stage was built. Biological treatment was

implemented in two stages: in 1978, a Russian company designed and built the first

stage (three basins); the second one (two basins) was built in 1987 by a Mongolian

company, on the basis of the same design as the first ones. Some parts of the plant

have been built or partially built but were never put into service, for lack of funds, at the

end of the 80’s: sludge anaerobic digesters, stabilization ponds. Recently, part of the

equipment was renewed through a Spanish loan, but several pumps have become

obsolete already and the SCADA system has broken down.

175. The process on this wastewater treatment plant is a very conventional one, using

simple straightforward technologies. The plant comprises of coarse screening, raw water

pumping, fine screening, grit chamber, primary settling (4), aeration tanks (5),

secondary clarifiers (5), sludge drying beds. The effluent is bacteriologically improved

through UV-treatment. There are large bio-ponds on the treatment grounds but they are

not used at the moment. The main units of the plant are presented in the satellite photo

below.

RETA 7918 Final report Page 69

Figure 28 Layout of the Central Wastewater Treatment Plant (CWWTP)

176. A simplified schematic of the CWWTP is

shown in the diagram. Also shown are locations

where samples are taken for testing on COD,

BOD and Suspended Solids.

Figure 29 CWWTP-schematic

RETA 7918 Final report Page 70

177. Figure 23 showed that in 2011 the inflow in the second half of the year was about

20,000 m3/d higher than in the first half. This trend can be observed every year, as

shown in a chart of average monthly flows over the years 2000-2012.

Figure 30 CWWTP: Inflow over the year (12-year average)

178. The inflow at the plant does not only vary each month, but also during the day,

as shown in the chart below. With an average flow shown as 6,100 m3/h, inflows are

considerably lower in the night (after 01h00) and the morning. By around 10h00 each

day inflows start increasing until ~7,000 m3/h and remain like that for the rest of the

day.

Figure 31 CWWTP: Inflow over the day (12-year average)

ii. Performance of the CWWTP

179. Opinions regarding the overall treatment performance of the CWWTP vary. Most

descriptions by experts were rather negative and bad smell was reported during almost

RETA 7918 Final report Page 71

every previous visit by VEI experts. However, somewhat to our surprise, the

performance of the CWWTP was not bad at all, during our visits in September/October

2012. Apart from the building that houses the fine screens, smell at all units of the plant

was acceptable and some performance data showed good treatment efficiency. It is

suspected (and calculations tend to confirm this) that the good performance is

connected with the practice of limiting the flow towards the biological section of the

treatment plant. With the limited flow, the biological part of the plant performs rather

well, certainly considering the age of the plant and the imperfections under which it has

to operate. The excess water not treated biologically only receives a mechanical

treatment is then discharged into the CWWTP’s effluent pipelines, through a bypass pipe

shown in Figure 29 above.

180. With the quality of the incoming water varying so much, it may be expected that

treatment results are not so stable, as well. The chart below shows the influent COD of

2011, together with the COD of the effluent measured just after the secondary clarifiers.

Figure 32 CWWTP: COD of influent and effluent, 2011

Generally, the COD of the effluent is in the 150 mg/l range, but on many occasions,

something goes wrong and the COD-concentration shoots up, sometimes to as high as

500 mg/l. This reflects in the COD-removal efficiencies of the plant, which shows large

variations. Ignoring the extremes shows that overall, the plant is not doing too badly,

with COD-removal rates hovering in the 80% range (see chart below).

Figure 33 CWWTP: COD-removal efficiencies in 2011

0

500

1000

1500

2000

1-Jan 31-Jan 2-Mar 2-Apr 2-May 2-Jun 2-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec 31-Dec

mg/lCWWTP - COD-data 2011

Influent

Effluent

0%

20%

40%

60%

80%

100%

1-Jan 31-Jan 2-Mar 2-Apr 2-May 2-Jun 2-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec 31-Dec

CWWTP - COD-removal efficiency 2011

RETA 7918 Final report Page 72

181. Patterns of influent strength and COD-removal became quite different in the first

9 months of 2012. COD-concentrations were reasonably low during the first months of

2012 but started going up gradually in March and reached values over 1,000 mg/l in

May (see chart below). In April, the CWWTP started experiencing difficulties. Effluent

quality had been good until then, but started quickly going up in April when values of

500 mg/l were reached. Sampling of effluent then stopped for 2 months, but it is

understood that during this time, effluent quality was bad. On 12th July, it was decided

to limit flows to the aeration tanks, to protect the biological process, as well as the

sedimentation in the clarifiers. Hence part of the influent was redirected and was not

treated. This quickly yielded results in the biological parts of the CWWTP and the effluent

standard improved by the day, until reaching values of less than 150 mg/l in September.

Figure 34 CWWTP: COD-concentrations of influent and effluent in 2012

182. In the period May-July, the incoming COD-load at the CWWTP doubled from the

usual 100-115,000 kg/d for this period to an average of 200,000 kg/d in early July, with

many days of much higher loads arriving (see chart below). It is not clear how the

COD-load could double in such a short period. The industries are widely blamed but, as

mentioned before, most of the wastewater loads arriving at the treatment are still

domestic. If only the industry were to blame for the doubling in COD-load, COD-

concentrations of industrial discharges should have become an unlikely 6.5 x as high as

usual (flows hardly changed between May and July). One would almost suspect that a

new and heavy polluting industry, not recorded by USUG and unknown to many others,

had started discharging very concentrated wastewater to the sewers. Another mystery is

the extreme variation in pollution load that started already in mid-March.

0

500

1000

1500

1-Jan 31-Jan 2-Mar 1-Apr 2-May 1-Jun 2-Jul 1-Aug 1-Sep 1-Oct

mg/l COD at CWWTP -2012

Influent

Effluent

RETA 7918 Final report Page 73

Figure 35 CWWTP: COD-loads of incoming wastewater in 2012

183. The COD-removal efficiency has fluctuated between extremes, in 2012 (see the

chart below). At times, removal of COD was 90% or more, but during the summer

months, when the high CO-loads started arriving, efficiencies all but collapsed, only to

recover when part of the wastewater was getting bypassed.

Figure 36 CWWTP: COD-removal efficiency in 2012

184. BOD-data were determined less frequently and only scarce data are available.

But in August and September, when the biological part of the treatment functioned well,

BOD-removal efficiency in the plant reached an average of 94%.

Incoming COD-loads at CWWTP -2012

0

50,000

100,000

150,000

200,000

250,000

300,000

1-Jan 31-Jan 2-Mar 1-Apr 2-May 1-Jun 2-Jul 1-Aug 1-Sep 1-Oct 1-Nov

kg/d

40%

50%

60%

70%

80%

90%

100%

1-Jan 31-Jan 1-Mar 1-Apr 1-May 1-Jun 1-Jul 31-Jul 31-Aug 30-Sep

COD-removal efficiency of CWWTP - 2012

RETA 7918 Final report Page 74

Table 26 BOD-removal at the CWWTP, 2012

Date Influent14 Primary Effluent Efficiency

1-Aug 338 312 10 97%

2-Aug 322 231 6 98%

6-Aug 293 270 16 94%

7-Aug 306 284 24 92%

8-Aug 671 554 18 97%

9-Aug 346 271 39 89%

15-Aug 316 255 28 91%

16-Aug 529 170 24 95%

3-Sep 208 220 18 91%

4-Sep 639 323 6 99%

Average 397 289 19 94%

Although the secondary section of the plant was running satisfactorily, once again,

overall effluent quality suffered as now fully treated water was mixed with bypassed

wastewater that had only undergone mechanical treatment (coarse and fine mess

screens and primary sedimentation).

E. CWWTP –Review of operations

i. General

185. The CWWTP is already old and close to being obsolete. An entirely new

wastewater treatment plant could/should well be constructed within the next ten years.

Any improvements proposed should improve operations but should not cost too much

money, therefore. Basic improvements that help to overcome some of the deficiencies

during a period of (probably less than) 10 years would be preferred. This warrants the

replacement of mechanical and electrical/electronic equipment, usually with a lifetime of

10-15 years, but not any serious investments in civil works, usually with a lifetime of

30-40 years. Some simple civil improvements may be made, or measures implemented,

as long as investments are relatively small.

186. A quick scan of the CWWTP units shows that the main obstacle to a sturdy

treatment process is the insufficient hydraulic capacity of the 5 secondary clarifiers.

Especially when incoming flows increase, water velocities in the clarifiers are becoming

(too) high and bio-mass, instead of settling to the bottom of the clarifiers, disappears

together with the effluent. When this occurs, not enough bio-mass can be pumped back

and concentrations in the aeration tanks become unacceptably low, hampering the

biological process in these tanks. Adding 2 or 3 clarifiers would hugely improve the

sedimentation process. Additional clarifiers are indeed planned and budget is apparently

available (to the tune of ₮ 1 billion, or ~USD 700,000) for construction of two additional

clarifiers in 2013. Building additional clarifiers would be recommended only if there were

no plans for an entirely new treatment plant.

187. The virtual collapse of the treatment process in mid-2012 (see Figure 36) could

not be blamed on an increased flow, but had to be attributed to increased pollution

concentrations of the incoming wastewater. This indicates that the biological processes

14 Shown are combined values for the two influent stations

RETA 7918 Final report Page 75

in the aeration tanks are not optimal. Under sub-optimal conditions, the sludge starts

bulking, becoming more difficult to settle it in the secondary clarifiers because of its high

sludge volume index (SVI). A number of improvement measures can be taken that

improve the biological processes in the aeration tanks that will help to make the sludge

more “settleable”, thus improving the efficiency of the clarifiers. This will help improving

the overall treatment efficiency and extend the life of the current installation. In fact, all

improvement measures proposed in the sections below aim at making the treatment

process deliver a better sludge quality that causes fewer problems in/with the clarifiers.

In the sections below, only the main treatment units will be identified, notably those that

would affect the operations of the clarifier.

ii. Influent pumping stations

188. Two pumping stations at the CWWTP pump up influent to a higher level, the

domestic pumping station (that pumps ~30% of the total incoming flow, mainly

domestic wastewater but not only) and the industrial station (that pumps the remaining

70%, a mixture of industrial and domestic wastewater). The industrial pumping station

handles approximately 70% of the total incoming flow. The pumping stations are in a

poor state. New pumps installed under a Spanish loan programme less than 5 years ago

burned out soon after their installation and have been removed. The remaining pumps

have sufficient capacity but are very old. It was considered to include 2 new pumps for

the industrial station in the ADB-grant scope. As procedures may take too long and

pumps may give up any time soon, USUG decided that the pump replacement at the

influent station will be made using USUG’s regular maintenance budget.

189. Installing frequency converters for the influent pumps was considered, as well.

Considering the sensitivity of the secondary clarifiers with regard to overload, stabilizing

the flow through the system would have been welcome. In fact, a frequency converter

was installed not long ago, but it failed after only 2 months of operation, for which

unstable 4 kV power supply is blamed making any frequency converter ineffective.

Another reason why a frequency converter is less useful is that total head loss over the

inlet pipes is rather constant. With a higher influent flow in the incoming sewer, the

water level in the inlet sump rises a little. The effect on the pumped flow is minimal,

hardly justifying the expense of a frequency converter.

190. From the industrial pumping station, two pumping mains transport the influent to

the unit that houses the fine screens. In the mornings, when incoming flows are low, the

station operates with one small and one large pump. During afternoons, after ~11h00, 2

large pumps are used. The two pumping mains are interconnected, but a number of

valves keep the pumping separated. It was investigated if opening the valves, resulting

in a joint operation of both pumping mains, would result in a higher flow and/or reduced

energy consumption for the times that a small and a large pump are used. It was

assumed that opening the valves would lead the water to find the most efficient way

towards its destination. A calculation was hampered by the lack of pump data and fictive

Q-H curves were used. The results are shown in the diagram below.

RETA 7918 Final report Page 76

Figure 37 Effect of closed/ open valves - Industrial pumping station

191. The effect of opening the valve (for the pump curves we used) is that total flow

through the two pumping mains would increase from 4,200 to 4,300 m3/h (about 2.5%),

but the pump efficiency of the largest pump would be reduced by some 3%. Considering

the flows, there is some benefit, but energy-wise opening the valve would not help

much.

iii. Mechanical pre-treatment: Screens & Primary Sedimentation

192. The mechanical treatment is functioning well and the screens as well as the four

primary sedimentation tanks could well handle higher flows. It is understood that the

mechanical treatment was laid out for a flow of 230,000 m3/d. Calculations show that

such a flow could well be handled. No operational improvements are foreseen under the

ADB-grant.

iv. The aeration tanks

193. Five parallel aeration tanks, with a total volume of 87,000 m3, receive pre-settled

wastewater from the primary sedimentation tanks. Each tank has 4 legs (see the

schematic drawing below). Air diffusers, which transform air supply to the tanks into fine

bubbles, are installed at the bottom of each tank. Return sludge enters the sludge

regeneration zone in leg 1. Fresh wastewater from the primary settlers enters the

aeration tank in the 2nd leg. The combined flow then continues in the 2nd, 3rd and 4th leg

as a prop flow and leaves for the clarifiers at the end of the 4th leg. It is possible to let

the return sludge regenerate over 2 full legs. If so desired, fresh wastewater flows

through a bypass channel to the back of the aeration tank and enters the tank in the 3rd

leg (as shown by the dotted line). A first calculation shows that the tanks are large

enough to handle the amount of wastewater, also with high COD or BOD concentrations.

However, there have been problems with bulking sludge and a number of improvement

measures are proposed that will help to deal with this phenomenon.

Valve

open

Closed

valve

RETA 7918 Final report Page 77

Figure 38 Schematic layout of one (out of 5) aeration tanks

194. Aeration takes place in all four legs of the tank. Air blowers produce air under

sufficient pressure which enters the tank through a system of pipes and, critically, air

diffuser units. The air diffusers play an important role and ensure that the air enters as

very small bubbles, to enhance the transfer of oxygen to the active sludge in the tanks.

The existing air diffusers have been in operation for 9 years and are nearing the end of

their life expectancy. Many are expected not to function properly, any longer.

195. For a number of reasons, the aeration tanks do not function as well as tanks in

more modern installations and sludge discharged from the aeration tanks has a very

high sludge volume index (SVI). The higher the SVI, the more difficult the sludge settles

in the clarifiers downstream of the aeration tank. The higher the SVI, the lower the loads

on the clarifiers should be to guarantee that sludge settles to the bottom of the

clarifiers. On occasion, the SVI in the CWWTP is more than double of what is common in

other treatment plants. Sludge with such extreme SVI is called bulking sludge.

196. In a new treatment plant, the same principle would surely not be applied again,

as there are now better ways of biological treatment of wastewater that result in a

better sludge quality and that also include the removal of nitrogen. Nevertheless, some

simple improvements are proposed under the ADB-grant that can improve the aeration

process. An improved process would result in a better sludge that would allow the flows

over the clarifiers to increase without immediately causing an overflow of bulking sludge

from the clarifiers to the effluent drain. The improvements proposed are (i) the

construction of a selector in each of the aeration tanks; (ii) replacement of all air

diffusers in the tanks; (iii) installation of new Dissolved Oxygen meters (DO-meters);

and (iv) repair and improvement of the SCADA-system. Each of these improvements will

be explained in more detail below.

197. (i)Selector: Many treatment plants are now equipped with a so-called selector, a

small basin where new incoming wastewater from the primary sedimentation tanks is

mixed with return sludge from the secondary clarifiers before it enters the aeration tank.

During the 10 minutes of contact time, fresh wastewater and return sludge are

thoroughly mixed. As there is little space available at the CWWTP, it is proposed to use

small part of each of the five aeration tanks and transfer it into a selector, as shown in

Figure 39 below. Building a selector implies that sludge regeneration will no longer be

applied. Return sludge will be fully mixed immediately with fresh wastewater and will

then enter the aeration tanks.

RETA 7918 Final report Page 78

Figure 39 Location of the selector inside an aeration tank

198. The selectors will be built at the South side of the aeration tanks, near the

secondary clarifiers; at the location where currently return sludge enters the tanks (see

Figure 39). Fresh wastewater now enters the tanks on the other side, near the primary

settlers, but it can be taken to the other side through an existing bypass channel. To

enhance mixing, each of the 5 selectors will be divided into 4 compartments in which the

mixture of sludge and fresh pre-settled wastewater zigzag from overflow weir to

overflow weir, before entering the aeration tank (see Figure 40). The selector will reduce

the volume of the aeration tank by ~2%.

Figure 40 Schematic layout of selector in an aeration tank

199. A 90 degree bend will need to be welded on the return sludge pipe of 500 mm

diameter, to bring the sludge to one side of the first selector compartment. Also a new

opening, provided with penstock (gate valve) needs to be made in the headwall of the

tank, to allow for entry of the fresh wastewater into the selector. Velocities in the

selector will be higher than in the aeration tanks. But especially during periods of low

flow, sludge could settle in the selector. For this reason, aeration pipes and diffusers in

RETA 7918 Final report Page 79

this part of the tank will remain. They may be old diffusers, as the size of the air bubble

is unimportant at this location.

200. The separation walls in the tanks will be made using U-profiles bolted to the

walls, into which prefab concrete slabs will be placed. At the bottom slabs, openings

need to be made to allow for the passing of air pipes. These openings will also ensure

that water levels on both sides of the partitions will always be the same, also when

tanks are emptied, to avoid too high a pressure on the concrete slabs.

201. (ii) Air diffusers: The air diffusers that are currently installed are 9 years old

and have been mistreated on occasion with too high air volumes, necessary for the

increasing COD/BOD-loads. As a result, the openings of the diffusers are too large,

causing air bubbles of becoming too large for efficient oxygen transfer.

202. For the oxidation of wastewater, a maximum of 71,000 Nm3/h is currently sent to

the 5 aeration tanks. This implies an air flow of about 14 Nm3/h for each of the 5040 air

diffusers currently installed. Two years ago, some 2,000 small diffusers were added to

spread the air flow over more diffusers, but they have a much smaller capacity. Design

flow of the currently installed air diffusers is 5-9 Nm3/h (allowing higher peak flows of up

to 13 Nm3/h on occasion), so the diffusers have, indeed, been overloaded recently. As

part of the project, all 5,040 existing air diffusers will be removed and replaced by

10,000 new air diffusers. In the bid documents, an alternative option for 6,000 larger air

diffusers will be requested from bidders, as these would be easier, and faster, to install.

This option may also be slightly cheaper. Some extra air piping will be required, as well,

especially near the selectors where oxygen demand is highest and most air will be

needed. A pressure relief valve will be built in each of the air access pipelines to protect

the diffusers from too high pressure.

203. In order to build the selector and install new air diffusers the aeration tanks have

to be taken out of operation. Because there are 5 parallel tanks, one tank can be

emptied at a time, while the remaining tanks will have to absorb a 25% extra flow

during that time. As resuming normal operations is crucial, the time that each tank

should be non-operational should be limited to one week. Installing the selector is fast

and so is the process of replacing the diffusers. Most time consuming is likely to be

making a new opening in the front wall of the tank and installing a penstock. Altogether,

the biological processes will be overloaded during a period of in total 5 weeks, probably

causing bulking sludge. However, with each next tank the situation will improve as more

and more tanks will have a selector in place and new diffusers installed. As the works do

not affect the clarifiers, the sedimentation capacity of the plant, the most critical

process, will not be impaired. If the biological process turns out to suffer badly from an

overload, it could be considered, once again, for some wastewater to bypass the

biological section of the CWWTP and bring the pre-settled wastewater directly to the

effluent line. Providing some form of treatment in the now obsolete bio-ponds could be

considered during that period. The CWWTP-management is not in favour of such a

solution and it has a number of disadvantages. A further discussion on the use of bio-

ponds is presented in section x below.

204. (iii) DO-meters: Twenty DO-meters are currently installed in the aeration tanks.

Unfortunately, the existing meters are not suitable for the application in wastewater and

they have become completely unreliable. As the DO-meters control the amount of air

sent to the air diffusers, their accurate measurement is important. Under the ADB-grant,

20 new DO-meters suitable for use in wastewater and self-cleaning, will be procured.

RETA 7918 Final report Page 80

205. (iv) SCADA: Repairing the existing SCADA is important, especially where it

concerns the control of the processes in the aeration tank. DO in the tanks should be

kept at 2 mg/l, while the SCADA must also ensure that not too much air is directed

towards the diffusers, as this could blow them up and cause a premature enlargement of

the openings of the diffusers. Much of the SCADA is in place already, but it is not

functioning any more, at the moment. New parts will be needed and some new functions

will need to be hooked up to the SCADA. The improved SCADA will also control other

processes at the CWWTP, including proposed sludge level sensors at the secondary

clarifiers.

v. Secondary clarifiers

206. As described before, the 5 secondary clarifiers are struggling to cope with the

sludge that the treatment plant produces. There are plans to add 2 clarifiers in 2013. It

is expected that, with the proposed improvements in the aeration tanks, the quality of

the sludge discharged into the clarifiers will improve, which would allow the velocity

through the tanks to increase. Thus, more wastewater can be treated properly. The

tanks themselves are in good condition and do not require any improvement. However,

as their operation is sensitive and depends on the quality of sludge, it is proposed to

install sludge level sensors in the tanks. Through the improved SCADA, the operators

would be notified timely if sludge levels would become too high.

vi. Sludge return pumps

207. For some time, the procurement of 2 new sludge return pumps was included in

USUG’s wish list for procurement through the ADB-grant. Because of the failure of the

old pumps, USUG had to take immediate action and installed two new (Chinese) pumps.

As these pumps function to the full satisfaction of the plant management, no further

action will be required.

vii. In-line BOD, COD & SS-measurements

208. USUG requested to include equipment in the ADB-grant proposal that could carry

out inline automatic measurements of BOD, COD and SS. Preferred was to install this

equipment at three locations to be able to permanently check the wastewater quality of

the influent, after mechanical treatment and of the effluent. After ample consideration, it

was decided not to include this equipment in the grant project. First of all, the

equipment is expensive and it would have cost ~USD 500,000 to pay for the equipment

at the 3 locations. Moreover, the equipment is complicated and needs intensive

maintenance, using chemicals and spare parts at high frequency. Taking into account

the sensitivity of the operations of the clarifiers, it was considered to install one unit, for

online BOD-measuring, in the effluent line of the clarifiers. However, a heated building

where the unit could be placed was not available, except at the UV-station.

Unfortunately, at this location, the effluent of the clarifiers is mixed with any bypassed

wastewater and a BOD- measurement would not help with the proper operation of the

clarifiers. In the end it was agreed, therefore, to delete inline automatic measurement

altogether.

RETA 7918 Final report Page 81

viii. Output of the proposed improvements

209. Much less than with the proposed improvements for water supply, the output of

the improvements recommended for the CWWTP are less measurable. Biological

processes like those described for the wastewater aeration tanks are much harder to

control and predict than the physical processes that apply to water supply. Main aim of

the improvements is (i) to prevent an early and unexpected breakdown of the CWWTP;

and also (ii) to improve the quality of the biomass/sludge in the aeration tanks in the

expectation that the sludge volume index will improve, making the sludge easier to

settle in the secondary clarifiers which, in turn, would increase their capacity. We would

like to predict as output that, after implementation of the improvements, all wastewater

arriving at the CWWTP could be fully treated and that bypassing a certain portion would

no longer be necessary. However, as there are many factors that influence the biological

processes, including the characteristics of the influent which is well above what is

common, there is no certainty that this will indeed occur.

ix. Sludge digestion and methane production

210. Regarding the pilot on sludge digestion and methane production, Japanese,

Korean and German experts are currently undertaking several studies and analyses. The

Japanese NJS consultants’ team has recently taken a sample for assessment of sludge

digestibility (no results have been received yet). Since other experts’ teams are also

investigating the feasibility of sludge digestion in Mongolia, the RETA will (for this

moment) not primarily look into this matter. However, cooperation and coordination with

the Japanese consultants’ team will need to be maintained.

x. Bio-ponds

211. Early on in its history, the CWWTP was equipped with four parallel lines of bio-

ponds, each consisting of 5 lagoons in series (see picture below).

Figure 41 Bio-ponds at the CWWTP

The total area is huge, almost 600 x 1,000 m2, or 60 ha. The bio-ponds were used in the

past, but they have been idle for a long time now and overflow structures to and from

RETA 7918 Final report Page 82

the lagoons are in serious need of repair. In some of the lagoons sludge was dumped,

but the lagoons could be made operational again with relatively minimal effort.

212. It was investigated if the bio-ponds could be instrumental in reducing the

pollution loads in case some wastewater would be bypassed again, for example during

the rehabilitation of the aeration tanks. Despite the large surface area, the ponds are,

unfortunately, too small to function as facultative lagoons. Because of the low prevailing

water temperatures, biological processes in the pond are not very effective and

discharging serious quantities of pre-settled wastewater with a BOD of ~360 mg/l would

create anaerobic conditions and accompanying smell problems.

213. It is understood that also the CWWTP management is not in favor of using the

ponds in the present conditions. They quote problems with smell and, possibly, flooding

of nearby basements. Plans exist to line the ponds in the (far?) future and install floating

aerators powered by solar panels. Costs are estimated at some USD 5 million. Being out

of the scope of this ADB-grant, this option was not investigated any further.

xi. Overview of proposed improvements for the CWWTP

214. Summarizing the interventions at the CWWTP shows the following operational

improvements:

i. Construction of 5 selectors, one in each of the aeration tanks of the CWWTP;

ii. Procurement of 10,000 new air diffusers, complete with clamps, and additional

air supply piping;

iii. Replacement of 20 existing Dissolved oxygen sensors in the aeration tanks;

iv. Supply and installation of 5 ultrasonic sludge level sensors in secondary settlers.

These new to be installed sensors need to be integrated in the existing SCADA

software

v. The existing SCADA system needs to be repaired and reprogrammed. Some

equipment has to be replaced and the software needs to be checked and

repaired, where necessary;

vi. Supply and installation of a new PC for the SCADA system to be installed in the

CWWTP control room and a second PC with SCADA connection in the head

engineer’s office in the CWWPT. The SCADA system at the CWWTP will be

designed as a local system and will not be connected to the central Operational

Control Centre (OCC).

xii. The future of the CWWTP – Possibilities for investments

215. USUG currently has no clear view on the future of the CWWTP. General opinion

appears to be that the CWWTP can still function for many years to come and also the

JICA-team in charge of strategic planning for water supply and sewerage assume in their

Interim Report 15 (October 2012) that the plant will only need to be replaced by the

year 2040. By that time, the oldest parts of the plant will be 75 years old and the most

essential units, the aeration tanks and the clarifiers, will not be much younger.

216. Taking into account that the current treatment technology used at the plant is

obsolete and creates operational problems time and again, despite several renovations

that took place in the past, it is felt that an entirely new wastewater treatment plant

15 JICA-sponsored “Study on the Strategic Planning for Water supply and Sewerage Sector in Ulaanbaatar City in Mongolia”, Interim Report, October 2012.

RETA 7918 Final report Page 83

should be designed and built in the coming 5-10 years. A preliminary design for such a

plant is outside the scope of this study. It is felt that the treatment system proposed in

the JICA-study, a large number of small oxidation ditches (see Figure 42 below),

although an improvement on the present situation, is not the state of the art technology

that is available nowadays. Recent process technological innovations have resulted in

better and cheaper treatment systems that should be taken full advantage off.

Figure 42 CWWTP - Proposed expansions (source JICA-study team)

217. A new treatment plant should probably have a hydraulic capacity of 200-250,000

m3/day. The amount involved would be in the range USD 200-250 million16. It could

possibly be built with ADB-loan funding, with the plant built in some stages using

subsequent tranches of a loan facility. Of course, additional investments will also be

required for the UB sewerage. It is understood that many of the sewer projects identified

in the 2006 master plan have not yet started while, with the present rapid

developments, additional investments will surely be needed. While sewerage is outside

the scope of this study, reference is made to the strategic plan for water supply and

sewerage that is being prepared by a JICA study team.

16 Source: JICA study team – Interim Report, October 2012.

RETA 7918 Final report Page 84

VIII. Industrial wastewater

A. Introduction

218. Although somewhat outside the scope of this study, RETA has been involved to a

certain extent with quantities and qualities of industrial wastewater. The trigger for this

involvement was USUG’s plan to procure a number of wastewater flow meters, to

measure wastewater quantities at some of UB’s largest polluting industries. While

reviewing current practices at some of the leading industrial polluters and considering

the impact of high pollution concentrations (COD, BOD, etc.) on the treatment efficiency

of the CWWWTP, as well as after the discussions on wastewater fees at USUG, it was

decided to expand this section to include ideas on future wastewater charges.

219. As described in section 0.B.ii of this report, the CWWTP has to cope with an

influent that exceeds the design standards, for which the effluents of industrial activities

in Ulaanbaatar are blamed. Although USUG charges industries for their effluents

discharged, they do not help to reduce waste, as charges are applied to the water the

industries consume, not on the amounts and concentrations of the wastewater

discharged. Thus, industries are not awarded for any efforts to reduce the amount and

strength of their wastewater. The Government has understood this and has adopted a

new Polluter Pay Principle law, in 2011. On the basis of the new law, industries will be

charged for the pollution they cause. Details are being elaborated at the Ministry of

Environment. This section of the report deals with the volumes of industrial wastewater,

the quality (BOD, COD, etc.) of these wastewaters, their effects on the CWWTP’s

influent, proposals for future industrial wastewater fees and, in anticipation of the

application of the new law to introduce genuine pollution charges, a proposal for the

measurement of wastewater flows from the most polluting industries.

B. Industrial water consumption

220. In 2011, USUG supplied 43.0 million m3 (Mm3) to its domestic and industrial

customers. Most of this water (74%) is used for domestic purposes, while the remaining

volumes are used by public companies (schools, hospitals, etc.), by companies

(businesses) and industries. Industries used only a small portion of the water supplied

by USUG, 2.62 Mm3 in 2011, only ~6% of the total supply by USUG. All industries are

metered with individual water meters of which 138 are connected to the central

registration system at the customer department.

221. Besides water supplied by USUG, many companies have private wells from which

they abstract groundwater. Of 140 large polluting companies, USUG monitors not only

the water it supplies, but also their private groundwater abstractions. Judging from

these large industries, groundwater abstractions are not widespread, they add only

~27% to the water consumed. Applying this same percentage to all industrial use would

bring the total industrial water consumption to ~3.33 Mm3 in 2011.

222. The 140 largest polluting industries monitored by USUG used ~1.0 Mm3 of water,

about 30% of total industrial water use, in 2011. The table below shows details on their

2011 water consumption divided over the amounts they procured from USUG and those

they abstracted from their own wells.

RETA 7918 Final report Page 85

Table 27 Top-140 industrial polluters - Water use per type of industry (2011)

Type of industry No. of Water use ('000 m3/year)

factories USUG Wells Total %

Tanneries 27 84.8 8.5 93.4 9.3%

Wool/cashmere 29 44.7 147.3 191.9 19.2%

Intestines cleaning 16 14.8 14.0 28.8 2.9%

Car wash 45 61.2 9.4 70.6 7.1%

Vodka/Beer/Soft drinks 23 589.2 26.1 615.3 61.5%

Total 140 795 205 1,000 100%

The largest water consuming companies in each category were visited during the

project. Details on these companies, their water use and, if possible, an estimate of their

wastewater production, are presented in Appendix 3.

223. By far the largest water users are the breweries, distilleries and manufacturers of

soft drinks, just 23 companies use over 60% of the water consumed by the top-140

polluters.

224. Most companies top-140 only use small amounts of groundwater in comparison

to the water they procure from USUG. The main exceptions are the 29 wool/cashmere

factories, which obtain over 75% of their water from their own wells, and the 16

intestine cleaning companies which abstract almost 50% of their supply from their wells.

225. Most of the industrial top-140 water demand is concentrated in two districts; the

Sorgino Khairkan District and especially the industrial Khan-Uul district in the Southern

part of UB (see the table below).

Table 28 Top-140 industrial polluters – Distribution over the districts (2011)

District District No. of Top 140 water use ('000 m3/year)

name factories USUG Wells Total %

1 Bayanzurkh 22 35.1 7.5 42.6 4.3%

2 Sorgino Khairkan 25 116.8 107.9 224.6 22.5%

3 Bayangol 29 48.0 32.2 80.2 8.0%

4 Sukhbaatar 8 46.1 46.1 4.6%

5 Chingeltei 4 7.1 0.7 7.8 0.8%

6 Khan-Uul 52 541.7 57.0 598.7 59.9%

Total 140 795 205 1,000 100%

C. Industrial wastewater production

226. Of the water used in the production process, generally approximately 80% is

discharged as wastewater. The remainder is used in products, evaporates or is wasted

otherwise. The 80% is a rule of thumb, but there are large variations, depending on the

type of industry, the processes used by the individual factories and the attention paid by

the management to control water use and pollution. This is the main reason why USUG

likes to measure wastewater flows at the factory premises. During the factory visits,

some indication of wastewater discharges by the top-140 industries was obtained. At the

same time, it was verified if continuous effluent measurements (as desired by USUG)

would be feasible at the largest polluters.

RETA 7918 Final report Page 86

227. In this section an attempt is made to estimate industrial wastewater discharges in

volumes and COD-concentrations. However, without detailed pollution scans that take

much more time than available under this project, it is not possible to provide accurate

estimates of the wastewater generated by these industries. The attempt below to

estimate annual wastewater volumes by the top-140 should be treated with reservation,

therefore, and should be used as an indication only.

The COD-concentrations and annual COD-loads presented in the table below are based

on weighted averages per industry branch of COD-concentration samples taken in the

past. It should again be stressed that the industrial COD concentrations and loads are

very tentative.

Table 29 Top-140 polluters – Estimated Wastewater volumes and COD-loads

Type of industry Water use Wastewater COD17

'000 m3/yr '000 m3/yr mg/l kg/yr %

Tanneries 93.4 84.0 13,300 1,117,772 34%

Wool/cashmere 191.9 172.7 2,640 456,044 14%

Intestines cleaning 28.8 25.9 11,600 300,226 9%

Car wash 70.6 63.5 1,000 63,534 2%

Vodka/Beer/Soft drinks 615.3 400.0 3,260 1,303,861 40%

Total 1,000 746 3,241,436 100%

228. The table indicates that 40% of industrial pollution of the top-140, in the form of

COD-loads, would be caused by the distilleries/breweries and soft drink manufacturers.

The companies deny this and state that much of the water they use leaves the premises

as steam and in their product. This is only partly correct: depending on the product,

alcohol distillery, beer or soft drink manufacturing, generally some 60-85% of their

water consumption leaves the factory as wastewater.

229. Tanneries are a close second, but it is good to realize that most of the tannery

wastewater is produced during only a few months per year, during the winter, when

there is an abundance of hides. During those months, from mid-November to mid-

March, the pollution caused by tanneries dominates Ulaanbaatar’s wastewater.

Moreover, tanneries also discharge chromium, with an average concentration of 28 mg/l,

which adds considerably to the pollution they cause. In the remaining months of each

year, production is much less and so is wastewater production.

230. Almost all tanneries do not discharge their wastewater directly to the sewer, but

lead it towards the Khargia pre-treatment plant. Most observers state that the Khargia

plant is not operating properly, or does any good at all for that matter. Samples taken

by USUG confirm the poor performance, with Khargia’s effluent not showing any

improvement on the influent it receives from the individual tanneries. However, a visit

was paid to Khargia in October 2012. A new manager was appointed and the physical-

chemical pre-treatment facilities seemed to be in operational condition. The company

has certainly difficulties, not least of them financial, it also faces losing (or has already

lost) its permit to dump dried sludge at the city landfill.

17 Values are preliminary estimates and should be used with reservation.

RETA 7918 Final report Page 87

It is worthwhile for USUG to intervene and ensure that the company is operating

properly (again). The pre-treatment process is relatively simple, the facilities are in

place and should be used, as such a pre-treatment can cheaply hold back serious

amounts of extreme tannery waste that would otherwise enter the sewer and create

problems at the CWWTP. Any negotiations should also address the batch-type operations

and agree that batch-wise discharges must take place every night before say 04h00, so

that shock loads arrive at the CWWTP during the mornings, when inflows are low, and

can be accommodated more easily.

D. Possible actions to reduce industrial wastewater

231. As the efforts of the CWWTP to treat the incoming influent properly are affected

rather much by the volumes and strengths of industrial wastewater, it is worthwhile for

USUG to try and eliminate at least part of the industrial wastewater flows. Although the

current wastewater charges do not encourage industries to reduce their wastewater

effluents, USUG will soon have the tools, through the new Polluter Pay Principle law, that

will make it easier to convince industries to reduce their wastewater volumes and/or

concentrations.

232. A start should be made with Khargia. This pre-treatment plant for the Tannery

sector of Ulaanbaatar has the potential to seriously reduce tannery waste. With proper

pollution fees, a better performance of Khargia would be of interest to Khargia itself, to

all of the connected tanneries and, of course, for the CWWTP. As stated before, in

discussions with Khargia, not only attention should be paid to a reduction of pollution

loads but also to the time that the batch-operated plant discharges these loads to the

sewer. Discharge at night should require a normal wastewater charge, but for discharges

during the day a sharply increased fee should be charged.

233. As soon as possible, USUG should start making detailed inventories of the largest

industrial polluters, notably those of the vodka/ beer sector, the wool/cashmere sector

and those involved in intestine cleaning. A start was made during this project, but time

spent at each industry was, necessarily, limited. USUG already has data on water use

and groundwater abstractions of each large polluting industry. Together with the

industries, a water balance should be made that shows how exactly water is used in a

company, how much ends up in the product and how much is discharged as wastewater.

Possibilities to reduce water consumption, to recycle water and to reduce COD-BOD

concentrations should be discussed and their effects on (future) wastewater charges

calculated. Such a process will take time, much more than was spent during this project,

and requires full cooperation from the industries concerned (a cooperation that we did

not always experience during our factory visits). Wastewater flows should be measured

and set against the total water consumption of the company during the same period, so

that the percentages can be used to determine wastewater quantities from total water

use. The equipment that will be procured under the ADB-grant (see paragraph 249) will

be helpful for this purpose. Wastewater samples must be taken over a period of time, so

they can be considered as representative for the quality of the wastewater leaving the

factories. Water volumes used x wastewater percentage determined x representative

concentration then constitutes the pollution load leaving the factory and entering the

sewers.

RETA 7918 Final report Page 88

E. Industrial wastewater charges

i. Current wastewater charges

234. USUG charges all its customers not only for the water supply, but also adds a

wastewater charge. Wastewater charges are based on the water supply, not on the

amount of wastewater discharged. Currently, they are ₮147/m3 for domestic customers,

₮300/m3 for industrial customers, while tanneries pay ₮600/m3.

235. The charges are a good start, but it could be argued that they are too low for

many industries. Distilleries and breweries discharge wastewater that is 5 times as

polluting as domestic wastewater. Even though their final products contain water that is

not discharged by the factories, they ought to pay close to 4 times the domestic

wastewater charge, say ₮600/m3 of water used, instead of the ₮300/m3 they pay now.

Tanneries discharge wastewater that is more than 20 times as polluting as domestic

wastewater, not even yet considering the chromium discharged, so they ought to pay at

least ₮3,000/m3 instead of the ₮600/m3 they pay now. A similar fee should be paid by

the intestine cleaning companies.

236. A disadvantage of the present system of fees is that it is entirely based on the

water the companies consume. Thus, there is an incentive for companies to reduce their

water intake, but no incentive to reduce pollution. Moreover, USUG has to deal with

complaints from companies, like the breweries, which argue that considerable volumes

of their water consumption leave the factories as beer and are not discharged by the

companies as wastewater. The most important reason to change the fee system would

not be to collect more money, but to reduce overall industrial pollution loads for the

protection of the treatment processes at the CWWTP. UB is likely to industrialize faster

in the future and a new approach to wastewater fees should aim at stabilizing, or better

decreasing, industrial pollution loads.

237. It is hard to understand how tanneries could complain about the comparatively

low wastewater fees they have to pay, but apparently they do. Argument is that they

discharge their wastewater to the Khargia pre-treatment plant and have to pay fees to

the company that runs the pre-treatment plant. The tanneries feel disadvantaged by this

double charge. Despite being under-charged for the pollution the tanneries cause, they

have a point. The tanneries themselves, with 1 or 2 exceptions, do not discharge any

wastewater to the sewers, but to the Khargia plant for which privilege they pay a fee. In

a fee system based on wastewater discharges, charges should be paid by Khargia, the

organization that actually discharges its effluent to the sewer. A preliminary proposal for

such a charge is elaborated in section E.ii below.

238. A new law, that recognizes the polluter pays principle, was adopted in 2011. With

UNDP sponsorship, a consultant is currently preparing proposals for wastewater charges

for the Ministry of the Environment. Interesting is that, in a draft document, a distinction

is made between a “water pollution fee” for wastewater that complies with the standards

and a “compensation for water pollution” in case the wastewater exceeds the standards.

A differentiation is also proposed for whether wastewater is discharged into the sewer,

or into the environment (a double fee). The fees in the draft document seem low,

certainly in comparison with the charges we suggested in paragraph 235. Moreover, the

draft document shows a long list of institutions that are eligible for large discounts,

between 50-95% of the wastewater fees. The document we received was very much an

unauthorized draft and much may still change. For the time being, the wastewater fees

charged by USUG will continue. However, considering the large differences in pollution

RETA 7918 Final report Page 89

loads by the largest industrial water consumers, it is proposed that, gradually, USUG will

move towards a different fee system for the large polluting industries, based on actual

wastes discharged. At the request of USUG, our initial thoughts on such wastewater

discharge fees are presented in the next section.

ii. Thoughts on a future system of wastewater charges

239. With the new polluter pays law, future wastewater fees should be based on

wastewater discharges, no longer on the water consumption of industrial companies.

However, suddenly switching to such a system would create difficulties for USUG as it

cannot immediately decide on the volumes of wastewater and the pollution loads of each

company in UB. A transition period is recommended, therefore, whereby USUG is legally

permitted to charge wastewater fees to companies on the basis of their water

consumption, as is the case now, and, for defined large polluting industries, on the basis

of pollution loads. To do so would require separate mechanisms for the following groups

of industries:

1. Small industries that discharge mainly domestic type wastewater, in fact most of

the industries of UB, including the many car wash industries that belong to the

top-140 largest industrial water users;

2. Large water users in the top-140 that also belong to the most polluting ones:

distilleries, breweries, soft drink manufacturers, intestine cleaning companies,

wool/cashmere companies and the few tanneries that are not connected to the

Khargia pre-treatment plant;

3. The group of tanneries, and a few nearby industries, that discharge their

wastewater to the Khargia pre-treatment plant.

@1 – small industries with domestic type wastewater

240. For most of the smaller industries, the present system of fees, based on the

combined water consumption of the USUG supply and private wells, could be continued.

In the more distant future, a system based on the estimated quantity and quality of

wastewater, using standard pollution factors could be applied. In addition, companies

that have made efforts to reduce their wastewater discharges could be assessed

separately and have their fees adjusted accordingly. Alternatively, USUG could assess

industries if an above average pollution was suspected.

@2 – large polluters

241. The larger polluters, those in say the top-50 out of USUG’s list of top-140 (but

excluding the tanneries that discharge to Khargia), should be charged in accordance

with the actual wastewater volumes and pollution loads they discharge to the sewer, in

line with the inventories described in paragraph 233 above. Considering the large

differences in COD-concentrations of the wastewaters of industries, even within the

same type of industries, the system should be based on actual discharge volumes and

the concentration of a number of key pollutants. Some insight in the differences in the

COD concentrations for three types of industries is provided by the numbers presented

in the table below.

RETA 7918 Final report Page 90

Table 30 Top industrial polluters – COD-concentrations Type of industry COD (mg/l)

Min Max Average

Wool/cashmere 480 8,400 2,600

Intestines cleaning 1,830 30,800 11,500

Vodka/Beer/Soft drinks 23 29,000 2,360

242. Ideally, wastewater flow meters would be installed in the outgoing sewer

pipelines of these factories and charges based on these flows. This requires wastewater

flows to be measured and sampled to determine the pollution loads. During the

industrial wastewater survey carried out under this project (see Appendix 3), a check

was made if permanent wastewater flow meters could be placed. This turned out to be

rarely the case. For a flanged electro-magnetic flow meter, wastewater pipes have to be

full with water and this is almost never the case. In addition, there are usually several

wastewater streams that have to be monitored, that only come together in one sewer

outside the factory premises. And most wastewater is actually discharged through a

partially filled concrete sewer. Flow measurement in partially filled sewers require special

equipment (“sewer rats”) that should not be left unattended for longer times, as solids

in wastewater may block the sewer at the measuring location and cause readings to be

inaccurate.

243. As placing permanent wastewater flow meters is not feasible in our view, it is

recommended to base wastewater fees on detailed surveys of the top-50 or so

companies that last one or two weeks and that will be carried out once a year, or twice a

year for the really large polluters. During the annual survey, in close cooperation with

the company’s management, all wastewater flows must be identified and compared with

the water consumption of the company, until a satisfactory water balance is agreed

upon. This is important as, during our industrial survey, it was found that not all

companies are equally helpful in pointing out where the sewers for different process

flows are located. Under new detailed regulations, USUG should have the tools to

penalize uncooperative companies, therefore.

Based on annual production data, comparing them with the production data during the

week of the survey, an annual wastewater pattern should be agreed upon. By taking

samples of each wastewater stream and of all wastewaters together, an annual pollution

load must be established for the company, with wastewater fees based on this annual

pollution load

244. In Europe and the USA wastewater charges are normally based on the combined

pollution of BOD or COD and Kjeldahl-Nitrogen. Industrial pollution by a company is then

compared with the COD + Kjeldahl-N of one person to arrive at the number of

population equivalents for which a company will be charged. Although BOD is a better

measure of the influence of a wastewater discharge on a treatment plant like the

CWWTP and on the environment, measuring COD is easier and has a long history in UB

and it is recommended to base the charges initially only on the basis of COD (except for

tannery waste: see below).

245. In all its communication with large industries, USUG should let it be known that it

encourages reduction of wastewater volumes and of pollution loads, as this improve the

performance of the CWWTP and, ultimately, the condition of the Tuul River. This implies

RETA 7918 Final report Page 91

that, after a company has improved its processes and reduced its discharges, a review

of the pollution charges must be made.

@3 – Tanneries (and others) discharging to Khargia

246. Tanneries in the Khan-Uul district that discharge all of their wastewater to the

Khargia pre-treatment plant should no longer be charged a wastewater fee. All charges

(which should be much higher than the ones applied at present) should be made to the

Khargia Company. The charges should be based on actual quantity and quality of the

effluent discharged by the Khargia treatment plant and should be determined by a

similar detailed survey as described above for the top-50 polluters. It will be the duty of

the Khargia company to sub-divide their overall charges to the over 20 tanneries (plus

some others) that discharge their wastewater to the Khargia plant. To be fair, this may

be hard for Khargia, as there are large differences in pollution loads. The table below

provides some indication on these differences.

Table 31 COD and Cr-concentrations of tannery wastewater

Type of industry Concentrations (mg/l)

Min Max Average

COD18 3,300 21,800 13,300

Chromium 1.3 46.2 27.6

With its high environmental impact, 1 kg of chromium discharges in effluent is charged

at over 50 x 1 kg of COD in many countries. It is recommended to include heavy

chromium fees as part of the wastewater charges in UB, as well.

247. As the tannery industry knows two distinct seasons, a high season from mid-

November to mid-March and a low season in the remaining months, pollution load

surveys at Khargia should be made at least twice a year.

248. The Khargia Company collects tannery wastewaters in a large tank and starts

treating the wastewater once the tank is full. The result is that during long periods no

effluent is discharged from the plant while, during short periods, shock loads of

wastewater are discharged, still with high concentrations of pollutants. This creates

special problems at the CWWTP as it has to cope with alternating high and low pollutant

loads. It could be argued that the Khargia plant should discharge its effluent only during

the period of low flows (generally at night) as then the CWWTP is under-loaded and is

better able to cope with the shock loads from batch operated discharges. Any fees to

Khargia can be made variable, low for discharges between 24h00 at night and before

04h00 the next morning, with higher fees for discharges during other hours.

iii. Flow metering equipment for the (bi-) annual pollution surveys

249. To be able to decide the wastewater loads by the top-50 polluting industries,

flows should be measured on all outgoing wastewater flows from these factories during

annual or bi-annual surveys. Permanent flow meters, like is the case for water

18 The concentrations shown are the weighted averages of samples taken from several tanneries. During a visit to Khargia, the company cited much lower values than shown in this table.

RETA 7918 Final report Page 92

consumption flow meters, were requested, but after the industrial survey it was decided

to procure 10 meters that can temporarily be placed in open sewers. During the

recommended future surveys, their performance can be monitored and any blockages in

the sewers resolved immediately. If USUG feels that permanent installation is warranted

in exceptional cases, it could leave the flow meters at important polluters for a longer

time. USUG already procured two meters to be installed at Khargia.

RETA 7918 Final report Page 93

IX. Reduction of NRW and water consumption

A. Current situation

i. Introduction

250. Non-Revenue Water is the difference between the system input volume (amount

produced) and the amount of billed authorized consumption (IWA Water loss taskforce).

NRW consists of two components: real losses (leakage) and apparent losses

(administrative errors, meter inaccuracy, illegal connections). The IWA Water balance

shows the different factors leading to NRW and Revenue Water. The Total System Input

Volume can be assigned to each of these factors and based on knowledge on the

individual components the total can be determined.

Figure 43 IWA Water balance

251. In Ulaanbaatar the main distribution network is controlled by USUG and the

water is delivered either directly to customers, or to so-called Customer Transfer Points

(CTP). CTPs are large size water meters that measure the volumes and pressures of

water delivered to groups of customers in apartment blocks or housing estates. Many of

the CTPs were constructed to measure the supply of water to housing estates belonging

to OSNAAG, the local Government’s housing estate authority and operator. USUG is

responsible for the distribution system and its operation up to the CTP. Downstream the

CTP, the organization responsible for the housing estate, like OSNAAG, or private

companies like Kantors, owns the distribution and is responsible for operation and

maintenance.

252. This section of the report deals with NRW in Ulaanbaatar, not only in the main

distribution network owned and operated by USUG, but also with NRW downstream of

the CTPs, in the housing estates managed by OSNAAG, the Kantors, etc. The lengths of

distribution pipelines in these estates are considerable as all pipelines are executed

double to provide for both warm and cold water. However a large part of the pipelines

are in open sight in the apartment buildings. NRW in the pipelines themselves are

therefore expected to be low. A schematic overview of the main and distribution network

is presented in Figure 44.

RETA 7918 Final report Page 94

Figure 44 Schematic structure of the main and distribution network

ii. NRW in USUG’s main network

253. The main distribution network of USUG of predominantly looped configuration

consists of approximately 380 km of pipes in diameters of 80 – 800 mm, laid in a hilly

area with elevation differences of up to 160 m. As much as 85% of the transmission and

distribution pipes are made of steel, with the remainder made of cast iron (CI). Details

are presented in the table below.

Table 32 USUG’s distribution pipes – diameters and lengths Diameter

(mm)

Total length

(m)

Percentage

(%)

Steel

(m)

Cast Iron

(m)

80

100

125

150

200

250

300

400

500

600

700

800

165

2,082

1,845

48,736

26,073

20,477

27,791

61,907

30,518

69,650

30,395

29,005

<0.1%

0.6%

0.5%

14%

7%

6%

8%

18%

9%

20%

9%

8%

165

1,087

1,845

35,575

20,529

6,017

23,421

55,317

23,515

69,650

30,395

29,005

-

995

-

13,161

5,544

14,460

4,370

6,590

7,003

-

-

-

Total 348,644 100% 296,521 52,123

254. Normally, a high proportion of steel pipes would be a cause of concern. Steel

pipes are generally prone to corrosion and in UB the steel pipes are neither coated, nor

provided with cathode protection. Some pipes were indeed affected by corrosion and

were replaced. But it appears that the corrosion was mainly caused by the presence of

nearby power cables, which turned the steel pipes into cathodes, which made them

prone to corrosive action. A visit was paid to the yard with old steel pipes that were

replaced. Apart from line corrosion at locations close to power cables, the old steel pipes

appeared to be in good condition. The prevailing soil conditions, with dry and non-

RETA 7918 Final report Page 95

aggressive soil (low electro-conductivity) causes the unprotected pipes to suffer little

damage through corrosion. Also the inside of the discarded steel pipes was in good

condition, most likely because of the permanent pressure in the distribution system.

255. In the past years, USUG’s NRW has been hovering around the 20% mark. The

figure was calculated based on metered date of the production of each individual

treatment plant and on the amount of water billed to customers. The charts below show

NRW over the past 6 years and variation of NRW over the year. NRW is in a (slow)

decline during 2008 – 2012 period, as an effort was made to get all the direct customers

of USUG and CTP’s metered. In 2006 98 % were metered and in 2010 all the direct

customers (4,147) were metered. Unfortunately, NRW increased again in 2011, to above

20%, because of a fault with a CTP with large water demand. The downward trend of

the NRW continued again in 2012, however, and over the first 8 months of the year

NRW became 18.7 % based on volumes water produced and water sold. For the year

2011 the total volume of water produced was 55.03 Mm3 and the volume sold was 42.99

Mm3 which is an NRW percentage of 21.9 %There is no clear pattern that shows

seasonal fluctuation during the year.

Figure 45 USUG’s NRW in the period 2007-2012 +NRW-variation over the year

iii. OSNAAG’s distribution systems and their NRW

256. When reviewing the water supply of UB, OSNAAG emerges as an important party.

OSNAAG, the housing authority, owns and operates many housing estates in UB through

its 20 service companies. The OSNAAG service companies not only manage, operate and

maintain the apartment buildings, but also take care of electricity, heating, hot and cold

water in their housing estates. OSNAAG owns a large number of apartment buildings

and provides water to more than 255,000 people in the center of UB. The service

companies buy water from USUG in bulk, with quantities measured at the CTPs, and

supply it to their individual customers. Besides OSNAAG, private owners of estates and

apartments (Kantors) fulfill a similar role. Kantors now provide housing, and water, to a

total of 73,600 people. However, while more than half of OSNAAG’s customers still pay a

flat rate for their water, all of the Kantor’s apartments are metered.

257. Of OSNAAG’s housing estates, 127 are provided with a CTP with GPRS facilities.

It is from these well monitored CTPs that most reliable information is available. In these

CTP monitored estates, OSNAAG rents out 78,407 apartments. Some years ago, all of

0

5

10

15

20

25

2007 2008 2009 2010 2011 2012

NRW (%)

0

5

10

15

20

25

30

jan

feb

mar

ch apr

may

jun

e

july

augu

st

sep

t

oct

no

v

dec

NRW 4 year average

NRW (%)

RETA 7918 Final report Page 96

the households in these apartments paid a flat rate for their water use. But in the last

few years, more and more apartments have become metered. In October 2012 a total of

37,515 apartments (out of 78,407 apartments in the 127 estates), or almost 50% were

equipped with water meters. Households that rent their apartment from OSNAAG must

pay for in total 4 meters and their installation. Four water meters are required per

apartment, two in the kitchen (one for hot and one for cold water) and two in the

bathroom. It is estimated that, in order for OSNAAG to reach metering of 100% of its

apartments, another 41,000 households have to be metered.

258. For the distribution networks inside OSNAAG’s compounds NRW is estimated at

10 – 15 %. Engineers from OSNAAG indicate that this is lost revenue because of

unmetered apartments. However looking at the total amount of water delivered to the

OSNAAG’s in August 2012 (1,413,000 m3/month) and the actual volume billed

(1,550,000 m3/month) NRW is in fact not present. More water is billed than delivered

because of the assumption of the fixed consumption per person per month (285 l/c/d)

on which the tariff is calculated while actually the average consumption for people

(~136.000) in the unmetered apartments is lower (255 l/c/d). Once all apartments are

metered and average consumption is down to 130 l/c/d the volume of water saved is 6,2

mio m3/year or 17.000 m3/day.

259. A research carried out by the University of Mongolia in 2006 showed an NRW

level of 6%. However, at the time none of OSNAAG’s apartments were metered and

OSNAAG simply charged its customers for all water procured from USUG. Until areas are

completely metered it is impossible to determine the actual level of NRW and calculate

the real loss and apparent losses.

B. Components of USUG’s NRW

260. The following paragraphs provide an analysis of the different NRW components

experienced in Ulaanbaatar.

i. NRW caused by metering inaccuracies

261. By Law19 customers are obliged to pay their water tariff on the basis of a water

meter. Since 2010, all the customers that receive water from USUG are metered,

through a total of only 4,147 water meters. That is an extremely small number for a city

of the size of Ulaanbaatar and one of the main reasons that USUG’s NRW is low in

comparison to that of most other water supply companies in the region. In other cities

much of the NRW is found in the myriad of tertiary distribution pipes in small alleys with

poor access and in the hundreds of thousands of house connections. USUG hardly needs

to cope with such problems as many of the tertiary distribution systems are located

downstream of CTPs and bulk water meters, in the domains of OSNAAG and the Kantors.

262. The table below provides some details on the number of meters and the

percentage of water use by the different consumer categories. The table shows that

households are by far the largest water consumers in UB, who are served through only

few CTPs and bulk water meters.

19 Law of Utilization of Water Supply and Sewerage of Urban Settlements (revised October 6th, 2011)

RETA 7918 Final report Page 97

Table 33 Water meter distribution in USUG’s network

Category No. of meters % consumption

Businesses 2,055 12%

Households 1,404 74%

Public services 391 8%

Industry 295 6%

Total 4,147 100%

263. Most of the water consumption is measured through large size bulk water meters.

Generally, these larger meters are in good condition. They are owned, operated and

maintained by USUG and meter accuracy is checked every two years. Smaller meters

cause slightly more problems. Some of them are installed incorrectly and accuracy of

these meters tends to be less. Small water meters (every household needs 4 meters)

must be procured and installed by the customers themselves and they remain property

of the customers. Also these meters must be inspected for accuracy every two years. In

UB there are four meter shops (one of USUG and three private ones). But current

practice is that they are only checked every 3-4 years. When the inaccuracy of the water

meters exceeds the tolerances set by the Standardization Office the meter will be

rejected. In the last 3 years 8,966 water meters were checked, of which 1,137 (12.7%)

were rejected.

264. The average lifetime of water meters is around 5 to 6 years but in practice, if not

broken, they will be used for a longer period. A longer use of the meters increases

inaccuracy especially for the hot water meters. Tampering with meters is observed by

USUG, occasionally. Unfortunately, fines to be paid for tampering are too low, lower that

the benefit of lower water bills.

265. USUG has an automated system for measuring the water consumption at CTP’s in

the network. These water meters are monitored by an operator in the OCC (Operation

Control Centre) at USUG’s head office. A total of 140 such meters are installed. Some

20-25 of these meters are not working properly, which adds to USUG’s NRW. The reason

is mostly lack of spare parts and meters mishandled by customers. Two employees of

the customer department are responsible for the repair of these meters.

ii. Illegal connections

266. There is no information about or any experience with illegal connections. Judging

from field visits, illegal water use in UB must be very low. Pipes are either buried very

deep, or in cellars underneath apartment buildings together with other utility pipes. The

first making it very hard to make a connection and it would require skillful work and

adequate tools under extreme conditions while being exposed to the public eye. The

latter making it easy for staff of the service company to detect any illegal connection.

iii. Real losses

267. The UB distribution system is not young. As much as 22% of pipes are older than

43 years and 85 % is older than 23 years. The table below provides more detail. Despite

this middle-aged network, corrosion does not seem a major problem (refer to the

RETA 7918 Final report Page 98

paragraph above). The fact that most pipes are laid at a large depth and, once there,

hardly ever get disturbed by other utilities (as is the case in many countries with pipes

buried at less than 1 m), helps to preserve pipelines in their original condition.

Table 34 USUG’s distribution – age of distribution pipes Year Age range

(years)

Length

(m)

Percentage

(%)

Cumulative

percentage

2000-2010

1990-1999

1980-1989

1970-1979

1960-1969

1950-1959

2-12

13-22

23-32

33-42

43-52

53-62

10,583

40,738

195,714

24,307

59,367

17,935

3%

12%

56%

7%

17%

5%

100%

97%

85%

29%

22%

5%

Total 348,644 100%

268. In recent years there has been a shift to other pipe materials, notably Ductile

Iron (DI) and high density polyethylene (HDPE). So far, a total 10 – 15 km has been laid

using these new materials, mostly in distribution pipelines in the ger areas. In case of

being laid at depths less than 2 – 3 meters, both materials will have external insulation

against extreme winter temperatures and often will be heated, as well.

269. With so many old steel pipes, despite the apparently favorable conditions for

steel pipes in UB, the Water Supply Department at USUG does routine checks on

leakages in the distribution system. The department is equipped with a leak correlator,

acoustic leak detector, pipe detector and mobile ultrasonic flow meter. While this type of

equipment shows optimal performance on metal pipes, which is the case in UB, the

results of leak searches are not promising. While annual about 40 km of pipeline is

checked with the correlator, no leak has ever been found in this way.

270. All 100 leaks in the distribution in the period 2008-2011 were found through

physical inspection. They were found after complaints or when leaks were suspected and

pipes were dug up. Leakages are generally detected right after the winter season.

Cracks appear when temperatures are rising because either elements of the network

settle/move, or because parts of the network have been frozen. This occurs when flow in

the pipelines is insufficient to prevent freezing. The table below shows the number of

leakages registered in the past 4 years.

271. Taking into account that 85% of pipes is made of steel, it was no surprise that

most leaks (74 out of 100) were found in steel pipes. In fact, per km of pipe, steel pipes,

with 1 leak per 4 km, did better that CI pipes, with 1 leak per 2 km of pipes.

Table 35 Number of leaks found in the period 2008 - 2011

Material 2008 2009 2010 2011 Total Leaks/km

Steel 13 17 12 15 74 0.250

Cast Iron 4 6 8 5 26 0.499

Total 17 23 20 20 100 0.287

RETA 7918 Final report Page 99

272. The data about the location of the leaks show that many of the leaks occurred

close to pumping stations. Pressures near the pumping stations are at their highest and

especially sudden pressure shocks could cause problems in CI-pipelines at bends or

tees, especially if anchor blocks were not executed properly. Especially near the Central

pumping station many leaks were found, occasionally causing large floods.

C. NRW at OSNAAG’s and Kantors’ distribution systems

273. NRW is USUG’s distribution system is only part of the equation in UB’s overall

NRW. Much of the smaller distribution pipelines and service connections are located

downstream of bulk water meters and CTPs, in the housing estates of OSNAAG and the

Kantors. The NRW in this distribution is of not of real concern to USUG. It does affect

USUG’s operations though, as will be described below.

274. Until recently, only few of OSNAAG’s customers used meters to measure their

water consumption. All apartments were charged for a daily water consumption of 285

l/c/d for the number of persons officially registered at the address. This was a

satisfactory arrangement for OSNAAG as the money thus collected covered their USUG

bills reasonably well. However, with a drive to preserve water and to let families pay for

what they actually consume, OSNAAG has started to encourage their customers to buy

and install water meters and pay for what they consume. While in 2007 only 18.3% of

OSNAAG apartments were metered, the percentage had already increased to 47.8% by

2012.

275. The increased metering in the OSNAAG compounds has dramatically reduced

water consumption. Average consumption went down from 291 l/c/d in 2006 to 202

l/c/d in 2012 (refer to section H below for more details). This caused a reduction in

revenue, and in production costs, for USUG, but it causes financial pain for OSNAAG as

fees collected from the households are no longer sufficient to cover the water bills that

are based on CTP-measurements. Because of their recently increased awareness on

water flows, OSNAAG was now able to quote an NRW percentage of 10-15% within its

premises. However this is still with only partially metering and thus an estimate.

276. The private Kantors operate on the up-scale side of the market and have always

equipped all their apartments with water meters. Engineers from OSNAAG stated that

NRW in these private Kantors is very small, but no data could be retrieved to

substantiate this claim.

D. Past NRW-reduction efforts in UB

277. Several investigations have been made into USUG’s NRW. A pilot has been

executed for the main network in the 3rd and 4th micro districts of Ulaanbaatar in 2009.

To make the water balance for the area the area was isolated and the inflow was

metered. At all the CTP’s the consumption of the customers was determined and based

on the difference the physical losses were calculated. The result from this pilot was that

in that area the physical loss in the main distribution network was about 0.9%. The

methodology proved to be a good way to determine actual NRW levels and can be

repeated in other areas.

278. A small number of CTP-areas are completely metered and information is available

on the level of NRW. For the area Moscow (in UB), with 20,990 people, the level of NRW

RETA 7918 Final report Page 100

is 4%. This is a minimal percentage which can be attributed to meter inaccuracy,

administrative errors and small leaks. This kind of minimal NRW can be considered as an

unrecoverable loss.

279. USUG also has a number of apartment buildings. These are 100% metered and

give an indication of the level of NRW in the building and the distribution network inside

the buildings. An investigation into an apartment building with 1,300 people showed an

NRW of 0.7%. This number is quite low and therefore not representative for all

apartment buildings. However all the apartment buildings that were visited have shown

favorable conditions (easy to check, dry cellars) and leakage and tampering within the

buildings is minimal.

E. Objectives for an intervention program - general

280. An intervention program should have the following three objectives:

i. NRW-reduction in the distribution managed by USUG;

ii. NRW-reduction in OSNAAG distribution systems downstream bulk meters/CTPs;

iii. A reduction in the per capita amounts of water used.

281. The objective of NRW reduction is to deplete the need of primary energy

resources for water systems operations, save water at both customer level and supply

level ensuring more sustainable use of available water resources, and promote a more

reliable and more efficiently run utility. In an NRW-reduction program, also reduction of

NRW at the OSNAAG compounds will be incorporated.

282. In NRW there is always a component that is recoverable and a component that is

unrecoverable or very hard to recover. Some administrative errors, meter inaccuracies

and minimal leakages are unavoidable and this is called the unavoidable annual loss.

From the part that is avoidable the objective is to regain as much as is economically

viable. NRW-reduction should stop once a further reduction costs more than the benefits

obtained from a lower NRW. Normally, NRW-reduction costs little in comparison to the

benefits it brings. However, in UB this balance may be skewed towards a higher NRW.

Pipes are located up to 8 m below ground level and physical leak reduction costs much

money. Care should be exercised to avoid embarking on an NRW-reduction scheme that

costs much and that may not bring large reductions. With NRW already in the middle

range and no lack of water resources (most pumping stations operate below capacity),

an NRW-reduction proposal should cherry pick activities that will cost relatively little.

283. The picture below is a schematic representation of activities that could be carried

out and to what extent.

RETA 7918 Final report Page 101

Figure 46 Distinction between recoverable and unavoidable losses

284. Of USUG’s ~19% of NRW it is estimated that about half should be categorized as

unavoidable. Meter inaccuracy (based on data of the meter workshop) with 3-4 %,

administrative errors have not been found. However, some inaccuracies will always

occur causing 1-2 % and 3-4% of loss because of the relatively high network pressure.

Taking into account also the length and age of the network, the total of unavoidable

losses will add up to 7-10%. This would leave say 9-10% of potentially recoverable

losses. The 7-10% remaining unavoidable losses compare well to current NRW levels in

the Netherlands where water supply is fully developed and where, with lower network

pressures than in UB, NRW is now 5-7%.

285. By reducing NRW, USUG’s marginal production costs will decrease. As staffing

and operational costs will not decrease, only a reduction in power consumption should

be considered. One m3 water less to produce will save 0.661 kWh at a cost of 0.661 x

₮88 = ₮58.1720. With current NRW approximately equal to 18.7%, or ~10 Mm3/year,

the value in monetary terms of NRW is approximately ₮582 million per year (~USD

416,000/year). If the NRW could be reduced by half, USUG would benefit to the tune of

~₮290 million per year (~USD 208,000/year).

286. Because of the relatively low value of NRW, NRW-reduction measures should be

executed at minimal costs and emphasis should be given to measures that cost less and

achieve relatively much. This requires a carefully designed NRW-reduction proposal.

Such a proposal is elaborated in the sections below, both for USUG’s and for OSNAAG’s

NRW, in respectively sections F and G below. A separate section (H) is dedicated to

water consumption reduction.

20 It should be noted that, after implementing energy reducing measures proposed in this report,

energy per m3 of water will become less, causing also a reduction in the NRW-valuation.

RETA 7918 Final report Page 102

287. An NRW-reduction program with an overall cost of USD 564,000 is proposed. If

this would achieve a 40% reduction of the potentially recoverable NRW, the Internal

Rate of Return would be 8.82%, not high in comparison with most NRW-reduction

schemes that are highly profitable from an economic point of view, but still acceptable.

F. Proposals to reduce USUG’s NRW

288. To decrease the level of NRW, interventions can be subdivided in 2 categories.

One is to tackle the apparent losses (which is least costly and is relatively fast). Second

is to reduce real losses (which require investments and time).

i. Apparent losses

289. To reduce apparent losses the following components need to be addressed:

a. Metering accuracy

b. Data transfer errors

c. Administrative databases

d. Illegal consumption

a. Metering accuracy

290. To ensure that water meters are operating properly, regular checks need to be

executed. By law all water meters have to be checked every 2 years on proper

functioning and accuracy. USUG already implements those checks regularly, especially

for the larger water meters. There is no need to further increase these checks. The way

and frequency it is done is sufficient to optimize meter accuracy.

291. An extreme form of inaccuracy of water meters is found with water meters that

are not functioning properly, or at all. As described before, USUG currently uses 20-25

large water meters that are known not to function properly. Just these 20-25 meters

could cause a 3-4% of the current NRW. Repair or replacement of such known cases of

inaccuracy must be taken up urgently.

292. Two measures would improve meter accuracy are (1) selecting only high quality

water meters for the network of USUG; and (2) prescribe a number of specific brands of

water meters in house connections and making the use of others illegal. At present,

customers are free to select any type of water meter and tendency is to procure the

cheapest brands, which are often (but not always) also the worst. Data from the meter

workshop reveal that the cheaper brands are (much) more likely to fail the tests.

Implementing legislation/regulation would improve the situation in a period of 7 to 10

years, at no cost to USUG.

293. Tampering with meters is a big issue in UB. USUG has assigned only 2 of its staff

to detect meters tampered with, but it is found that as many as 10-15% of meters show

at least attempts at tampering. It is estimated that tampered with water meters cause

an NRW in the range 2 to 4 %. Penalties are imposed if meters were tampered with, but

the benefits of tampering, resulting in lower water bills, outweigh the relatively low

penalties. To reduce tampering with water meters, more checking will be required and

penalties need to be made much harsher.

RETA 7918 Final report Page 103

b. Data transfer errors

294. During the feasibility period, a random number of meter readings were compared

with the volumes billed. No mistakes were found and the conclusion is justified that an

active search for data transfer errors will not result in a lower NRW. No effort on

improving this system is recommended, therefore.

c. Administrative databases

295. USUG’s administrative database is completely computerized, with records of all

4,147 customers registered in the database. Because so much bulk supply is involved,

USUG’s number of customers is small. Generally, small databases contain only few

errors and hardly any NRW-reduction can be expected from carrying out active checks

on the records. On the other hand, because of the small customer base, checking is not

a great and costly effort and it is recommended to check the database once every 3

years, therefore.

d. Illegal consumption

296. Illegal consumption is water consumed through an illegal connection to USUG’s

distribution system. Illegal connections were made by unauthorized individuals or

companies and which are (obviously) not registered in USUG’s database. Water used

through illegal connections is not (cannot) be billed and is, thus, not paid for. Illegal

connections are not easily made without detection to distribution pipes with high

pressure and buried deep underground. In apartment buildings piping is often in plain

sight in the basements of such buildings which makes detection easy. It is recommended

to carry out physical inspections once a year in apartment buildings not belonging to

OSNAAG or the Kantors, especially in those areas of USUG’s distribution system that

have a high NRW. OSNAAG and the Kantors are advised to carry out similar inspections.

ii. Real losses

297. To control real losses there are basically the following tools;

a. Pressure management

b. Active leakage control

c. Speed and quality of repairs

d. Pipeline and asset management

a. Pressure management

298. Pressure management is an undervalued tool to reduce leakage. International

data on pressure/leakage relationships demonstrate that leakage in distribution systems

is usually much more sensitive to pressure than would be estimated by the square root

relationship, with different components of leakage responding differently to pressure.

Pressure and leakage are exponentially related to each other, a 1 % increase in pressure

will result in a 1.15 % increase in average leakage rate. Management of pressure is

therefore one of the fundamentals of an effective leakage management policy. It is all

the more appealing as it usually costs little and often reduces costs because of the

reduced energy needed for pumping.

RETA 7918 Final report Page 104

299. Pressures in USUG’s network are (too) high, with levels between 4 and 7 bar

quite common. Some OSNAAG companies’ switch of their pumps at night as the

pressure in the distribution system is (more than) sufficient to transport water also to

the top floors of their apartment buildings. Reducing these high pressures to minimum

levels (determined mainly by ongoing contracts with OSNAAG that stipulate a minimum

pressure of 20 mwc) will help to reduce NRW by an estimated 2-4% and reduce energy

costs at the same time.

300. Not only the levels of pressure are important, also the sudden changes in

pressure that occur frequently should be tackled. Pumps that switch on or off cause

shock waves in the distribution system and many leaks occur just after such sudden

changes in pressure. Moreover, many of the pipe bursts occur close to the pumping

stations where pressures and pressure changes are highest. By using frequency

controlled pumps this effect can be eliminated and flow changes can become more

gradual. It is recommended from a point of view of NRW management to have frequency

controlled pumps at every pumping station. This will reduce leakage and increase the

lifespan of the network.

b. Active leakage control

301. Active leakage control refers to finding and repairing invisible leakages. Because

of the specific circumstances of the low lying pipelines this is quite hard and costly in UB.

Active leakage control is not recommended for the entire network therefore. To

determine where the actual levels of NRW are highest the network should be divided

into so-called District Metering Zones (DMZ), large sections of the network that are

hydraulically separated and where inflow of water can be measured through bulk water

meters. By comparing water inflows with customer billings for each DMZ, NRW can be

calculated for each DMZ and DMZ with high NRW can be given special attention. The

figure below shows how the main network can be subdivided into a number of DMZ. It is

common NRW-reduction practice to sub-divide a DMZ into smaller District Metering

Areas (DMA). In UB, each DMZ already has several DMAs in the form of separate

distribution systems within OSNAAG’s housing estates which are metered through their

CTPs.

Figure 47 Proposed DMZ (hydraulic islands}

302. Dividing the main network in smaller units will be carried out to improve

operational management of the distribution system. Fortunately, creating DMZs is also

RETA 7918 Final report Page 105

the first step of finding leakages pinpointing NRW to specific areas. Once these DMZ’s

are established the level of NRW can be determined and the DMZs with the highest

levels of NRW will be investigated further. With different techniques like correlation and

acoustic equipment invisible leakages can be found. Experience shows that USUG is not

yet successful with this methodology. Training and guidance is needed to apply the

techniques and find leakages. However, activities may not be too expensive so as not to

become uneconomical.

c. Speed and quality of repairs

303. Once leakages are found the water supply department is responsible for making

adequate repairs. As explained above, not many leaks are found and those found are

usually very large and need to be repaired urgently. USUG is experienced in handling

such leaks and uses appropriate techniques, as was demonstrated by a pipe burst (and

subsequent repair) that occurred during the presence of the feasibility study team in UB.

The knowledge and skill to repair such leaks to a high standard are already existent.

There is no need to further increase these skills.

d. Pipeline and asset management

304. Asset management is actually a tool for long term NRW management. Once NRW

is reduced it is of importance to keep it at the desired level. It is not uncommon that

water companies make a large effort in reducing NRW, succeed in doing so, but then let

benefits slip after interest in NRW decreases. To keep NRW at the desired level, asset

management is a useful tool. Through a mini-WOP arrangement between Vitens Evides

International and USUG, attention is being paid to asset management. In 2012 several

experts have visited USUG to give training and assistance in setting up an asset

management system. The supporting activities will be completed in 2013.

G. Proposed NRW-reduction pilot in an OSNAAG compound

305. To determine the NRW and its components in OSNAAG housing estates, the

Feasibility study team agreed with OSNAAG on executing an NRW-reduction pilot study

in a hydraulically isolated part of OSNAAG’s Sunny house service company. This service

company has several CTP’s in their control and the area selected is measured through

CTP 2. This isolated part of the compound houses a total of 1,092 households with 3,895

people. The location of this compound is shown in the figure below.

306. Within the CTP-2 area in the Sunny housing estate, a number of parts have been

renewed. In August 2012 they have renewed the cold water control panel and have

installed new booster pumps. With the installation of this new equipment it has become

easier to carry out pressure control in the area.

RETA 7918 Final report Page 106

Figure 48 Proposed NRW-pilot: OSNAAG’s Sunny house estate – CPT-2

307. The pilot will be executed in a few steps. It is intended to make a complete water

balance for the area. Therefore not only individual households will be metered but also

the apartment buildings, that way also the actual losses in the pipelines can be

determined.

Step 1: Check water meter USUG

Step 2: Check customer database (all customers registered properly)

Step 3: Record data to make a flow pattern

Step 4: Install water meters outside apartment buildings

Step 5: Record flow into the selected apartment building

Step 6: Install household water meters

Step 7: Make an action plan depending on the findings

Step 1: Check water meter USUG: to ensure that proper data is collected the meter

of USUG should be checked in the meter workshop. USUG will take out the meter and

calibrate it to ensure it is functioning correctly. If necessary replace it with a new water

meter.

Step 2: Check customer database: the customer department of Sunny House will

check all the registered residents to see if there are any connections which are not

registered and any volume of water is missing through illegal connections.

RETA 7918 Final report Page 107

Step 3: Record data to make a flow pattern: during the check of the customer

database already data can be gathered from the water meter. Through the CTP flow

patterns can be gathered in the customer department of USUG.

Any specific problems during that period need to be recorded. The flow pattern found

will be compared with the flow pattern of the apartment buildings (see step 4).

Step 4: Install water meters outside apartment buildings: in front of three

apartment buildings mechanical water meters will be installed to record the flow going

into these individual apartment buildings.

Step 5: Record flow into the apartment buildings: for a period of one month the

flow into each apartment building is recorded and the daily flow pattern established and

compared with the flow pattern for the whole compound. Large discrepancies, indicating

NRW, must be investigated.

Step 6: Install household water meters: within the Sunny house estate, the

apartment buildings with the highest non-metered per capita consumption will be

selected and an estimated 800 water meters installed. By choosing the highest

consumption the effect of metering will be clearer. Also in these apartment buildings

NRW might be high as the un-metered consumption can either be explained by high use

by customers or by high NRW in the pipelines. After installation the meters of the

customers will be read twice per month for a period of 3 months. After the test period

the meters can be read in a regular pattern. However they will be registered separately

to be able to calculate NRW on a monthly basis.

Step 7: Make an action plan depending on the findings: depending on the results

of the investigations, it should be possible to pinpoint the causes of NRW. An action plan

should address these causes. OSNAAG staff suspect that NRW is especially caused by

improper use by consumers. If this would indeed be the case, NRW reduction programs

should focus on metering of households and on customer awareness.

H. Water consumption reduction

308. Taking into account scarce groundwater resources, reduction of water

consumption is another objective of this project. It is a well-known fact that unmetered

consumption is the enemy of water conservation. This was proven in UB when, over the

period 2007-2011, OSNAAG started with a campaign urging their customers to install

private water meters. During that period metering increased from 18.3% of apartments

to 45.5%, while the average consumption in OSNAAG’s apartments decreased from 285

to 204 l/c/d.

309. The chart below shows, to a certain extent, what metering will do to water

consumption. The chart combines the percentage of apartments metered in a certain

compound and the average consumption. The chart is based on water consumption in 19

OSNAAG compounds with a total of 255,000 people. Although there are large variations,

the trend is clear, the more meters are installed, the lower the water consumption. The

trend line shows that with 0% of apartments metered, average consumption would be

260 l/c/d, while with 100% metered, consumption would be less than half, at 130 l/c/d.

This may be somewhat over-optimistic. Families with a low water consumption are

probably more inclined to invest in 4 water meters (4 meters are necessary to measure

all inflows into the house: 2 in the front – 1 for cold water and 1 for hot water- and

similarly 2 at the back) than large families that suspect that their water consumption is

RETA 7918 Final report Page 108

high. The final per capita consumption may be higher than the 130 l/c/d shown,

therefore.

310. Water saving through installation of water meter is unmistaken and large

amounts of water can be saved. Total water consumption to 127 areas measured by CTP

could decrease from the current 45,600 to 30,600 m3/d. With this saving an additional

115,000 people could well be provided with 130 l/c/d.

Figure 49 OSNAAG’s apartments: Effects of metering on water consumption

311. Such a decrease in consumption would also have financial implications. USUG’s

revenues from OSNAAG would decrease by USD 100,000 per year, but this could well be

compensated by increased sales to additional customers. The transition from

consumption with fixed payments to metered consumption has created more problems

for OSNAAG: Amounts collected before were sufficient to cover payment of USUG’s

water bills. OSNAAG is now exposed to the difference between the water consumption

measured through the CTPs and the volumes it can bill to its customers based on

metered consumption. Besides tackling this difference (in fact OSNAAG’s NRW),

OSNAAG will have to raise tariffs to cover this difference.

312. Table 36 shows data on the degree of metering in OSNAAG’s apartments and the

effect this has had on the average water consumption. It turns out that metered

customers consume between 90 to 130 l/c/d, whereas the unmetered customers can use

as much as 418 l/c/d (in Iven Eh). It should be noted that any NRW in OSNAAG’s

systems is allocated to the unmetered customers, so their actual consumption may be

less. Unmetered consumption is extraordinarily high in Iven Eh. This indicates that either

water is lost, or that people waste a lot of water. Staff from OSNAAG indicates that this

area has always had a high consumption and believes that this is either because of

waste from the customers, or because of illegal connections. In such an area, as well as

in other areas with consumption over 300 l/c/d, OSNAAG needs to make more thorough

RETA 7918 Final report Page 109

investigations. In the area Batbayanburd, consumption of unmetered customers is

shown as 35 l/c/d. This is unlikely and probably due to a problem with the water meter.

This needs to be investigated by USUG and OSNAAG.

Table 36 OSNAAG: Effects of metering on water consumption Location Metered consumption Unmetered consumption

% No. of

people

Av. Cons.

(l/c/d)

No. of

people

Av. Cons.

(l/c/d)

Sancomfort 11.7% 1,674 164.6 12,681 284.1

Ema & B 18.9% 5,068 108.7 7,631 238.3

Sims 25.7% 1,778 104.3 5,035 254.7

GM 27.1% 5,784 175.3 7,482 237.8

Ashid Undrah 33.9% 4,945 134.4 7,221 258.5

Sunny house 34.0% 14,880 95.4 15,992 190.4

Unor gorhi 35.7% 3,673 114.8 8,085 327.5

Etseg Eh Huu 40.0% 13,253 91.7 6,806 122.4

Ganga Urgoo 42.9% 4,537 97.5 4,904 209.9

Unor town 43.1% 8,213 79.1 8,096 263.2

Sansar Urgoo 44.4% 2,780 114.4 4,601 240.3

Dulaan Urgoo 46.4% 3,702 160.1 5,845 243.2

Tavan shar 47.8% 1,743 98.8 8,070 311.4

Huh Asar 52.6% 14,820 90.5 13,331 199.6

Open House 59.5% 6,130 65.6 3,932 215.0

Housing Serv. 66.0% 4,496 85.0 6,818 293.6

Hairhan Uul 70.8% 7,391 85.5 6,133 296.4

Batbayanburd 74.2% 3,677 113.8 1,922 35.0

Iven Eh 77.2% 5,532 135.9 1,464 418.7

Moscow 100% 5,162 131,2 0 N/A

I. Public awareness

313. Public awareness has to be a key activity according to Municipality of UB, USUG

and OSNAAG. Through public awareness, metering will increase in UB, water savings will

be achieved and water saving culture will be improved, thus having a positive effect on

water resources. By law, water has to be supplied through a water meter. At the

moment 41,000 households or 51.4% of OSNAAG apartment households do not yet

possess water meters. Surveys of USUG executed by independent agencies during the

last three years repeatedly show similar results with regard to the desirability of water

meters. Some data from the latest survey are presented below (in the separate RETA

7918 Social Survey Report more data is available):

- 73.2 % of the people without water meters would like to install a meter; the

other people (26,8 %) don’t want one;

- Of the people who are not interested in having water meters, 24.2% of them

think: water is expensive, 18.7%; it is same whether you have it or not, 17.6%;

it is difficult to have many water meters, 11% of them; it is impossible to install a

water meter in our pipeline, 5.5%; the remaining 4.4% don’t know from where to

get it;

RETA 7918 Final report Page 110

- For people without a meter, 26% would like to lease the meters; 57.4% would

buy water meters if the price was less than 20,000 MNT per water meter (~USD

15) and 8.9% would still not buy a water meter regardless of the price;

- 58.9 % of the respondents were against saving water as long as they pay their

bill; the remaining are in favor of saving water. However compared to that 88.7

% of those interviewed advise their children to save water;

- 91% of respondents believe that groundwater resources are in danger. 7.3%

doesn’t agree with that.

314. Secondary analyses based on USUG’s existing survey of Customer Satisfaction

Survey of 2010, 2011 and 2012 years has been done and it has shown a necessity to

conduct a Focus Group Discussion (FDG) and Key Informant Interviews (KII) as some

specific data on water metering was missing. Because of the already available surveys

and due to the limited time and budget no full survey was executed.

315. The questionnaire of FGD was prepared on the issues related on Water Metering,

Water Saving and Water Saving Culture. The target group has been chosen carefully

from apartment customers, mainly from old and down town apartments, who have most

problems with water metering due to old house pipes, and included representatives from

USUG, OSNAAG, Association of Condominium and others. The FGD consisted of 40

participants (9 male and 31 female), which are chosen mainly from downtown and old

apartments houses (27). 40% of them were without water meters in their apartments.

FGD included 18 representatives from OSNAAG (8 engineers, 4 water meter readers, 2

accountants), USUG 2 staff, and Association of Condominium 2 staff.

316. A FGD workshop with stakeholders has taken place on October 13th 2012 with 40

participants and it has been conducted in 3 working groups. Each group was facilitated

with a same guideline and questions. FDG shows that people are aware of reduction of

water sources, the value of water, importance of water saving; however, it is not in a

sufficient level.

317. The Key Informant Interviews (see the list of KIIs in Attachment @@) and FGD

within a small number of participants, which are chosen from previous FGD has been

done to collect missing data. The questions for KII and small FGD were the same, but

specifically targeted to their responsible fields.

i. Focus Group Discussions

318. Some of the remarks made during the focus group discussion are mentioned

here.

- Water metering is compulsory by law and Government should take an action for

it and implement it in steps. It could give certain discounts for water meter and

it’s installment as “Ger OVEN” several programs, which was dedicated to combat

with UB city’s air pollution and then after it’s payment tools as of licensing.

- The selection of proper water meters with a guarantee should be advised to each

household for correct measuring and to avoid future problems.

- Old apartments pipelines should be changed completely or needed to find an

alternative solutions, while of encountering so many difficulties with old pipelines.

- The OSNAAG and OCC service, rule, requirements and accountability should be

improved especially for installing water meter for fixing any damages during

installation in order to improve the customer satisfaction.

RETA 7918 Final report Page 111

- The pipes, which are under responsibility of Association of Condominium as of

common property, should be repaired, while the associations are not capable to

fix it.

- The number of laboratories, which guaranteeing the quality and calibrate water

meters, should be increased and improved in capacities.

- Customer friendly solutions for reading water meter points should be found such

as with an automatic reading from a distance, while reading a water meter points

(sometimes there are several) monthly, bothers customers.

- Water cost, tariff and fee should be adjusted depending on a water consumption

level of customers, through a stepped tariff high consumption should become

more expensive.

- The co-operation and networking among the people should be developed, where

they can give each other well advised requirements on water saving and other

useful tools. People must improve their control on water saving, completeness of

their pipes through their condominium association and plumbing skills.

- There are a lot of institutions related to water; however, there is no any

organization, which permanently deals on improving Water Saving Culture. Policy

and decision makers consider the importance of the issue, but they all keep

saying that they do support it in a policy level.

Conclusions

Conclusions of the FGD are stated below:

• A lack of State Policy and support for water metering, water saving and water

saving culture;

• A lack of knowledge on water saving tools, equipment and its labeling among the

consumers;

• A lack of information to the public regarding water saving, water metering and

water saving culture. At the moment only on UN Water Day, 22 March extra

attention is being paid;

• A lack of system accountability (e.g. increased number of water meter, could be

planned), responsibilities, networking of related organizations, which could be

responsible to issues of water metering, water saving and water saving culture;

• A lack of problem solving, when problems are encountered during installation of a

water meter;

• A lack of educational program and advertisement on water saving culture.

ii. Key Informant Interviews

319. The information as acquired through the KII is presented below;

- It is obvious that there is no any institution, which is dealing with responsibilities

on Water Saving Culture, especially; water metering is the key issue of saving

water in UB. Ministry of Environment and Green Development is dealing with this

issue as Water Saving and Using Grey Water technology, but all this will be at a

policy level and not much is put in practice.

- A program or project on Water Saving Culture could be developed, which is cross

the sectors among the different stakeholders. And then this Public Awareness

Building could be called “Traditional Culture and Knowledge of on Water Use and

Conservation”.

- The discussion on establishing Water Partnerships like in Sweden is on-going, one

of the stakeholders should take an initiative and it could be led by the President

of Mongolia. The Water Regulatory Commission already became a Member of this

RETA 7918 Final report Page 112

organization. In general, “WATER AND SAVING” is mostly the responsibility of

Ministry of Environment and Green Development, however, the issue related

water metering as key issue of saving water in UB city, has not been considered

before at this level.

- The issue of cultural entertainment for children an attractive way on Water

Saving Culture could be considered further for discussion, while Ministry of Sport,

Culture and Tourism is responsible for Theatre of Puppet.

- The youth education on water saving culture, at secondary schools on reflecting it

into curriculum, is possible in 2 ways, either to add the issue to the relevant topic

or to add more hours of it.

- The Ministry of Environment and Green Development has a fund called “Nature

Protection Fund”, which could be a funding source for Public Awareness Building

Program on “Traditional Culture and Knowledge of on Water Use and

Conservation”, which could be cross-sector among all relevant organizations.

- The Association of Condominium could be used for giving information and advice

to its apartment-customers, collecting bills of repair works in a small amount and

paying it to relevant organizations. It should be given a motivation for making it

better.

iii. Public Awareness Building Campaign

320. The key issue of saving water in UB is water metering as 74% of the total water

distributed is consumed by apartment customers. As discussed before in this report the

water consumption per day in each household was 420 liter in 1997 and now after water

metering of almost 47,8 % is 202 liter according to the statistics of USUG 1st August,

2012. This clearly shows that once apartments are metered and people pay according to

their consumption they become aware of the costs and their ability to reduce water

consumption. A Public Awareness Building Campaign (PABC) and youth educational

program should be developed on theme Water Saving Culture including water metering

and to make permanently.

321. Ideally a PABC should be focused on scarcity of water source and increased value

of water; however for many people the financial issue of saving money is an important

motivation to actually save water. The advantageous sides of water meter and best

practices of saving water in daily lives, water saving tools as WC double flash, water

saving showers and forceits and water saving electronic equipment including its labeling

should be used and presented in the various advertisements of media for water saving

culture.

322. It is needed to prepare a PABC Plan or Program on theme of Water Saving

Culture and disseminate this culture with following activities:

- To increase a state participation by appointing a promotional department;

installing water meter in every household and to increase a water tariff for the

unmetered apartments;

- To make it through adult training and information e.g. family education, to

youth by reflecting it to kindergarten and secondary school program;

- To improve promotion via media e.g. TV as most important tool (from the

survey people indicated to get most of their information from that), Radio,

newspapers and to make it permanently.

323. Advertisement of media should be focused on the following:

RETA 7918 Final report Page 113

- To introduce it from the financial benefits with additional appeal to save

water;

- To introduce the negative consequences against the environment;

- To deliver realistic and statistic information and studies, which gives

comparisons of saved water;

- To make a water saving campaign as state policy with participation of

Government;

- To bring it to children in most attractive form e.g. trick movie;

- A cultural entertainment could be more effective and easy way to bring Water

Saving Culture to our society.

324. Water Saving is a responsibility of a number of organizations and all citizens.

There are relevant organizations as USUG, OSNAAG, Ministry of Environment and Green

Development, Green Development Program, which are responsible for Saving Water,

however, according to the FGD, have not yet done sufficient to put policy into practice.

325. Cultural Entertainments and all media are commercial, therefore all

advertisement programs “Water Saving Culture” should be made with a planning and

budgeting of relevant organizations. Some of TV and newspapers costs are following:

Table 37 Costs of media campaigns

Name of Media Unit Cost in MNT

TV Channels

National TV 1 min 150,000

UBS 1 min 150,000

TV9 1 min 70,000

TV5 1 min 100,000

Eagle 1 min 60,000

MN25 1 min 150,000

Newspapers daily

Zuunii medee A4 page 300,000

Undesnii Shuudan A4 page 450,000

Unuudur A4 page 500,000

Udriin sonin A4 page 200,000

326. The activities for the PABC for Water Saving Culture are mentioned in Table 38.

The Draft Plan is made based on the secondary analysis of existing studies, USUG and

OSNAAG statistic data, FGDs and Key Informant Interviews.

327. Round table meeting is needed annually for forthcoming activities, improving

cooperation and networking with regards of Water Saving Culture; improving

Accountability; building Water Partnerships; improving advertisement and its’ tools;

improving and reflecting water saving culture into educational programs, which is in the

plan in the amount of 11 million MNT.

328. Stakeholders involved in the PABC are the Ministry of Environment and Green

Development, the Ministry of Education and Science, the Water Regulatory Committee,

USUG, OSNAAG, Association of Condominiums, Media, donor organizations and related

organizations.

RETA 7918 Final report Page 114

329. Target groups are all consumer groups but mainly focused at Adults (older than

21 years) and Youth (12 – 21 years), who need to become well aware of their duty of

Using and Conservation of Water and to implement it in daily lives. They will be the

customers for the coming 10 years and once good practice is common the smaller

children will engage as well. All proposed activities of this draft PABC is in amount of 166

Million MNT, which include costs of various media advertisements.

Table 38 Public Awareness Building Campaign Nr. Name of the

proposed activities Responsible Timing Estimated cost in 1000' MNT

Cost per unit

Quantity Total cost

1 Round Table meeting

of all stakeholders

(50), should be held

every year, which

include followings:

Stakeholders

decision

First one,

in Jan,

2013

10,950

2 Education to children:

Play of Puppet (in

proposal)

Ministries of

Env. +Culture

20,000

3 Hanging posters on

School WC and Wall:

Min. of

Education+

children

0

4 Cultural

Entertainment: 90'

Min, of

Env+USUG+

Cultural

Enterprise

Yearly 30,000 1 30,000

5 TV advertisement 1'

program: everyday:

1'

Any

stakeholder

Daily 150 360 54,000

6 TV programs

Preparation with

different targets and

messages

Quarterly 3,000 4 12,000

7 Co-ordination &

Networking of all

stakeholders activities

1,500 12 18,000

8 Website development 2,500 2 5,000

9 Newspaper

advertisement in

different target and

messages /at least in

2 newspapers/

Any of

stakeholders

Monthly 500 24 12,000

10 Radio program: 1'

costs 20000 MNT,

20'=400000 MNT, it

will be repeated twice

in National Radio and

4 times in FM 106

Any of

stakeholders

Monthly 400 12 4,800

TOTALS: 166,750

RETA 7918 Final report Page 115

J. Institutional aspects

330. Water supply companies lose income when water is saved and apartments are

metered as the total volume delivered is decreased. Further at the moment the OSNAAG

charges a higher volume for unmetered customers than actually used by consumers.

How the reduction will affect overall income and costs should be detailed in a tariff

study. To cover the costs USUG and OSNAAG will need to increase tariffs. USUG and

OSNAAG should prepare a detailed tariff study to make a proposal how to develop the

tariff in the coming years to go to full cost recovery and prepare for cross-subsidies that

will allow investments in distribution into the Ger areas. The review of the tariffs should

be done on a regular basis (for instance every 3 years) thus making the costs for a fixed

period of time predictable and also have consumers prepared on regular reviews and

adjustments of tariffs.

331. Water metering is an issue which is of direct influence on the water consumption

of customers and should be implemented by OSNAAG’s within their authority as

apartment dwellers. Social surveys show that a large number of the unmetered

customers have financial and technical limitations to meter their apartment. OSNAAG

and the regulator suggest placing the responsibility for metering with OSNAAG. This is

common international practices and enjoys a large number of advantages such as

quality of water meters and no financial restraints for consumers.

332. Through a changed water tariff system consisting of two parts 1) a fixed amount

for water metering and 2) a rate for consumption, OSNAAG can arrange metering for all

customers and also maintain the quality of water meters by selecting a limited number

of good quality brands and by regular replacements (every 7 years). Assuming that the

average use of the water meters is 7 years and the costs for installation of 4 water

meters are 100 USD the costs per month are 1,2 USD (1,670 MNT) per household. To be

able to meter all customers, a total of 4 million USD is needed. To come up with the

initial investment OSNAAG should have a working capital available. This can be done

either through the investment program, MUB or OSNAAG themselves. As the financial

situation of OSNAAG has not been investigated the financial capacity of the organization

is not known. Once the tariff system is adjusted and meters are paid for in the water

tariff part of the investment can be covered through this fixed charge.

333. USUG is responsible for a (small) number of apartment buildings which should be

transferred to OSNAAG’s. Irrespective of the financial consequences (this would need to

be examined), transferring these assets to OSNAAG is a logical step. Operating

apartment buildings is not a core task of USUG and dilutes the focus in the organization.

Once the apartments are transferred USUG would then be able to focus entirely on the

development of water supply and wastewater collection and treatment facilities in the

city center, as well as in the Ger areas. Both USUG and OSNAAG would find such a

development logical for the mid-term.

RETA 7918 Final report Page 116

X. Capacity development/institutional strengthening

A. Introduction

334. Ulaanbaatar’s water demand and wastewater production is projected to increase

in the near future; infrastructure needs to be extended. Due to the ongoing urban and

industrial development in UB, water and wastewater is expected to double over the

coming years. Currently water consumption is appr. 55 Mm3 (2011) while, in the middle

scenario development of JICA, it is expected to increase to 94 Mm3 in 2030.

Infrastructure for water production, water distribution, wastewater collection and

treatment, need to extend into new residential and industrial areas, as well as ger areas,

to meet this growing demand and to adequately serve the growing population of the city

and its industries.

335. Within USUG in the last four years a lot of attention has been paid to capacity

development through a Water Operators Partnership (WOP) with VEI. It has laid the

foundation for USUG to become a stronger and well-performing water operator. The

WOP has (amongst others) contributed towards (i) improvement of USUG’s business

planning by introduction of a balanced scorecard system for evaluation of USUG’s

performance, along with training and coaching of managers and a business analyst to

effectively utilize this system; (ii) enhancement of USUG’s financial planning and

forecasting by introduction of financial projection models and tariff calculations; (iii)

improvement of energy efficient operation of two pumping stations; (iv) increased

USUG’s customer orientation through execution of an customer satisfaction survey that

was followed by several specific interventions such as a water metering pilot that

resulted in a reduction of water consumption; (v) strengthened skills of staff by

provision of assistance in computer modeling (GIS, water distribution, sewerage), water

quality analysis (laboratory), groundwater measurements with sensors and wastewater

treatment; (vi) a comprehensive reorganization of USUG’s internal organization per

January 1st 2011 that involved the establishment of new departments for project

management and investments and for business planning and asset management; and

(vii) the development of a vision on the institutional reform of the urban services sector,

as induced by decree 182 (GoM, May 14th 2008). Knowledge acquired through that WOP

and information gathered during implementation of RETA 7918 is the basis for the

recommendations made in this section on further capacity development and institutional

strengthening.

336. USUG currently faces challenges that need reinforcement of their human resource

capacity to properly address them. Not only the rise in water demand and wastewater

production (even beyond the current infrastructural capacities), also the demand for

performance orientation, intensified performance monitoring by the newly established

Water Services Regulatory Commission, and its actual weak financial position, urges

USUG to identify means to address these challenges. Even more important is how USUG

can play their role or take a lead in relevant water sector development such as

mitigating uncontrolled urban development, respond to increasing public awareness on

the relevance of the environment, take part in further regulation, transformation into

performance management, and improve decision making on transparent business

operations.

337. Capacity development is a major instrument to achieve and sustain improved

technical operations and create a financial healthy water operator that is able to at least

recover its operating cost. USUG expressed their demand to strengthen their capacity to

RETA 7918 Final report Page 117

improve its performance, and to prepare itself for future developments. Reference is

made to the ADB Report TA 7591 in which capacity development within USUG is

addressed in a discussion with VEI and USUG, who have been partners since 2007 in a

so-called Water Operator Partnership.

338. In the last four years USUG took advantage of the Water Operators Partnership

(WOP) with VEI. This partnership laid the foundation for USUG to become performance

sensitive and eager to improve. The WOP has (amongst others) contributed towards (i)

improvement of USUG’s business planning by introducing a balance scorecard system for

evaluation its operational performance, along with training and coaching of managers

and business analysts to effectively utilize this system; (ii) enhancement of USUG’s

financial planning and forecasting by introduction of financial projection models resulting

in fair tariff calculations; (iii) improvement of energy efficient operation of two pumping

stations; (iv) increased customer orientation of USUG through execution of an customer

satisfaction survey, (v) introduction of a water metering pilot that resulted in a

substantial per capita reduction of water consumption in apartment blocks; (vi)

strengthened operational staff in the use of computer modeling (GIS, water transport

&distribution, sewerage), water quality analysis (laboratory), groundwater

measurements with sensors and wastewater treatment; (vii) a comprehensive

reorganization of USUG as per January 1st 2011 that involved the establishment of new

departments for project management and investments and for business planning and

asset management. This all as an attempt to address the institutional reform of the

urban services sector, as induced by GoM Decree 182 (May 14th 2008).

339. During RETA 7918 VEI provided limited technical assistance and training to

USUG on the following subjects:

• Assistance in implementing the proposed activities. Technical experts from VEI,

RHDHV and local consultants were made available to assist and train their peer

colleagues and ensure adequate installation and operation of new equipment;

• Conduct of on-the-job training and instruction of individual staff related to the

project activities: PLC-programming, SCADA software development, database

management, installation of electrical equipment, etc. to ensure adequate O&M

of the newly installed equipment;

• Provision of support in project management, project logistics, and procurement.

340. This chapter will reflect on additional Capacity Development needs beyond RETA

7918. There is a need to establish a strong supportive Department on Business

Development and Asset Management as the future of USUG may be decided by their

response and plans (such as long term investment plan, strategic plan, water safety

plan, and various business plans) and proposals (tariff proposal, proposal for Ger

separation, water meter proposal OSNAAG-USUG, and proposals to address the licensing

of industrial wastewater discharges to CWWTP.

341. Based on the three pillars (i) the capacity development during the WOP with VEI,

(ii) the information obtained from various stakeholders (WSRC, MCUD and OSNAAG) in

the water sector, and (iii) the intensive discussions with USUG management,

recommendations were arrived at and laid down in this section on capacity development.

Capacity Development is addressed at three different layers: (a) the individual Capacity

Development, (b) the organizational Capacity Development, and (c) the institutional

Capacity Development.

RETA 7918 Final report Page 118

B. Individual Capacity Development

342. The current short period of the RETA project hardly gives opportunity to build

upon a long term coherent perspective for capacity development (Priority II). Essential is

the corresponding and supportive capacity development associated with the activities to

be undertaken during the RETA project period (Priority I) being (a) asset management

and data collection & analysis, (b) the establishment of an Operational Control Center

for water distribution and pressure management, (c) the renovation of water supply

infrastructure, (d) the rehabilitation of the central wastewater treatment plant CWWTP

and its industrial waste flows, and (e) the pilot to raise effectiveness of water demand

management by reducing NRW and increase water metering.

343. Although technical knowledge is generally available, USUG lacks a systematic

collection of data and capacity to analyze these to improve operations. Data is gathered

but is not systematically stored, verified, or made available to those who need it. This is

an important first step in the establishment of Asset Management principles within

USUG.

344. The OCC staff is in need for support in how to analyze and use available data for

long term analysis and optimization of water distribution. During the RETA 7918, OCC

staff was trained but this was by far insufficient. Further training is needed on;

- Operation and Maintenance of the SCADA system;

- Hydraulic network modeling and optimizing reservoir use;

- Pressure management (and energy reduction)

345. Operation and Maintenance of the CWWTP can be improved firstly through

improved process control and secondly by improving organizational aspects of the

CWWTP. Process control will be improved largely through the investment in the CWWTP

by the project and this should result in improved effluent quality. Secondly the

maintenance structures of the CWWTP should be improved. In general, more attention

should be paid to a systematic process of preventive maintenance and sufficient budget

should be made available for this. Maintenance should be properly planned, using

standardized equipment and through increased skills of the maintenance staff. A review

of staff efficiency is recommended. In the interim report of JICA (October 2012) some

recommendations have been made.

346. In order to more efficiently use the produced water a pilot will be started

together with OSNAAG to do a water balance study to reduce NRW. This pilot will

illustrate how USUG and OSNAAG have to work together on water loss reduction and

lower per capita water demand in UB city.

347. Finally, a MD program for the newly established management team is envisaged

to embark on -and embed- these project activities within a new corporate culture. It is

also recommended to start to prepare some staff members to acquire and strengthen

general competencies and prepare them for a leading role in USUG. This in particular

applies to English language courses and a 4 months education program at the NHL

University in the Netherlands on Water Services Management.

H. Organizational Capacity Development

348. For the long run a more substantive capacity development program is envisaged

to prepare USUG to become a performance oriented water utility. At the same time

USUG needs to reinforce their capacity to analyze data collected and transfer it into

RETA 7918 Final report Page 119

valuable strategic and policy documents to guide the way forward internally and in

relation to its stakeholder environment.

349. Reorganization of USUG. With support from Vitens Evides International USUG

restructured its organization and since summer 2012 a new management has been

appointed. In Figure 50 the new organizational chart is presented. The Steering

Committee (which includes representatives of MUB) appointed a new Director for USUG

and approved the organizational division into 5 departments and the corresponding

matrix structure. In consultation with USUG it is recommended that -for the time being-

this new structure will be given a chance to prove its added value. After one year it will

be evaluated aiming to further improve it, if necessary.

350. Support to the Human Resources (HR) department. Substantial personnel

changes took place in 2012 which, unfortunately, have resulted in a USUG brain drain.

To ensure that USUG will find a way to capacitate their organization and the staff, the

HR department needs professional training on how to recruit, train, evaluate, and

motivate staff, and ensure the corporate culture is favoring good performing employees

of USUG.

351. Training Center. To improve the capacity of staff, their motivation and skills in

relation to USUG’s targets, a training center was established in 2012 (with Koica

support). Different training modules are developed and conducted by USUG staff. In

relation to social development and customer relations training was provided for 664

water kiosk vendors (37.2% of total USUG employees), for 59 pump operators, 4

drinking water plumbers and 8 equipment repair man. Annually professional training is

conducted for 467 staff, who are paid by their professional grade. Twice per year,

certification is assessed according to the "Regulation of training and certification /

examination for professional graded employees of USUG". A total 34 persons were

upgraded and increased the number of professional staff by 7.3%. Training on HRM

(human resources management) was conducted for 15 managers in support by the

University of Ulaanbaatar. Basically the USUG Training Center focuses on workmanship

and in a lesser degree on managerial competencies.

352. Management Development. The Human Resources program of USUG for 2013-

2016 is under preparation. This will review the required competences of USUG staff and

check the capabilities of current staff against the required skills. From observations and

interviews there is a clear need for a Management Development program (MD) to

strengthen the recently appointed new managers of USUG and introduce them to basic

competencies of departmental and division management. The newly established USUG

management is eager to adjust the organizational and managerial culture for the further

development of USUG. This may be boosted by the MD program focusing on change

management.

353. Technical Business Development and Asset Management (TBDAM)

Department. In view of the various institutional challenges USUG wants to strengthen

their Department on Technical Business Development and Asset Management. The

TBDAM department has to develop its capacity how to advise on companywide legal,

business and policy matters, and take care for proper planning and reporting obligations

such as for investment planning, water safety planning, tariff calculation models,

strategic planning, performance management, asset management business cases, etc.

RETA 7918 Final report Page 120

Figure 50 New organizational structure of USUG as of 2012

I. Institutional Capacity Development

354. At institutional level, within a so-called “Enabling Environment”, many

developments take place in Mongolia that requires USUG to prepare itself for this

changing environment. Some of these developments are required as a consequence of a

fast growing economy and subsequent rise in urban and industrial water demand, the

rise of environmental awareness and concern of the public at large, the establishment of

a Water Services Regulatory Commission and the rising debts of the public sector.

355. Municipality of Ulaanbaatar (MUB). USUG is operating under direction of the

MUB. As the Property Department of MUB is the owner of the USUG assets it is also

RETA 7918 Final report Page 121

involved in USUG’s future investment planning, its financial arrangements, appointment

of management and with tariff increases for water and wastewater. This situation is not

conducive for the development of USUG into a strong utility ready to face future

investments. To improve efficiency of the daily operations it is recommended that USUG

obtain more autonomy.

356. Water Services Regulatory Commission. This newly established Commission

(June 2012) is still pioneering to identify its role and added value in the overall setting of

the water sector. Chapter 3 of Decree 182 ‘Public Service Sector’s Privatization and

Reformation Directive’, the WSRC is – amongst others- responsible for reviewing tariff

studies and proposals of water utilities in Mongolia and must decide whether the

proposed changes are affordable for the public and coherent with the objectives of the

utility. In addition, its role is to advice on legislation that improves utility performance

and on setting key performance indicators that connect tariffs to achievements. Decree

182 aims at an improvement of public services in Mongolia through a reform of the

public service sector, including the water and sanitation sector. USUG is very supportive

to this WSRC to encourage transparency, induce performance management, and to build

a capable and decisive mandatory body to ensure proper licensing and tariff setting for

water services.

Figure 51 Example of the separate regulatory framework

357. OSNAAG. Currently USUG is bulk water supplier to OSNAAG. Major part of USUG

water (~ 75%) is distributed to customers via OSNAAG; approximately half of this

supply is metered at household level. As required by law USUG campaigns to have all

households metered individually to reduce per capita water demand by more than 25%

and to have all institutions metered. Currently USUG is charging MNT 255 and 147 per

m3 for water and wastewater to OSNAAG, while OSNAAG and their contracted companies

charge tariffs to institutions that are nearly three times higher (MNT 770 and 420 per

m3, respectively). Serving institutions directly from USUG may therefore benefit its

business orientation as water service provider for institutional and industrial customers.

358. Industries. It is beyond any doubt that the performance of CWWTP is not

primarily affected by the state of its physical infrastructure (although key elements are

ready for replacement), but that the composition of the incoming sewage imposes

RETA 7918 Final report Page 122

serious problems to its performance. In particular the performance of the Khargia pre-

treatment facility (under MUB responsibility) is to be questioned. If essential disturbing

factors (hydraulic or organic peak loads, contamination with toxic elements) is not

properly regulated, the CWWTP is not (and will never be) able to perform to meet

standards in the already difficult climatic conditions (low temperatures).

359. A substantive technical assistance (TA) program is recommended that;

(i) provides input and assist MUB, USUG, WSRC, and other stakeholders in the

sector to develop suitable ways for institutional reform, and to decide the

most preferred/adequate options;

(ii) assists MUB and USUG to implement the chosen reform options (e.g. by

revision of laws and contracts, definition of a method for supervision with

indicators and targets for service delivery);

(iii) assists USUG to adjust its internal structure and procedures to support the

institutional changes and increase its corporate autonomy (e.g. by

enhancement of internal organization and HR procedures and strengthening

of (financial and operational) planning and management mechanisms through

professionalization of staff;

(iv) assists USUG to continuously improve the quality, efficiency and

sustainability of its daily operations (especially on by improving procedures

for operational control, training of operators in the OCC and reduce

operational costs and improve use of resources).

360. Business scope of USUG. The current assignment of USUG to run its water

services business-wise, does not match to their social duty to provide heavily -to be

subsidized- water services to Ger areas. This double focus prevents USUG to become a

financially healthy autonomous water utility that can be held accountable for the efficient

delivery of high quality and affordable water services to its customers in UB at a tariff

based on full cost recovery (including operational and capital cost). It is worth to

investigate the possibility to divert USUG into an autonomous water utility (USUG I)

focusing on the urban areas of UB supplying OSNAAG, industries and institutions with

water, and an USUG II that will serve Ger areas and be run by a municipal department.

In the ADB Report TA 7591 (October 2011) states that “the high capital and operational

cost, low household incomes, and low density of development make the provision of

sustainable urban services to Ger areas very challenging”. In other words: these

services may always have to rely on financial government support (even if USUG I would

provide their potable water for free to USUG II).

361. Tariff structure of USUG. USUG has to enlarge/strengthen its capacity to

develop tariff structure scenarios that may be attractive and acceptable to the

shareholder (MUB), to the WSRC and to the Fair Competition Commission while ensuring

the realization of a healthy financial status. With a tariff structure that fully covers ALL

(operational and capital (redemption & debt service) costs, reliance on government

support (and therefore political interference) may be reduced, creating more autonomy

for USUG. USUG can achieve a clear and pre-defined set of competitive water service

levels for its customers that can be transparent and be monitored by the WSRC

regulator and by the MUB.

RETA 7918 Final report Page 123

Figure 52 Current institutional arrangement of USUG

J. Summary and budget implications

362. A Capacity Development Program is arrived at that can cater for the

organizational and institutional changes that are envisaged, to equip USUG with the

right knowledge, skills and competencies to act not only as technical competent water

utility but also as player in the increasingly complex institutional context. Important is a

thorough understanding of the current (and desirable future) position of USUG within the

government setting. The long lasting relationship between USUG and Vitens Evides

International may provide a good take off for the challenges ahead. The following

aspects need to be taken into consideration:

- Provide input and assist MUB, USUG and other stakeholders in the sector to

develop suitable options for institutional reform, and to decide the most preferred

and adequate option (e.g. by revision of laws and contracts, roles and

responsibilities, modalities for partnerships, PPP models etc.);

- Organizational development with an emphasis on midterm business planning

processes to improve financial planning and tariff development;

- Training of higher and middle management in regards to utility management and

HR management based on performance indicators and output. For this a 2 year

Management Development program should be designed and executed.

RETA 7918 Final report Page 124

363. In order to transform USUG into a performance oriented and financial healthy

water utility it needs a concerted action of all key players in the institutional arena to

Act, to Behave, and to Commit themselves to these transformations. Only then USUG

can absorb and anchor the envisaged institutional changes, improve their service

delivery, their operational performance, and financial transparency. This will create a

perspective for USUG to develop itself into a more (financial) autonomous utility thereby

reducing their demand for financial government support, while improving their high

quality water services to the public and the economy at large. Training on performance

management is therefore preferably to take place in mixed composition of WSRC, MCUD

and USUG staff.

364. To cater for instrumental human capacity at USUG that is needed to support and

sustain the RETA project interventions a budget of € 196,000 (cost level 2013)would

suffice. This Capacity Development program will concentrate on (a) the establishment of

professional capacity at the Operational Control Center, (b) the strengthening of the

professional position of USUG in dealing with industrial waste flows (negatively) affecting

the performance of CWWTP, and (c) build upon the current financial and economic

capacity of staff in the Technical Business Development and Asset Management

Department on report writing, English communication, financial management, and finally

on business case development and introduction of asset management.

Table 39 Proposed budget for Capacity Development

Activity Number Unit cost Total (USD)

Support to Asset Management development within USUG 2 15,000 30,000

OCC development via intensive training and coaching 3 15,000 45,000

NRW pilot training and guidance USUG&OSNAAG 2 15,000 30,000

O&M of CWWTP and industrial licensing 1 15,000 15,000

MD program for USUG Management Team 1 20,000 20,000

Training 2 staff USUG on Water Services Management 2 13,000 26,000

Training Performance Management & Tariff Model 2 15,000 30,000

Total USD 196,000

365. For the long run a more structural remediation program is needed for the

departments already referred to in the ADB Report TA 7591 on: Ulaanbaatar Water and

Sanitation Services and Planning Improvement (October 2011). A very first assessment

indicates that over a period of 5 years (2015-2020) USD 1.2 million more could be

invested in the capacity of USUG (and wherever appropriate also staff from OSNAAG and

WSRC). This should be able to transfer USUG into the so desirable autonomous and

financially healthy water and sanitation service provider for UB city.

RETA 7918 Final report Page 125

XI. Proposed interventions and their estimated costs

Throughout the report, interventions were discussed, some proposed, while others were

rejected. All of the desirable interventions are listed below, together with their estimated

costs. All base costs were estimated at 2012 cost level, and then adjusted to a cost level

for 2014, the year during which the project implementation is expected.

Table 40 Cost estimate in US Dollars of items proposed

Intervention items 2012 2014

Base costs Rounded

1 Industrial Pumping station 686,300 800,000

2 Measuring in distribution 170,000 196,000

3 CWWTP 750,510 858,000

4 Meat Pumping station 188,500 223,000

5 Four Booster stations 52,000 63,000

6 Sharkhad Booster station 59,550 70,000

7 Tolgoit Booster station 35,500 42,000

8 OCC and communications 235,500 279,000

9 Nisekh Pumping station 134,350 156,000

10 Upper source Pumping station 50,000 56,000

11 Capacity Building 196,000 216,000

12 Sewer flow meters 130,000 136,000

13 Add distrib. measuring 520,000 604,000

14 NRW-related items 609,000 714,000

15 Central Pumping station 1,104,369 1,238,000

16 Spare parts 100,000 105,000

Total USD 5,021,579 5,756,000

366. The costs for capacity building were based immediately on a cost level of 2013.

367. The estimate exceeds the grant amount of USD 3.7 m made available by the

ADB. The higher number is presented nevertheless for a number of reasons: (i) more

budget could be made available, for example by USUG, or through a loan by the ADB;

(ii) prices could have been overestimated; (iii) it could be decided to delete some items

at a later stage; and (iv) bidders may decide to bid very low prices in the current

economic climate. But in the packaging schedule in the next chapter, a selection of the

most desirable items was made, with a total cost within the grant budget of USD 3.7

million.

RETA 7918 Final report Page 126

XII. Packaging

368. Several packaging schedules were reviewed and most of them rejected as being

to unpractical. In the end it was agreed with USUG to have four main works packages.

Emphasis has been on a number of aspects of USUG’s operations, SCADA upgrading,

pump renewal, distribution rehabilitation and the CWWTP operations. It was a logical

thought to split the works over packages that would be close to these four main issues.

This led to the following packages: A. SCADA improvements, B. Mechanical-electrical

works, C. Distribution operation improvements and NRW, and D. CWWTP improvements.

Because of its expected size and character, Package B was earmarked as an ICB. The

others would be more suitable for local contractors and were assumed to become NCB.

If, at a later stage, enough budget would be left, some equipment could be procured

under a shopping package E: Supply of equipment.

369. With the overall estimate exceeding the USD 3.7m budget the most desirable

interventions were arranged within the grant, while the less urgent interventions were

moved to a second schedule that could, possibly be financed out of a loan, or from

USUG’s regular budget. The expensive frequency converters for the Central Pumping

Station were included in a possible future loan package. This led to the following

packaging arrangement:

Table 41 Proposed packaging

Type Package USD (rounded) Cost level 2014

GRANT Package A: SCADA 1,169,000

Package B: Mechanical and electrical works 717,000

Package C: Distribution improvement and NRW 604,000

Package D: CWWTP 858,000

Capacity building 216,000

Sub-total 3,564,000

Contingencies 136,000

Grant total 3,700,000

LOAN Package B: Mechanical and electrical works Central 1,238,000

Package C: Distribution improvement and NRW 714,000

Package E: Equipment 240,000

Sub-total 2,192,000

Contingencies 219,000

Loan total 2,411,000

Overall total 6,111,000

370. The items earmarked for the grant, including a minimal amount for physical

contingencies, add up to USD 3.7m. A final choice will/may need to be made during the

time of evaluating the bids. If bids are priced very competitively, it could be decided to

finance also some equipment, now shown under loans, from the grant budget. For the

loan packages, a 10% physical contingency was added.

RETA 7918 Final report Page 127

371. For each of the four packages, additional details are shown below, with all

amounts rounded to the nearest thousand US Dollar...

Table 42 Details of the four Bid packages

Package A: SCADA USD (rounded) Cost level 2014

1 Industrial Pumping station 139,000

2 Various Locations in the Distribution Network 196,000

3 Meat Pumping station 223,000

4 Chingeltei, Selbe, Bayanhoshuu & Upper Booster stations 63,000

5 Sharkhad Booster station 70,000

6 Tolgoit Booster station 42,000

7 Operational Control Centre and communication issues 279,000

8 Nisekh Pumping station 156,000

Total 1,168,000

Package B: Mechanical and electrical works 2014 - Rounded

1 Industrial Pumping station

- main pumps 299,000

- Renovation of wells, incl. new pumps 323,000

- Flow meters and sensors 32,000

- Installation costs 7,000

2 Upper source Pumping station 56,000

Total 717,000

Package C: Distribution improvement and NRW 2014 - Rounded

1 Various Locations in the Distribution Network

- Construction of manholes 264,000

- Pressure control valves 125,000

- Pressure measuring sensors 10,000

- Electromagnetic flow meters 178,000

- Installation costs 26,000

Total 603,000

Package D: CWWTP 2014 - Rounded

1 Wastewater treatment plant CWWTP

- Selectors and Penstocks 189,000

- Diffusers 519,000

- DO-meters 64,000

- Sludge level sensors 13,000

- Repair and upgrading SCADA 73,000

Total 858,000

RETA 7918 Final report Page 128

XIII. Financial and Economic Analysis

A. Introduction

372. This chapter focuses on the financial and economic analysis of Ulaanbaatar Water

and Wastewater Operations Improvement project (RETA 7918) and is in line with the

following Asian Development Bank (ADB) guidelines: Financial Management and Analysis

of Projects Guidelines (2005) and Financial Due Diligence Methodology Note (2009).

373. The analysis will assess the current financial situation of USUG, the financial

viability of the project activities as linked to the components 1) Energy Saving and

operational control improvement, 2) Non-revenue water and consumption reduction and

3) Capacity development and institutions strengthening and finally the project’s impact

on the financial state of USUG as the beneficiary of this project.

374. The project will be financed by the Urban Environment Infrastructure Fund (UEIF)

under the Urban Financing Partnership Facility (UFPF) managed by the ADB and will

consist out of a grant of $ 3.7 million. The total of all identified project items are

estimated to cost more21 than the available grant. The excess may be financed under an

ADB-loan. As a grant agreement has not yet been set up it is assumed that payment for

project activities by ADB will be carried out after signed approval of the procurement

contracts by USUG is received.

375. Close cooperation with the Project Preparatory Technical Assistance (PPTA) team

was strived for since it is the intention that the final report will be incorporated in the

outputs of the PPTA Consultants.

376. After the elections in August 2012 USUG has gone through some changes of

employee positions. Therefore it is noted that although the abovementioned organization

scheme remains unchanged the responsible head of departments may have changed as

well as some other financial positions. This may have had an impact on the collection of

financial information for this report.

B. Financial State of USUG

i. Financial Indicators

377. The current financial performance of USUG up until Q3 of 2012 was investigated.

Year-to-date (YTD) figures for 2010 and 2011 and YTD figures up until 3rd Quarter of

2012 are shown in the table below. The exchange rate used is 1 USD = ₮1380.

21 Cost level 2014

RETA 7918 Final report Page 129

Table 43 USUG’s Balance Sheet 2010-12 (thousands of USD)

31-Dec-10 31-Dec-11 30-Sep-12

ASSETS Current Assets Cash 5,547 7,355 7,998

Accounts debts (Net sums) 2,739 3,045 3,252

Inventory 2,100 3,040 3,084

Prepaid costs 188 142 280

Total Current Assets 10,574 13,581 14,614

Noncurrent Assets Assets (Net) 34,339 48,190 55,172

Intangible Assets (Net) 50 55 245

Construction in process 2,191 210 348

Total Noncurrent Assets 36,579 48,455 55,765

TOTAL ASSETS 47,153 62,036 70,379

LIABILITIES Short term liabilities

Accounts payable 103 129 1,926

Tax payable 1 87 3

Other payable 150 194 98

Prepaid income 118 116 106

Total Short term liabilities 372 526 2,133

Long term debts Long term loan 27,641 45,130 52,052

Other long term loan 8,280 10,436 10,436

Total long term loan 35,922 55,566 62,488

Total Liabilities 36,294 56,091 64,622

Equity State Equity 634 634 634

Revaluation funds 21,106 21,080 21,080

Other Equity 11,536 11,820 14,703

Accumulated revenue (loss) -22,416 -27,589 -30,660

Total Equity 10,859 5,945 5,758

TOTAL LIABILITIES 47,153 62,036 70,379

378. The balance sheet shows that USUG is strongly dependent on long term loans for

its operations. The amount of equity is diminishing whereas the amount in total (long

term) liabilities is increasing over time. This means that USUG is getting highly

dependent on external funds and its operations are now less sustainable than several

years ago. This trend is troublesome for future development of USUG as a sustainable

organization which should be fit for the future. It is USUG’s intention to turn long term

debt into equity. However, USUG should also invest time and effort in sound financial

management in order to ensure that sub sequential losses will become a thing of the

past and that total cost recovery can be achieved. The two charts below show the

development of Sales out of Operations per year and the Segmentation of Sales in 2011.

RETA 7918 Final report Page 130

Figure 53 USUG’s sales (equivalent in million USD/year)

Figure 54 USUG’s sales as percentage for each sector

7.0

9.110.4

11.212.4

13.415.0

17.4

0

2

4

6

8

10

12

14

16

18

20

2004 2005 2006 2007 2008 2009 2010 2011

USDm/yr Sales from Operations (USDm/yr)

0%

10%

20%

30%

40%

50%

60%

70% 60.5%

34.1%

3.4% 2.0%

2011 Income per segment

RETA 7918 Final report Page 131

Table 44 USUG’s Income statement (thousands of USD)

2010 2011 Q1-Q3 '12

Operational Income / Costs

Sales 15,014 17,426 13,456

Costs of Sales -14,679 -16,148 -14,163

Total of Sales 335 1,278 -706

Operational Costs -2,506 -2,357 -2,507

Operational Result -2,171 -1,080 -3,214

Non-operational results 6,721 -3,845 200

Earnings before Tax 4,550 -4,925 -3,013

Income Tax 0 -97 -13

Net Earnings 4,550 -5,022 -3,027

379. The difference in net earnings between 2010 and the following years 2011 and

2012 is mainly due to an individual tariff increase as of August 2010 of 50% (for

domestic customers). This has led to a significant increase of earnings in 2010. In 2011

on the other hand the net earnings were negative due to the foreseen salary increases

of the personnel. Not only did the salary increase with a one-off increase of ₮80,000 in

February but another salary increase of 25% was conducted in June of that same year.

Together with exchange rate losses this salary increase impacted the net earnings of

2011 negatively, which were insufficiently covered by the tariff increase.

380. Current tariffs for water supply and wastewater are shown in the table below:

Table 45 USUG’s tariffs for water supply and wastewater

Type Tariff (MNT/m3)

Water supply Wastewater

As of Feb. 2012 As of April 2010

Industries 554.55 600.00

Institutions 554.55 300.00

OSNAAG Companies 255.45 147.00

Individual Apartments 286.20 166.80

Ger Area 909.00 -

381. USUG is unable to prepare financial projections for the year 2013, as a proposal

for a new tariff increase is still being drafted and awaiting approval of the Municipality

Tariff Committee. Although tariffs have been increased in the past and although they

had a positive effect on USUG’s financial position, the current tariffs are insufficient for a

full cost recovery, especially after the large 2012 salary increases.

382. The current proposal for the adjustment of the tariffs is to only increase tariffs for

the Industrial customers, as shown in the table below. It is based on a fixed base tariff

per month (dependent on the diameter of the water inlet pipe) and on a rate which

varies with the annual water consumption.

RETA 7918 Final report Page 132

Table 46 USUG’s proposed 2013 tariffs for industrial customers # Pipe

Dia

No. of industries

Basic Tariff in ₮/month

(unmetered)

Fixed costs (₮/month) for

Industry

Water Consump -tion (m3/year)

A B C D=B*C E

1 15

283 7,637.9 2,161,526 233,890

2 20

529 7,763.6 4,106,944 444,394

3 25

722 23,732.8 17,135,082 1,854,113

4 32

792 21,000.3 16,632,238 1,799,701

5 0.4

668 33,976.1 22,696,035 2,455,843

6 50

517 57,256.6 29,601,662 3,203,072

7 65

4 96,055.4 384,222 41,575

8 80

401 105,610.9 42,349,971 4,582,512

9 100

192 335,307.6 64,379,059 6,966,188

10 150

91 635,578.7 57,837,662 6,258,370

11 200

24 5,150,694.3 123,616,663 13,376,039

Total

4,223

380,901,063 41,215,697

Figure 55 USUG’s earnings (before interest and tax)

383. The accumulated net result in 2011 was ~6.8 billion MNT (USD 4.9m) negative.

The operational result was 1.5 billion MNT (USD 1.1m) negative and the non-operational

result was 5.3 billion MNT (USD 3.8m) negative. The difference can be explained by the

positive impact a tariff increase had on the 2010 results which, however, quickly

disappeared when steep salary increases quickly started influencing the 2011 results.

384. Three loans are currently registered as long term liability on the Balance sheet of

USUG (USIP I, Spanish Loan and USIP II). Until now USUG has neither paid interest nor

amortization on these loans pending a decision by the UB Municipality on a World Bank

suggestion to turn the loans and accumulated interest into equity.

-3.75

-7.13

4.55

-4.93

-8

-6

-4

-2

0

2

4

6

2008 2009 2010 2011

USD mio Earning (before Interest & Tax)

RETA 7918 Final report Page 133

Figure 52 USUG’s cash position (equivalent in million USD)

385. The chart above shows that, despite the not so stellar financial performance,

USUG is flush with cash. Cash in hand was the equivalent of USD 7.5 million, at the end

of 2011. Reason for this positive cash flow is that the operational result (before

depreciation) is still positive and not all the cash is used for investments. Furthermore,

as stated above, USUG has not paid any debt service on the three loans (USIP I and II

and Spanish loan).

ii. Operational Indicators

386. Some operational indicators of USUG, as reported in the 2011 annual report, are

shown in the table below.

Table 47 USUG’s Operational indicators (2011)

USUG's Operational Indicators (2011)

Indicator

Number of employees 1,455

Revenue (billion MNT ) 24.5

Expenditure (billion MNT ) 31.3

Billed water (million m3/year) 43

Direct Customers 3,500

Average water consumption (l/day)

Apartment dwellers 204.7

Ger dwellers (Truck supplied) 6.9

Ger dwellers (connected to pipeline) 8.4

Average tariff (MNT/m3) Water Wastewater

Apartment 255.5 147

Institutions 554.6 300

Factory 554.6 600

Source: USUG's financial report 2011

0

1

2

3

4

5

6

7

8

2005 2006 2007 2008 2009 2010 2011

Cash flow and balance (Equivalent in USD mio)

Net Cash flow in USD mio Cash Balance in USD mio

RETA 7918 Final report Page 134

Summary Water Supply and Wastewater Statistics (2011)

Parameter

Water source or well fields 4

Water kiosks in Ger area 567

Truck supplied 313

Connected to pipeline 254

Total length of sewerage pipeline 151,7 km

Length of water supply pipes in Ger area 173 km

Extracted water in m3 '000 per day 151,0 m3

Treated wastewater in m3 '000 per day 154,5 m3

Treatment efficiency 64-90%

Source: USUG's financial report 2011

iii. Balanced Score Card

387. In order to monitor USUGs progress, VEI made an effort to introduce a balanced

score card in 2010. This Balanced Score Card enables management of USUG to closely

monitor key performance indicators of USUG against set targets. These indicators are

financial, commercial, operational and human resources related. Although the score card

itself has fallen out of favor and is no longer in use, USUG keeps track of many

indicators and reports them diligently to the management on a monthly basis. The table

below shows a number of key performance indicators (kpi) and their values in the past

years.

Table 48 Key Performance Indicators monitored by USUG

USUG KEY PERFORMANCE INDICATORS

Unit 2008 2009 2010 2011 Q1-3 2012

Financial Performance Indicators

F1 Net result ( before tax) 000 MNT -5,174,610 -9,835,328 6,278,815 -6,796,773 -5,376,592

F2 Net cash flow 000 MNT -748,457 2,132,968 1,674,084 2,494,326 2,303,960

F3 Operating ratio

1.09 1.02 1.05 1.04 1.27

F4 Av. billed tariff dr. water MNT/m3 243 274 308 346 351

F5 Av. billed tariff w.water MNT/m3 135 157 176 197 200

Commercial Performance Indicators

C1 Collection ratio % 95% 96% 92% 98% 98%

C2 Average debt per client Months 2.4 2.3 2.2 2.0 1.9

C3 Av. consumption dr. water ( I /c/d) 268.2 261.2 236.2 209.5 204.9

C4 Av. billed tariff dr. water MNT 151 144

143 150 149

C5 Av. billed tariff w.water MNT 311 543 337 842 727

Operational Performance Indicators

O1 NRW water supply % 20.3% 20.4% 19.7% 21.8% 19.4%

O2 NRW wastewater % 21.6% 23.7% 23.8% 24.7% 22.8%

O3 Energy consumption kWh 58.38 67.70 68.01 66.92 68.70

O4 Readiness of equipment % 97.3% 97.8% 98.0% 99.1% 95.5%

O5 Breakdowns per month No. 193 88 157 89 84

RETA 7918 Final report Page 135

USUG KEY PERFORMANCE INDICATORS

Unit 2008 2009 2010 2011 Q1-3 2012

Human Resource and Operational Indicators

D1 Drinking water quality

0.5 8.9 0.6 0.2 0.2

D2 Treatm. Eff. CWWTP % 87% 87% 75% 77% 76%

D3 Number of employees # 1348.6 1381.8 1421.4 1456.6 1483.3

D4 Sales per employee 000 MNT 1056.7 1142.5 1214.9 1375.8 1394.9

D5 Petrol consumption Liters 938,395 1,110,993

1,090,061 995,928 962,630

C. The proposed Project

388. The financial component of the project aims at establishing an investment

program for water and wastewater operational improvement services for USUG. In the

past the Government of Mongolia and the Municipality of Ulaanbaatar have received

technical and financial assistance in the form of capacity building and project

preparation/implementation grants, and loans from various international donors,

including form the ADB, the World Bank, JICA, Spanish Govt, Dutch Govt, etc.

389. The ADB has committed itself to a USD 4 mio grant to USUG, of which USD 3.7

mio is available for investments described in this report. Costs of interventions

exceeding this amount could be financed from an ADB-loan or by USUG itself.

390. The proposed investments as recommended by VEI for the pumping stations

which include PS Upper and Central will have a significant reduction on energy costs for

USUG. It can lower the energy costs for pumping at the four main pumping stations with

25% and, if PS Upper and Central are combined, a reduction of energy costs of even

32% can be achieved. As indicated earlier USUG does not plan to fit all of the required

investments into the grant facility. However this could be financed through either a loan

from the ADB or a commercial loan. The impact of a commercial loan on the IRR was

investigated for that part of the required investments that cannot be financed from the

USD 3.7m grant. Altogether, the following scenarios for energy efficiency at the pumping

stations were investigated:

1. Only investing in energy saving measures at the Industrial PS and the Meat PS ;

2. Investing in energy saving measures at all four main PS at Central, Upper,

Industrial and Meat, with investments at Central from a loan and those for the

other PS from the USD 3.7 m grant (option E in chapter V above);

3. The same scenario as 2, but with an increased flow from Central and a reduced

flow by Upper (option F in chapter V above). It should be noted that while this

option will save more energy than any other option and will have the highest IRR,

USUG has not agreed with it for technical and administrative reasons. Also in this

scenario, the investments at Central would need to be made through a loan.

The energy savings that can be achieved and which are used in the IRR calculations are

summarized in the table below.

RETA 7918 Final report Page 136

Table 49 Energy reduction by distribution pumping Scenario Investments in distribution pumping Energy reduction

in USD/year Energy

reduction at the 4 PS

1 Industrial & Meat PS only 26,527 2.2%

2 Upper PS-Central-Industrial-Meat PS 292,917 24.9%

3 As Scenario 2, but with more water pumped by Central and less by Upper (option F in chapter V)

373,314 31.7%

391. The proposed investments and the way of financing are shown in the Table 50

below. A distinction is made between the grant facility which amounts up to USD 3.7

million (in accordance with the Urban Environment Infrastructure Fund) and the

remaining part which USUG chooses not to include in the grant facility for the time

being. It is assumed for calculation purposes that this part will be financed by a

commercial loan or by USUG. For the IRR calculation scenarios, only investments for the

water supply components (grant and loan) were taken into account, as shown in the

table below. It should be noted that the investments for scenarios 2 and 3 are exactly

the same.

Table 50 Investment costs per scenario

Type Package Costs

Scenario 1 Scenario 2+3

in USD

Ind/Meat Option E + F

GRANT Package A: SCADA 1,169,000

1,169,000 1,169,000

Package B: Mech/electr works 717,000

661,000 717,000

Package C: Distrib improvm/NRW 604,000

604,000 604,000

Package D: CWWTP 858,000

Package E: Equipment 0

Capacity building 216,000

216,000 216,000

Sub-total 3,564,000

2,650,000 2,706,000

Contingencies 136,000

101,000 103,000

Grant total 3,700,000

2,751,000 2,809,000

LOAN Package B: Mech/electr works 1,238,000

1,238,000

Package C: Distrib improvm/NRW 714,000

714,000 714,000

Package E: Equipment 240,000

Sub-total 2,192,000

714,000 1,952,000

Contingencies 219,000

71,000 195,000

Loan total 2,411,000

785,000 2,147,000

Overall total 6,111,000

3,536,000 4,956,000

392. The internal rates of return were calculated using the following assumptions:

- Annual inflation rate for energy costs set at 5%;

- Annual general inflation rate set at 4%;

- Calculations assumed for a 20-year period;

RETA 7918 Final report Page 137

- Regarding loan amount the Commercial Interest Reference Rate (CIRR) is set

at 2.32% (according to USD loans > 8.5 yrs, source: OECD);

- Repayment of loan is 10 years with a grace period of 2 years;

Further reference is made to Annex 5 in which the calculation tables for each scenario

are shown. The table below summarizes the calculated IRR for each scenario.

Table 51 Overview of IRR of each scenario

Scenario Option Ch. V Description IRR

1 A+B Industrial & Meat only 8.7%

2 E Upper, Central, Industrial, Meat 16.5%

3 F As 2, but Upper less water, Central more 19.6%

393. The IRR of each scenario is satisfactory, even for scenario 1 with only minimal

energy saving at the main Pumping Stations. For some serious energy saving, as per

scenarios 2 and 3, the IRR is very high, despite the fact that for the adjusted pumping at

Central USUG has opted for the expensive option with frequency controllers, rather than

the cheaper option of changing one pump that was contemplated before and despite the

fact that for this more expensive option a loan will be required. This calculation makes

clear that it is of added value for USUG to invest in Upper and Central regarding

distribution pumping and in an extra NRW program even when the additional investment

is financed by a commercial loan.

D. Recommendations for financial reforms

394. It is essential that the tariffs within USUG cover all costs. It is to be expected that

the proposed tariff adjustment which is now pending approval of the Municipality Tariff

Committee will be executed during 2013. It remains important to monitor if the tariffs

are high enough to pay not only for the operational costs but also the interest and non-

operational costs. It is estimated that because of the salary increases that were

apparent the last two years within Mongolia, the income of a household in Ulan Bator

has increased significantly. It is therefore expected that the envisaged increase of the

water tariff is affordable for households and an increase of the tariff is deemed to be

appropriate, therefore.

395. Furthermore the outstanding repayments and interest of the loans of USUG need

either to be paid or to be transferred by the MUB into investment funding. It is of

importance that the financial department keeps monitoring the key performance

indicators in order to provide management of USUG with the necessary information in

order to set up measures for improvement of operations of USUG.

396. How to make USUG profitable again is not an easy task. The 2010 tariff increase

gave a temporary relief and profit, but salary increases quickly used up all benefits.

Assuming a gradual increase in tariffs, in line with overall inflation in Mongolia and a

slower increase in costs would bring USUG slowly back on the path to profitability. The

graph below shows that by 2017, USUG could break even and make profits thereafter.

Saving energy, as proposed in this report, would help, but only little, despite the high

IRR that can be achieved. Applying all cost saving measures would only help to achieve

profitability halfway 2016, 6 months earlier, as shown in the chart below. It should be

noted that, in the scenarios shown in the chart, debt service (which may, or may not,

RETA 7918 Final report Page 138

need to be paid by USUG) was not yet included. Including debt service would require

drastic additional tariff measures.

The graph below only goes up to 2021 as it remains uncertain how the tariff reform and

debt service will evolve over time. However it shows the positive impact of the project

on the operations of USUG.

Figure 56 Chart with future Revenues of USUG for all Scenarios

RETA 7918 Final report Page 139

XIV. Long-term investments

A. Background

397. Long-term master planning was not part of the RETA 7918 project. At the request

of the ADB, the study team reviewed the needs and possibilities for long-term invest-

ments and based itself thereby mainly on the JICA-supported “Study on the Strategic

Planning for Water Supply and Sewerage Sector in Ulaanbaatar City in Mongolia”22. This

report shows the large investments that would be of interest for any possible future

loans and for the financial planning of USUG and the city administration.

398. In addition, possibilities for smaller downstream investments were identified,

mainly for the improvement of operations at USUG.

B. Priority Investments

399. The JICA-study report identifies water resources development, water supply

extensions and improvements, sewerage and wastewater treatment, as well as water

supply and sanitation projects in the Ger areas.

400. Most of the components identified in the JICA-report are included in a priority

project proposal, of which the investment costs are summarized below.

Table 52 Priority project components Water Supply & Wastewater management

Description Details

USD

mio ~2020 ~2025 ~2030

Water Source

Development Surface dam development 375 188 188

Underground dam development 49

24 25

Water supply Rehab distribution 35 35

Strengthen w/s facilities 154 75 49 30

Wastewater CWWTP 586 145 57 384

Nisekh WWTP 101 49 10 42

Industrial area/transfer to Emeelt 39 39

Reuse of effluent / sludge 58

58

TA Capacity building CWWTP 4 4

Sewer rehab 79 12 12 55

Sewer improvement 31 27 4

Sewer extensions 132 28 28 76

TA Industrial wastewater 4 4

Ger improvement Pipe connection to kiosks 28 2 10 16

Discharge pipes from sub-centers 28 11 8 9

Water supply & sewerage dev. 570 190 190 190

Totals Water Supply 613 110 261 243

Wastewater 1,034 308 111 615

Ger areas 626 203 208 215

Grand Total 2,273 621 580 1,073

401. The total investments required are well over USD 2 billion over a period of about

20 years, of which almost half is earmarked for wastewater collection and treatment.

22 Interim report, dated October 2012

RETA 7918 Final report Page 140

The largest single investment identified is for the Central Wastewater Treatment Plant

CWWTP, with a capital requirement of almost USD 600 million.

402. Much of the investment earmarked for the CWWTP is for a large-scale renewal

around the year 2030, or even later. As stated in paragraphs 215-217, an entirely new

wastewater treatment plant should probably best be designed and built in the coming 5-

10 years, rather than in 20-30 years. Thus, the large investments for the CWWTP would

likely be required much earlier than shown in the table above.

C. Investments in improved operations (near future)

403. Some smaller investments, mainly for operational improvements, are

summarized in the table below. They are all related to USUG’s water supply operations.

Table 53 Possible investments in operational improvements (next 10 years)

Location Description USD mio

Industrial PS Renewal electrical installations 1.0

Upper Frequency converters 1.3

Booster stations Pumps and frequency converters 1.5

Distribution system Measuring equipment 2.0

Pressure and flow control 1.0

Smart metering at large customers 1.5

Asset management and spare parts 0.5

Operation Control Centre Real time control software 0.3

Pressure control/reservoir operation 0.5

Expansion of SCADA 0.5

Total operational improvement next 10 years 10.1

RETA 7918 Final report Page 141

XV. Design and Monitoring Framework

A. Benefits

404. The proposed project will have significant benefits for USUG’s control over the

water and wastewater systems. Once the network is separated in pressure zones,

SCADA has been installed on the different booster stations and staff has been trained

accurate control will ensure optimal operations. Staff of the OCC will have the tools and

with training the ability to optimize pressure and flow.

405. The same applies for the CWWTP. With SCADA installed and improved technical

equipment the environmental benefit will be substantial. As shown in table below.

406. NRW benefits will amount to a better use of resources. It is to be expected that

the level of NRW for USUG will decrease from 19 to 14 % or an equivalent of 2.75 mio

m3/year. This also saves energy costs for pumping and reduces carbon output.

407. Once all apartments are metered and average customer consumption is actually

at the targeted 130 l/c/d then another 6.20 m3/year can be saved. Adding to the

reduction of needed resources. This will however have no financial benefit as the actual

amount paid by unmetered customers is at the moment 285 l/c/d whereas their

consumption is 255 l/c/d.

Table 54 Benefits

Item Grant Costs

(USD)

Benefits

Financial

(USD/year)

Environmental

SCADA

1,169,011

115,914 USD

Energy saving of 5 % overall

which is equal to 1,817,750

kWh/year or 1,222 tonnes

CO2/year.

Energy saving

660,969 (Industrial)

Meat 15,434 USD

Industrial 11,094 USD

Upper Source

Central

242,041 kWh/year or 163

tonnes CO2/year

173,967 kWh/year or 117

tonnes CO2/year

1,252,775 kWh/year or 842

tonnes CO2/year

2,924,712 kWh/year or 1,967

tonnes CO2/year

CWWTP 857,764

Cost benefit is limited

to easier operations

Reduced output of COD and

impact on the environment

Industrial

metering

Increased income

Improved influent at the

CWWTP

NRW

management

605,000

121,000 USD

Reduced water losses of 2.75

mio m3/year and 1.86 mio

kWh/year, reduction of 1,251

tonnes/year CO2 emission

RETA 7918 Final report Page 142

Item Grant Costs

(USD)

Benefits

Financial

(USD/year)

Environmental

Water demand Water metering

program

No financial benefit Reduced water consumption of

6.2 mio m3/year and 4,2 mio

kWh/year, reduction of 2,823

tonnes/year CO2 emission

Capacity building 216,000 No Financial benefit Capacity of the staff improved

B. Design and monitoring framework

408. To ensure the results that are foreseen in the project will also be achieved a

design and monitoring framework (DMF) is prepared. Based on the original design

framework prepared in 2011. In Appendix 4 the DMF is presented.

409. The Urban Environment Infrastructure Fund (UEIF) under the Urban Financing

Partnership Facility( UFPF) will provide a grant investment to finance;

(i) operations improvement of the central wastewater treatment plant (CWWTP)

and drinking water supply network;

(ii) introduction of local control and central operational control systems;

(iii) implementation of a domestic and industrial water metering programme; and

(iv) a program for Non-Revenue Water (NRW) and water consumption reduction

for apartment dwellers.

410. The investments aim to deplete the need of primary energy resources for water

and wastewater systems operations, save water at both customer and supply level

ensuring more sustainable use of available water resources, decrease wastewater

pollution and promote a more reliable and more efficiently run utility.

411. Through selection of these KPI’s the technical performance and result of the

project can be measured and monitored. These being the energy consumption per m3

water distributed to customers, the average consumption per customer, the influent and

effluent quality of the CWWTP (influent saying something about the effectiveness of the

Khargia and industrial wastewater), compliance with flow and pressure set points in the

network, the NRW percentage.

RETA 7918 Final report Page 143

Appendix 1 Proposed Improvements – water supply

The following list gives a description per location of the activities to be undertaken. All

the activities consist of supply and installation unless otherwise stated.

A. Pumping Stations

Industrial Pumping station23

• Installation of a complete PLC logic controller system with I/O and SCADA

control system and PC for local SCADA control, the installation shall be

installed in a cabinet inside the pumping station.

o Complete programming of the SCADA system including all elements:

▪ Main pumps including PID controller for pressure set point

▪ All flow, pressure, reservoir levels and temperature sensors

▪ Database and graphics capable with minimum 1 month buffet

of all data

▪ Refer to the signal list for the parameters.

▪ SCADA must comply with the existing SCADA software in USUG

• Replacement of measuring equipment for Flow, Pressure and reservoir level in

the pumping station and the two reservoirs

• Replacement of four main pumps and electric motors complete with shielded

cables including installation and connection to the existing two frequency

controllers in the pumping station. A selector for switching between pumps

and converter must be installed to switch between two pumps for each

frequency converter.

• A complete telemetry system via fiber optic cables for communication

between the main PLCPLC in the pumping station and the server in the OCC

department in the main office of USUG. A fiber optic connection point is

present in the building next to the pumping station about 250 meters away

from the main building.

• Supply and installation of 16 new submersible pumps in the existing

boreholes for energy efficient water production.

• For each of the 16 boreholes supply and installation of control panel with PLC

for borehole control.

• Installation of fiber optic cables between all boreholes and the pumping

station building for communication between boreholes and main PLC for pump

regime.

• Replacement of an existing chloride dosing system by a fully automated

dosing system based upon existing chlorine gas cylinders. A dedicated

ventilated space for this installation is present at the pumping station.

• Reconstruction of pipelines and control valves of pumping station for energy

saving reasons refer to the attached drawing of this reconstruction.

Nisekh Pumping station

• Supply and Installation of a complete power MCC with main switch and fuses

to be installed in a new cabinet

• Supply and Installation of three new soft starters for the main pumps

• Installation of a complete PLC logic controller system with I/O and SCADA

control system and PC for local SCADA control, the installation shall be

installed in a cabinet inside the pumping station.

23 Two frequency controllers for the main pumps at Industrial station have already been

installed in the Industrial pumping station.

RETA 7918 Final report Page 144

o Complete programming of the SCADA system including all elements:

▪ Main pumps including PID controller for pressure set point.

▪ All flow, pressure, reservoir levels and temperature sensors

▪ Database and graphics capable with minimum 1 month buffet

of all data

▪ Refer to the signal list for the parameters.

▪ SCADA must comply with the existing SCADA software in USUG

• Replacement of measuring equipment for Flow, Pressure and reservoir level in

the pumping station and the two reservoirs

• A complete telemetry system via GPRS for communication between the main

PLCPLC in the pumping station and the server in the OCC department in the

main office of USUG.

• For each of the 16 boreholes supply and installation of control panel with PLC

for borehole control.

• Installation of fiber optic cables between all boreholes and the pumping

station building for communication between boreholes and main PLC for pump

regime.

• Replacement of an existing chloride dosing system by a fully automated

dosing system based upon existing chlorine gas cylinders. A dedicated

ventilated space for this installation is present at the pumping station.

• Supply and installation of three new drainage pumps including float switch.

Sharkhad Booster station

• Supply and Installation of a complete power MCC with main switch and fuses

to be installed in a new cabinet

• Installation of a complete PLC logic controller system with I/O and SCADA

control system and PC for local SCADA control, the installation shall be

installed in a cabinet inside the pumping station.

o Complete programming of the SCADA system including all elements:

▪ Main pumps including PID controller for pressure set point.

▪ All flow, pressure, reservoir levels and temperature sensors

▪ Database and graphics capable with minimum 1 month buffet

of all data

▪ Refer to the signal list for the parameters.

▪ SCADA must comply with the existing SCADA software in USUG

• Replacement of measuring equipment for Flow, Pressure and reservoir level in

the pumping station and the reservoir

• A complete telemetry system via GPRS for communication between the main

PLC in the pumping station and the server in the OCC department in the main

office of USUG.

• A complete telemetry system via GPRS for communication between the main

PLC in the pumping station and the Sharkhad reservoir.

Tolgoit Reservoir and Booster station

• Supply and Installation of a complete power MCC with main switch and fuses

to be installed in a new cabinet

• Installation of a complete PLC logic controller system with I/O and SCADA

control system and PC for local SCADA control, the installation shall be

installed in a cabinet inside the pumping station.

o Complete programming of the SCADA system including all elements:

▪ Main pumps including PID controller for pressure set point.

▪ All flow, pressure, reservoir levels and temperature sensors

▪ Database and graphics capable with minimum 1 month buffet

of all data

▪ Refer to the signal list for the parameters.

▪ SCADA must comply with the existing SCADA software in USUG

RETA 7918 Final report Page 145

• Replacement of measuring equipment for Flow, Pressure and reservoir level in

the pumping station and the reservoir

• A complete telemetry system via GPRS for communication between the main

PLC in the pumping station and the server in the OCC department in the main

office of USUG.

Meat pumping station

• A complete telemetry system via fiber optic cables for communication

between the main PLC in the pumping station and the server in the OCC

department in the main office of USUG. A fiber optic connection is present in

west booster station about 3500 meters away from the main building. This

work includes excavation of the cables.

• For each of the 16 boreholes supply and installation of control panel with PLC

for borehole control.

• Installation of fiber optic cables between all boreholes and the pumping

station building for communication between boreholes and main PLC for pump

regime.

Upper Source pumping station

• A complete telemetry system via cable and satellite for communication

between the main PLC in the pumping station and the server in the OCC

department in the main office of USUG. For the pumping station to the top of

a hill about 500 meters by cable from these continued by GPRS to the main

office.

• Supply and installation of satellite communication.

Chingeltei, Selbe, Bayanhoshuur upper and lower booster stations, total four

(4) locations

• Extension of the existing PLC for two way communication between the station

main PLC and the main office OCC for control from the OCC. This extension

needs to be compatible with the existing GE Fanuc PLC.

B. Distribution Network of Ulaanbaatar

Construction of 20 control valves for the distribution network

• Construction of manholes with lid see drawing for specifications

• Installation of a PLC logic controller system with I/O and SCADA control

system the installation shall be installed in a cabinet inside the manhole.

o Complete programming of the SCADA system including all elements:

▪ Refer to the signal list for the parameters.

▪ SCADA must comply with the existing SCADA software in USUG

• Replacement of measuring equipment for Flow, Pressure and reservoir level in

the pumping station and the reservoir

• A complete telemetry system via GPRS for communication between the main

PLC in the pumping station and the server in the OCC department in the main

office of USUG.

• Installation of pressure control valves in the manhole

• Installation of two pressure sensors in the main pipe on both sides of the

valve.

RETA 7918 Final report Page 146

Construction of 10 new measuring points in the distribution network

• Construction of manholes with lid see drawing for specifications

• Installation of a PLC logic controller system with I/O and SCADA control

system the installation shall be installed in a cabinet inside the manhole.

o Complete programming of the SCADA system including all elements:

▪ Refer to the signal list for the parameters.

▪ SCADA must comply with the existing SCADA software in USUG

• Installation of measuring equipment for flow and pressure

• A complete telemetry system via GPRS for communication between the main

PLC in the pumping station and the server in the OCC department in the main

office of USUG.

Reconstruction of 10 measuring points in the distribution network

• Installation of a PLC logic controller system with I/O and SCADA control

system the installation shall be installed in a cabinet inside the manhole.

o Complete programming of the SCADA system including all elements:

▪ Refer to the signal list for the parameters.

▪ SCADA must comply with the existing SCADA software in USUG

• A complete telemetry system via GPRS for communication between the main

PLC in the pumping station and the server in the OCC department in the main

office of USUG.

C. Operational Control Centre (OCC) at USUG’s main office

• Equipment for dispatch centre control and monitoring

o Renewal OCC server (RAID 4)

• Personal computers, display’s see specifications

• Office network improvement and expansion

o Renewal office network server for the Integrated Data Base(RAID 2)

• Software for computer managed maintenance program

o Upgrade of the existing MP2 Maintenance program

• Telemetry to network connection equipment for pumping station control

• Reprogramming of the existing SCADA software in the OCC office to include

all the parameters from the pumping stations in this tender.

• Equipment for Engineering station for energy saving scenario’s

o PC with software and connection to server

RETA 7918 Final report Page 147

Appendix 2 Proposed improvements - wastewater

A. Proposed improvements at the CWWTP

• The existing SCADA system needs to be repaired and reprogrammed. This

means some equipment has to be replaced and the software needs repair.

• Supply and installation of a new PC for the SCADA system to be installed in

the WWTP control room and a second PC with SCADA connection in the head

engineer’s office in the WWPT.

• Replacement of 20 existing Dissolved oxygen sensors in the aeration tanks

• Supply and installation of 5 ultrasonic sludge level sensors in the secondary

settlers, these new to be installed sensors need to be integrated in the

existing SCADA software

• Supply and installation of analysing equipment for several parameters the

effluent stream of the treatment plant

• Construction of a selector in the treatment plant

• Replacement of existing old air diffusers in the aeration tanks and replace

them with 10,000 new diffusers24.

B. For measurement of industrial wastewater flows

• Supply of 10 portable wastewater flow meters for measuring in industrial

sewers

24 Replacing the old diffusers with 6,000 larger air diffusers is still under consideration. Using the larger

diffusers could save time of installation and money.

RETA 7918 Final report Page 148

Appendix 3 Largest industrial water users

This appendix provides details on several important industries.

Distilleries/Vodka/Beer

Name of company MCS Spirit bal

buram Jem international APU-2

Type of industry Vodka Vodka and beer Alcohol

Water use

m3/month (av

Jan-Aug)

3,595 55,014 156,484

Phone 88102000 98133133 91113656

Flows-Incoming-

USUG USUG USUG USUG

Well No No Yes (not using)

Process that use

water: For products

For products (transfer

from well. Dari-Ekh) Products

1 Washing bottles Washing bottles Washing bottles

2 Cleaning Cleaning Cooling

3 Cooling Cleaning

… Domestic Domestic Domestic

Wastewater

coming from each

process

Any treatment Mechanical Mechanical

Effluent to sewer

Amount of

wastewater

(m3/month)

3,595 (Jan-Aug) 55,014 (Jan-Aug) 166,562 (Jan-Aug)

Effluent Test From USUG No From USUG

Time of test Every month Every month

Date last sample:

COD (mg/l) 967

Suspended solids 28.5

Ammonia (mg/l) 15 0.24

Can we install a

meter somewhere Yes Yes Yes

Diameter of

wastewater pipe

(mm)

150 150 250

RETA 7918 Final report Page 149

Name of company MCS Spirit bal

buram Jem international APU-2

Location of

wastewater

manhole

Outside of the

industry (RS)

Outside of the industry

(RN)

Outside of the industry

(R)

Name of employer

Oyunbaatar

(technology

engineer)

Galdan (plumb) Batbayar (plumb)

Date 2-Oct-12 2-Oct-12 2-Oct-12

Note:

Capacity: About

20000

bottles/day.

Pumping station of

Cashmer holding

company-CWWTP

Industry have 2 water

supply. USUG-using

for technology, well

(Dari-Ekh)-for

products. 3

wastewater line-

domestic, beer

industry and vodka

industry

Water: 75 % for

products. 25 % for

technology. Resued

water. Alcohol:15000

l/day

Tanneries

Name of company MLG (Surai invest) Elire Fure

Type of industry Tannery Tannery

Water use m3/month (av

Jan-Aug) 6,153 7,972

Phone 91911600, 88894188 99111889, 99229130

Flows-Incoming-USUG USUG USUG

Well No No

Process that use water: All wet technology All wet technology

1 Washing Washing

2 Soaking Soaking

3 Cleaning Cleaning

… Domestic Domestic

Wastewater coming from each

process All wet technology All wet technology

Any treatment Mechanical Mechanical

Effluent to sewer

Amount of wastewater

(m3/month) 6200 (Jan-Aug) 8020 (Jan-Aug)

Effluent Test From USUG From USUG

Time of test Every month Every month

Date last sample:

COD (mg/l)

RETA 7918 Final report Page 150

Name of company MLG (Surai invest) Elire Fure

Suspended solids

Ammonia (mg/l)

Can we install a meter

somewhere Yes Yes

Diameter of wastewater pipe

(mm)

Location of wastewater manhole

Name of employer Batbayar (technology

engineer)

Purevnyam,

Buyankhishig

(technology engineer)

Date 1-Oct-12 1-Oct-12

Note:

To process 600 skin one

week. Industry has 2

wastewater pipes.

(chrome-10% and

sulfide-90%)

Capacity: low season-

2500 skin/day, high

season skin/day.

Industry has 2

wastewater

pipe.(chrome-10%

and sulfide-90%) but

effluent mixed

Intestine cleaning

Name of company Gufan and

Gunua EECC

Mandakh

keizing

Type of industry Gut processing Gut processing Gut

processing

Water use m3/mth (av

Jan-Aug) 200-300 500-600 400-450

Phone 99155197 99907192,

99922130 88722468

Flows-Incoming-USUG USUG _ USUG

Well No well _

Process that use water: Gut processing Processing Gut

processing

1 Cleaning Domestic cleaning

2 sorting

3

Wastewater coming from

each process

Washing and

cleaning primary processing screen

Any treatment Have a screen Filter

Effluent to sewer

Amount of wastewater

Effluent Test From USUG From USUG From USUG

RETA 7918 Final report Page 151

Name of company Gufan and

Gunua EECC

Mandakh

keizing

Time of test every month every month every month

Date last sample:

COD (mg/l) 4012.8 729.6 748.8

Suspended solids

Ammonia (mg/l) 870 106 31

Can we install a meter

somewhere Can not yes Can not

Diameter of wastewater

pipe (mm) 100 100 150

Location of wastewater

manhole

Name of employer Master

Saruulchimeg

Employee

Oyunchimeg

Master

Davaanyam

Date 8-Oct-12 8-Oct-12 9-Oct-12

Note: 12000 tonne

products pre day

Cashmere/Wool

Name of company Khanbogd

Cashmere

Capital

factor Monfiya Jin korona

Cashmer

holding

Type of industry

Wool,

cashmere

washing

Wool,

cashmere

washing

Wool wash

Wool

cashmere

washing

Wool and

cashmere

Water use

m3/month (av

Jan-Aug)

12.2 50 1500 3000 8875

Phone 11635697 99087880 99113718 99998368 88002524

Flows-Incoming-

USUG USUG _ _ _ USUG

Well _ Well Well Well Yes, with

meter

Process that use

water: Washing

Washing

wool and

cashmere

Washing

wool

Washing

wool and

cashmere

1 Domestic Domestic Domestic Domestic Washing

2 Coloring

3 Cleaning

… Domestic

Wastewater

coming from each

process

Washing and

domestic

Technology

and

domestic

wastewater

Technology

and

domestic

wastewater

All wet

technology

Any treatment Screen bar

filter Screen bar mechanical mechanical Mechanical

Effluent to sewer 5-6 tonne

RETA 7918 Final report Page 152

Name of company Khanbogd

Cashmere

Capital

factor Monfiya Jin korona

Cashmer

holding

Amount of

wastewater

(m3/month)

14,736 (Jan-

Aug)

Effluent Test From USUG From USUG From USUG From USUG From USUG

Time of test every month every

month

every

month

every

month Every month

Date last sample:

COD (mg/l) 576 499.2 710.4 8400

Suspended solids

Ammonia (mg/l) 490 16 175 2353

Can we install a

meter

somewhere

Can not Can not Yes

Diameter of

wastewater pipe

(mm)

120 150 150 150 300

Location of

wastewater

manhole

Have a

pumping

station

Outside of

the industry

(RS)

Name of

employer

Employee

Erdenebaatar

Ulambat

and

Ganbold

HR

Enkhtaivan Gankhuyag

Altankhuu

(technology

engineer)

Date 9-Oct-12 9-Oct-12 10-Oct-12 10-Oct-12 2-Oct-12

Car wash

Name of company Khanbogd

Cashmere Khoty Chand traid

Type of industry Wool, cashmere

washing Car wash Car wash

Water use

m3/month (av

Jan-Aug)

12.2 500-600 650

Phone 11635697 99182620 94224321,

99183976

Flows-Incoming-

USUG USUG USUG USUG

Well _ No _

Process that use

water: Washing Car wash Car wash

1 Domestic Washing Washing

2 Cleaning Cleaning

3

Wastewater coming

from each process

Washing and

domestic Washing Washing

RETA 7918 Final report Page 153

Name of company Khanbogd

Cashmere Khoty Chand traid

Any treatment Screen bar filter Mechanical Screen, filter

Effluent to sewer

Amount of

wastewater From USUG

Effluent Test every month

Time of test

Date last sample:

COD (mg/l)

Suspended solids

Ammonia (mg/l)

Can we install a

meter somewhere Can not yes can not

Diameter of

wastewater pipe

(mm)

120 100

Location of

wastewater

manhole

Name of employer Employee

Erdenebaatar

administrator

Ariunbold

manager

Tsagaan

Date 9-Oct-12 8-Oct-12 8-Oct-12

Note 15 tonne

That car wash

center: 40-50 car

per day

RETA 7918 Final report Page 154

Appendix 4 Design and Monitoring Framework

Design Summary

Performance Targets/Indicators

Data Sources/Reporting Mechanisms

Assumptions and Risks

Impact Ulaanbaatar water and wastewater systems has a lower carbon footprint, better benefit to poor people, has a lower impact on available water resources.

By 2019 Greenhouse gas emission of the water and wastewater system is reduced by 15% City needs for new water resources is decreased by saving 25,000 m3 of water per day Water service coverage is extended in peri-urban areas 25,000 low income household Underground contamination is reduced

ADB and international sector assessment and progress report on Millennium Development Goals Ministry of Water Resources reports Business reports of USUG

Assumptions Investments and regulations enable improvement of urban and environmental infrastructures Macroeconomic factors continue to be robust Risks Political instability Infrastructure investments fall short of demands posed by rapid urban development and in-migration

Outcome Improved delivery, financial sustainability, operation and maintenance of water service in Ulaanbaatar City

By 2019 NRW in USUG decreased from 19% in 2012 to 14% in 2017 and 12 % in 2019 Water consumption in City formal area deceased from 262 l/c/d in 2009 to 160 l/c/d in 2017 and 130 l/c/d in 2019 By 2015 Energy consumption of water and wastewater scheme decreased of 15% Operation cost decreased by 5% Pollution from central WWTP to the Tuul River is reduced by 15% Solution for beneficiary reuse of sludge through biogas collection is developed

National statistics office, household socioeconomic survey Urban sector report of government and international organizations Water consumption measurement from USUG and OSNAAG Financial and business reports of USUG

Assumptions Pilot programs are extended to the whole City in cooperation with OSNAAG Awareness program is well understood by the population Strong government commitment from Government and agencies Risk Lack of effective government support and coordination among agencies

Outputs Operational control and management of the water distribution and wastewater schemes are improved

By 2015 Operational control equipment and procedures of 4 water pumping stations are upgraded 10.000 Diffusers are installed and 5 selectors are in place in the aeration tanks

2 new sludge return pumps and 2 frequency controllers

Tender documents and invoices for equipment Documentation of the Regulatory Committee, legislation of National Government Approval letters on proposed tariffs by the MUB, Regulator and relevant agencies such as the Fair competition agency

Assumptions All concerned government agencies provide full support to the TA All required information is available on time Risk Inadequate support and performance of the government and stakeholders

RETA 7918 Final report Page 155

Design Summary

Performance Targets/Indicators

Data Sources/Reporting Mechanisms

Assumptions and Risks

NRW and water consumption reduction program is implemented Capacity developed and institutions strengthened

are installed

20 dissolved oxygen sensors, control valves and actuators for the aeration system are installed

Measurement and monitoring devices are installed Water meters are installed in 200 apartments in selected pilot area Wastewater regulation and measuring equipment is in place to cater for appropriate wastewater tariffs Level of non-revenue water is accurately measured Program for reduction of non-revenue water is implemented in the selected pilot areas Proposal to install water meter to 41,000 unmetered apartments in cooperation with OSNAAG is developed Awareness program developed and implemented 2 years training program, with the target of 30% female participation, is developed and implemented Regulatory, institutional and price reforms for water supply and wastewater treatment are approved by the Government

Appendix 5 IRR tables

Table 55 Internal Rate of Return Scenario 1: Energy saving at Industrial and Meat PS only

Financial sustainability (in USD, 1 USD = ₮1380)

project year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034

NON-FINANCIAL OPERATIONS

Cash inflow

Reduced energy costs - 26,527 27,853 29,246 30,708 32,244 33,856 35,549 37,326 39,192 41,152 43,210 45,370 47,639 50,021 52,522 55,148 57,905 60,800 63,840 67,032

Reduced NRW - 121,000 125,840 130,874 136,109 141,553 147,215 153,104 159,228 165,597 172,221 179,110 186,274 193,725 201,474 209,533 217,914 226,631 235,696 245,124 254,929

Benefits resulting from SCADA - 115,914 120,551 125,373 130,387 135,603 141,027 146,668 152,535 158,636 164,982 171,581 178,444 185,582 193,005 200,726 208,755 217,105 225,789 234,820 244,213

Total cash inflow - 263,441 274,244 285,492 297,204 309,400 322,098 335,321 349,089 363,426 378,355 393,900 410,088 426,946 444,500 462,780 481,816 501,641 522,285 543,785 566,174

Cash outflow grant 1):

Package A. SCADA 1,169,000

Package B. Mech. & Electrical works 661,000

Package C. Distribution improvement & NRW 604,000

Capacity Building 216,000

Contingencies 101,000

Cash outflow loan:

Package B: Mechanical and electrical works -

Package C: Distribution improvement and NRW 714,000

Contingencies 71,000

Total cash outflow 3,536,000 - - - - - - - - - - - - - - - - - - - -

1) Excluding CWWTP components

Cash balance before financing (3,536,000) 263,441 274,244 285,492 297,204 309,400 322,098 335,321 349,089 363,426 378,355 393,900 410,088 426,946 444,500 462,780 481,816 501,641 522,285 543,785 566,174

Accumulated cash balance (3,536,000) (3,272,559) (2,998,315) (2,712,823) (2,415,619) (2,106,219) (1,784,121) (1,448,800) (1,099,712) (736,286) (357,931) 35,969 446,057 873,003 1,317,503 1,780,283 2,262,099 2,763,740 3,286,025 3,829,810 4,395,984

FINANCIAL OPERATIONS

Cash inflow

Grant by ADB (Urban Environment Infrastructure Fund) 2,751,000

Loan International Banks 785,000 - -

Total cash inflow 3,536,000

Total cash inflow for repayment 785,000 - - - - - - - - - - - - - - - - - - -

Cash outflow loan:

Repayment - - 78,500 78,500 78,500 78,500 78,500 78,500 78,500 78,500 78,500 78,500 - - - - - - - - -

Financing costs: fees 9,813 - -

Financing costs, Interest 18,212 18,212 16,391 14,570 12,748 10,927 9,106 7,285 5,464 3,642 1,821 - 0 0 0 0 0 0 0 0 0

Outstanding loan 785,000 785,000 706,500 628,000 549,500 471,000 392,500 314,000 235,500 157,000 78,500 0 0 0 0 0 0 0 0 0 0

Total cash outflow 28,025 18,212 94,891 93,070 91,248 89,427 87,606 85,785 83,964 82,142 80,321 78,500 0 0 0 0 0 0 0 0 0

PROJECT CASH BALANCE (2,779,025) 245,229 179,353 192,423 205,956 219,972 234,492 249,536 265,125 281,283 298,033 315,400 410,088 426,946 444,500 462,780 481,816 501,641 522,285 543,785 566,174

NPV (250,463)

Financial IRR 8.7%

Accumulated cash balance (2,779,025) (2,533,796) (2,354,442) (2,162,020) (1,956,064) (1,736,091) (1,501,599) (1,252,064) (986,938) (705,655) (407,622) (92,222) 317,867 744,812 1,189,312 1,652,092 2,133,909 2,635,549 3,157,835 3,701,619 4,267,794

Interest on accumulated cash balance 64,473 58,784 54,623 50,159 45,381 40,277 34,837 29,048 22,897 16,371 9,457 2,140 - - - - - - - - -

Accumulated cash balance (2,843,498) (2,657,053) (2,532,323) (2,390,059) (2,229,484) (2,049,789) (1,850,134) (1,629,646) (1,387,418) (1,122,506) (833,929) (520,668) (110,580) 316,366 760,865 1,223,645 1,705,462 2,207,102 2,729,388 3,273,172 3,839,347

RETA 7918 Final report Page 157

Table 56 Internal Rate of Return Scenario 2: Energy saving at Upper, Central, Industrial & Meat PS

Financial sustainability (in USD, 1 USD = ₮1380)

project year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034

NON-FINANCIAL OPERATIONS

Cash inflow

Reduced energy costs - 292,917 307,563 322,941 339,088 356,042 373,845 392,537 412,164 432,772 454,410 477,131 500,987 526,037 552,339 579,956 608,953 639,401 671,371 704,940 740,187

Reduced NRW - 121,000 125,840 130,874 136,109 141,553 147,215 153,104 159,228 165,597 172,221 179,110 186,274 193,725 201,474 209,533 217,914 226,631 235,696 245,124 254,929

Benefits resulting from SCADA - 115,914 120,551 125,373 130,387 135,603 141,027 146,668 152,535 158,636 164,982 171,581 178,444 185,582 193,005 200,726 208,755 217,105 225,789 234,820 244,213

Total cash inflow - 529,831 553,953 579,187 605,584 633,198 662,087 692,309 723,926 757,005 791,613 827,822 865,706 905,344 946,818 990,214 1,035,622 1,083,137 1,132,856 1,184,884 1,239,329

Cash outflow grant 1):

Package A. SCADA 1,169,000

Package B. Mech. & Electrical works 717,000

Package C. Distribution improvement & NRW 604,000

Capacity Building 216,000

Contingencies 103,000

Cash outflow loan:

Package B: Mechanical and electrical works 1,238,000

Package C: Distribution improvement and NRW 714,000

Contingencies 195,000

Total cash outflow 4,956,000 - - - - - - - - - - - - - - - - - - - -

1) Excluding CWWTP components

Cash balance before financing (4,956,000) 529,831 553,953 579,187 605,584 633,198 662,087 692,309 723,926 757,005 791,613 827,822 865,706 905,344 946,818 990,214 1,035,622 1,083,137 1,132,856 1,184,884 1,239,329

Accumulated cash balance (4,956,000) (4,426,169) (3,872,216) (3,293,028) (2,687,444) (2,054,246) (1,392,159) (699,851) 24,076 781,081 1,572,693 2,400,515 3,266,221 4,171,564 5,118,382 6,108,596 7,144,218 8,227,355 9,360,211 10,545,095 11,784,424

FINANCIAL OPERATIONS

Cash inflow

Grant by ADB (Urban Environment Infrastructure Fund) 2,809,000

Loan International Banks 2,147,000 - -

Total cash inflow 4,956,000

Total cash inflow for repayment 2,147,000 - - - - - - - - - - - - - - - - - - -

Cash outflow loan:

Repayment - - 214,700 214,700 214,700 214,700 214,700 214,700 214,700 214,700 214,700 214,700 - - - - - - - - -

Financing costs: fees 26,838 - -

Financing costs, Interest 49,810 49,810 44,829 39,848 34,867 29,886 24,905 19,924 14,943 9,962 4,981 - 0 0 0 0 0 0 0 0 0

Outstanding loan 2,147,000 2,147,000 1,932,300 1,717,600 1,502,900 1,288,200 1,073,500 858,800 644,100 429,400 214,700 0 0 0 0 0 0 0 0 0 0

Total cash outflow 76,648 49,810 259,529 254,548 249,567 244,586 239,605 234,624 229,643 224,662 219,681 214,700 0 0 0 0 0 0 0 0 0

PROJECT CASH BALANCE (2,885,648) 480,021 294,424 324,639 356,017 388,612 422,481 457,684 494,283 532,343 571,932 613,122 865,706 905,344 946,818 990,214 1,035,622 1,083,137 1,132,856 1,184,884 1,239,329

NPV (258,119)

Financial IRR 16.5%

Accumulated cash balance (2,885,648) (2,405,627) (2,111,203) (1,786,564) (1,430,548) (1,041,936) (619,454) (161,770) 332,514 864,856 1,436,788 2,049,910 2,915,616 3,820,959 4,767,777 5,757,991 6,793,613 7,876,750 9,009,606 10,194,490 11,433,819

Interest on accumulated cash balance 66,947 55,811 48,980 41,448 33,189 24,173 14,371 3,753 - - - - - - - - - - - - -

Accumulated cash balance (2,952,595) (2,528,385) (2,282,941) (1,999,750) (1,676,922) (1,312,483) (904,373) (450,441) 43,842 576,185 1,148,117 1,761,238 2,626,944 3,532,288 4,479,105 5,469,319 6,504,942 7,588,078 8,720,934 9,905,818 11,145,147

RETA 7918 Final report Page 158

Table 57 Internal Rate of Return Scenario 3: Energy saving at Upper (less water), Central (more water), Industrial and Meat PS

Financial sustainability (in USD, 1 USD = ₮1380)

project year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034

NON-FINANCIAL OPERATIONS

Cash inflow

Reduced energy costs - 373,314 391,980 411,579 432,158 453,766 476,454 500,276 525,290 551,555 579,133 608,089 638,494 670,418 703,939 739,136 776,093 814,898 855,643 898,425 943,346

Reduced NRW - 121,000 125,840 130,874 136,109 141,553 147,215 153,104 159,228 165,597 172,221 179,110 186,274 193,725 201,474 209,533 217,914 226,631 235,696 245,124 254,929

Benefits resulting from SCADA - 115,914 120,551 125,373 130,387 135,603 141,027 146,668 152,535 158,636 164,982 171,581 178,444 185,582 193,005 200,726 208,755 217,105 225,789 234,820 244,213

Total cash inflow - 610,228 638,370 667,825 698,654 730,921 764,696 800,048 837,053 875,788 916,335 958,780 1,003,212 1,049,725 1,098,418 1,149,395 1,202,762 1,258,633 1,317,127 1,378,369 1,442,488

Cash outflow grant 1):

Package A. SCADA 1,169,000

Package B. Mech. & Electrical works 717,000

Package C. Distribution improvement & NRW 604,000

Capacity Building 216,000

Contingencies 103,000

Cash outflow loan:

Package B: Mechanical and electrical works 1,238,000

Package C: Distribution improvement and NRW 714,000

Contingencies 195,000

Total cash outflow 4,956,000 - - - - - - - - - - - - - - - - - - - -

1) Excluding CWWTP components

Cash balance before financing (4,956,000) 610,228 638,370 667,825 698,654 730,921 764,696 800,048 837,053 875,788 916,335 958,780 1,003,212 1,049,725 1,098,418 1,149,395 1,202,762 1,258,633 1,317,127 1,378,369 1,442,488

Accumulated cash balance (4,956,000) (4,345,772) (3,707,402) (3,039,577) (2,340,923) (1,610,002) (845,306) (45,258) 791,795 1,667,583 2,583,918 3,542,698 4,545,910 5,595,635 6,694,054 7,843,448 9,046,210 10,304,843 11,621,970 13,000,339 14,442,827

FINANCIAL OPERATIONS

Cash inflow

Grant by ADB (Urban Environment Infrastructure Fund) 2,809,000

Loan International Banks 2,147,000 - -

Total cash inflow 4,956,000

Total cash inflow for repayment 2,147,000 - - - - - - - - - - - - - - - - - - -

Cash outflow loan:

Repayment - - 214,700 214,700 214,700 214,700 214,700 214,700 214,700 214,700 214,700 214,700 - - - - - - - - -

Financing costs: fees 26,838 - -

Financing costs, Interest 49,810 49,810 44,829 39,848 34,867 29,886 24,905 19,924 14,943 9,962 4,981 - 0 0 0 0 0 0 0 0 0

Outstanding loan 2,147,000 2,147,000 1,932,300 1,717,600 1,502,900 1,288,200 1,073,500 858,800 644,100 429,400 214,700 0 0 0 0 0 0 0 0 0 0

Total cash outflow 76,648 49,810 259,529 254,548 249,567 244,586 239,605 234,624 229,643 224,662 219,681 214,700 0 0 0 0 0 0 0 0 0

PROJECT CASH BALANCE (2,885,648) 560,418 378,841 413,277 449,086 486,335 525,091 565,424 607,410 651,126 696,654 744,080 1,003,212 1,049,725 1,098,418 1,149,395 1,202,762 1,258,633 1,317,127 1,378,369 1,442,488

NPV (257,384)

Financial IRR 19.6%

Accumulated cash balance (2,885,648) (2,325,230) (1,946,389) (1,533,113) (1,084,026) (597,691) (72,601) 492,823 1,100,233 1,751,359 2,448,013 3,192,093 4,195,305 5,245,030 6,343,448 7,492,843 8,695,605 9,954,238 11,271,365 12,649,734 14,092,222

Interest on accumulated cash balance 66,947 53,945 45,156 35,568 25,149 13,866 1,684 - - - - - - - - - - - - - -

Accumulated cash balance (2,952,595) (2,446,123) (2,112,438) (1,734,730) (1,310,793) (838,324) (314,918) 250,506 857,916 1,509,042 2,205,696 2,949,776 3,952,988 5,002,713 6,101,131 7,250,526 8,453,288 9,711,921 11,029,048 12,407,417 13,849,905