(2023.09.05-ны өдрийн орчуулга)                                                       Unofficial translation

This Law shall enter into force on December 31, 2023

LAW OF MONGOLIA

December 9, 2022                                 Ulaanbaatar city

ON PUBLIC AND PRIVATE PARTNERSHIP

CHAPTER ONE

GENERAL PROVISIONS

Article 1.Purpose of the Law

1.1.The purpose of this Law is to implement public and private partnership projects in the field of public infrastructure and public services, to support private sector participation and investment, to ensure efficient long-term cooperation between the public and private sectors based on the optimal risk management of partnership agreements, and to create a favorable legal environment in connection with the implementation of sound financial and budget management.

Article 2.Legislation on public and private partnership

2.1.The legislation on public-private partnership /hereinafter referred to as "partnership"/ shall consist of the Constitution of Mongolia, the Law on Development Policy, Planning and its Management, the Law on the Budget, the Law on Budget Stability, the Law on Debt Management, and other legislative acts issued in conformity with these laws.

2.2.If an international treaty, to which Mongolia is a party, stipulates otherwise than this Law, the provisions of the international treaty shall prevail.

Article 3.Scope of the application of the Law

3.1.This Law applies to relations related to selection of projects, selection of partners, entering into partnership agreements and its implementation based on planning, development, evaluation, and analysis of partnership projects to be jointly implemented by the public and private sectors in the field of public infrastructure and public services.

3.2.The following activities are not included in the partnership specified in this Law:

3.2.1.activities of the defense sector;

3.2.2.all types of banking and financial market services and activities;

3.2.3.activities of exploration, mining, and exploitation of minerals for-profit purpose, other than providing services to the public through the infrastructure of the mining industry;

3.2.4.other activities prohibited by law.

3.3.Matters related to partnership budget management, financing, reporting and control of contingent liabilities, other than those specified in this Law, shall be governed by the Law on Budget and the Law on Debt Management.

3.4.Registration of newly created movable and immovable property rights in the state registry, transfer of ownership, use, and possession rights of partnership objects, and relations related to state and local ownership are regulated by the Law on State and Local Property and the Law on State Registration of Property Rights will manage.

3.5.Within the framework of partnership, replacement or repossession of land owned by others with compensatory compensation shall be regulated in accordance with the Law on Land and other relevant legislation.

3.6.Matters related to implementation of transparency within partnership shall be regulated by this Law, the Law on Glass Accounts, and the Law on Public Information Transparency.

3.7.Within the framework of partnership, the relations related to conclusion and selection of the private sector partners and consulting services contracts shall be regulated in accordance with this Law, and the provisions of the Law on the purchase of goods, works, and services with State and local property assets shall not apply.

Article 4.Principle of partnership

4.1.The following principles shall be followed in the partnership:

4.1.1.a partnership project shall be implemented in the field of public infrastructure and public services, be in the interest of the public, and support the purpose of serving the public;

4.1.2.to improve the quality and accessibility of public services, to ensure balance of control and regulation in budget and financial management, and to support economic growth based on the private sector;

4.1.3.a partnership defines rights and obligations between the public and private sector, optimally distributes risks based on the principles of good governance, distributes public expenditures based on quality, results, and performance in the long term, and increases economic efficiency by increasing financial resources to provide public services;

4.1.4.to select and implement a long-term cost-effective option that meets the quality and efficiency of products and services in the partnership, as well as customer needs and requirements;

4.1.5.to organize a selection of private sector partners in a fair, equitable, transparent, competition-based, open, effective and responsible manner, and to inform the public about the process and results of all stages of the selection process;

4.1.6.a selection of the private sector partner must fully comply with this Law and other related procedures and methods;

4.1.7.to assess and determine risks to the budget in the decision of whether to implement a project through partnership, and regularly monitor the performance of financing during an implementation of a partnership project;

4.1.8.a partnership is to support investment and participation of the private sector, increase budget and economic efficiency, and be stable in the long term;

4.1.9.a partnership project should reduce climate change, introduce environmentally friendly technologies, and support the development of green economy.

Interpretation: "Green economy" means an economy that aims to improve human well-being and social equity while reducing environmental risks and degradation.

Article 5.Definitions of terms of the Law

5.1.The following terms used in this Law shall be understood in the following meanings:

5.1.1."building" is defined in sub-paragraph 4.1.1 of the Law on Construction, applicable within the scope of this Law;

5.1.2."contingent liabilities" is defined in sub-paragraph 4.1.48 of the Law on Budget;

5.1.3."Government debt guarantee" is defined in sub-paragraph 4.1.7 of the Law on Debt Management;

5.1.4."Government support" refers to the Government's approval, settlement of capital and land issues, reduction or exemption of fees and charges paid to the Government in accordance with this Law, tax and other non-tax concessions and support in case of specially defined circumstances;

5.1.5."Government permit" means permits, licenses, permissions, and registrations required by state authorities in accordance with relevant legislation within the framework of partnership;

5.1.6."financier" means a bank or financial institution other than a shareholder that provides a loan to a private sector partner in connection with the implementation of a project, provides a financial guarantee for the partnership project, or provides other financial support;

5.1.7."innovation" defines in sub-paragraph 3.1.1 of the Law on Innovation;

5.1.8."public infrastructure" means public service buildings, highways, railways, cableways, above-ground and underground road structures, all types of engineering networks, simple and engineering structures for disaster and accident prevention, facilities with structures;

5.1.9."value for money" means determining the quality, availability, efficiency and profitability of project services at all stages of the implementation of the partnership project at the total cost of the project;

5.1.10."financial capacity" means that fees charged to users for services provided within the framework of the partnership, and financing from the budget are in accordance with the capacity of the user and the budget, and that expenses and potential liabilities can be solved from the income;

5.1.11."public-private partnership" means a cooperation in the long-term sustainable and efficient implementation of the project through financing a partnership depending on the type of the partnership private, providing public infrastructure and public services to the public and the state partner in the long term according to a partnership agreement signed with a public-private partners, and optimally distribution of risks by the partners.

5.1.12."state partner" means the state central administrative body in charge of the industry in charge of implementing the partnership agreement, the state central administrative body in charge of partnership matters, and other persons specified in Article 16 of this Law according to the partnership agreement;

5.1.13."public services" means equal, quality, efficient public services provided by the government to citizens in infrastructure, energy, roads, transportation, health, education, culture and other related fields in order to create a comfortable living environment for citizens according to legislations and standards.

5.1.14."impact on the budget" is a calculation of impact on the budget and finances of an implementation of project, as well as the possible situation that directly or indirectly creates payment obligations;

5.1.15."budget risk assessment" means an analysis of impact of a partnership project on the budget and possible liabilities calculated according to the model specified in paragraph 9.2 of this Law;

5.1.16."Partnership project development facility" means a partnership facility formed from the sources prescribed by law in order to obtain professional consulting services for preliminary project evaluation, full project analysis, calculation and analysis of the impact of the original partnership project and the budget, and to finance the costs related to project preparation, planning, selection, implementation, monitoring, and reporting.

5.1.17."project documents" means a partnership agreement, construction agreement, supply agreement, purchase guarantee agreement, service agreement and other ancillary agreements, construction, operation, technical control agreement with authorized organizations, maintenance and project management all related documents;

5.1.18."project income" means the source of project revenue arising from users' payments, fees according to a partnership agreement;

5.1.19."special purposed company" means a project company founded by a private sector partner for the special purpose of implementing a partnership project, assuming the role of a private sector partner within the framework of a partnership agreement;

5.1.20."partnership agreement" means a civil law agreement concluded between public and private partners to implement a partnership project, defining the rights and obligations of the parties and other relevant issues;

5.1.21."partnership object" means property rights, results of work and services, movable and immovable property belonging to the partnership agreement;

5.1.22."partnership project" means activities such as private sector partner investment, design development, construction, financing, reconstruction, improvement, repair and maintenance of infrastructure buildings and facilities, provision of public services, and management of public services refers to a public project in order to meet public needs and requirements in the field of public infrastructure and public services; 

5.1.23."partnership original project" means the project document that includes technical, economic, financial, legal, legal, social and environmental reasons, evidence, and quantitative data required for the provision of public infrastructure, buildings, and basic social services through partnership for a partnership project;

5.1.24."partnership stage" means all stages of planning and implementation of partnership project such as preliminary and feasibility assessment of the partnership project, preparation of preliminary technical and economic basis, detailed technical and economic basis and partnership original project, definition of partnership project, selection of private sector partners, entering a partnership agreement, providing contract management, implementing the project or provide public infrastructure and public services in accordance with the contract, supervising and monitoring the implementation of the project, auditing and reporting on project activities and results, withdrawing from the private sector partner partnership, transferring the infrastructure to the state partner;

5.1.25."development policy document" means long-, medium-, and short-term development policy and planning documents specified in the Law on Development Policy, Planning and Its Management;

5.1.26."private sector partner" means a legal entity with foreign or domestic investment and an association of legal entities established in accordance with the Law on Company and the Law on Investment, which has entered into a partnership agreement with a state partner and is responsible for implementing a partnership project specified in this Law;

5.1.27."project initiation by the private sector" means project proposals initiated by the private sector in accordance with this Law to be implemented on the basis of partnership in the field of public infrastructure and public services;

5.1.28."users' fee" means fees and charges to be paid by users for using public infrastructure and public services;

5.1.29."risk analysis" means an assessment and analysis of financial, legal, social, environmental and budgetary impact of the project in accordance with methods specified in this Law;

5.1.30."full analysis of the project" means the analysis specified in paragraph 20.4 of this Law in order to calculate economic efficiency, social importance, impact on the budget, risks and project risks of the project to be implemented through partnership, and to determine type of partnership, a form and duration of the project implementation;

5.1.31."Government's guarantee" means the government's obligations under Article 31 of this Law for the long-term sustainable implementation of the partnership project.

CHAPTER TWO

POWER OF STATE AUTHORITIES RELATED TO PARTNERSHIP

Article 6.Power of the State Great Khural

6.1.The State Great Khural shall exercise the following powers regarding partnership:

6.1.1.to discuss and jointly approve partnership goals and measures when approving Mongolia's development policy and planning documents, medium-term budget framework statements, and the current year's budget draft;

6.1.2.to discuss a report on implementation and results of a partnership project together with an integrated budget performance report, to supervise an implementation and give directions.

Article 7.Power of Government

7.1.The Government shall exercise the following powers regarding partnership:

7.1.1.to approve and supervise an implementation of a partnership project that has been fully analyzed as specified in this Law;

7.1.2.to approve public infrastructure, public service sectors and directions for implementing partnership;

7.1.3.to solve issues related to Government support and Government guarantee for a partnership in accordance with this Law;

7.1.4.to take necessary measures and give directions for long-term sustainable implementation of the partnership project;

7.1.5.to grant a right to enter into a partnership agreement;

7.1.6.to discuss partnership laws, partnership implementation, results, and reports on project risks and impact on the budget during an implementation of contract, and submit it to the State Great Khural together with a consolidated budget performance report;

7.1.7.to make price adjustments in some sectors in accordance with the agreement with a private sector partner in order to make the user's fee payment consistent with actual costs for an implementation of a partnership.

7.2.The Government shall approve and implement the following procedures and methods within the framework of partnership:

7.2.1.procedure for full analysis of a project implemented by partnership;

7.2.2.procedures and standard documents for selecting private sector partners and consulting services;

7.2.3.procedure for concluding a partnership agreement, standard contract model, and a set of contract documents;

7.2.4.method of risk assessment and distribution within the partnership;

7.2.5.procedure for government support and government guarantee for the implementation of the partnership project in accordance with the provisions of this Law;

7.2.6.procedure for controlling a full analysis of project to be implemented through partnership and granting approval for conclusion of a partnership agreement, amendments and modifications to the agreement;

7.2.7.partnership project implementation, financing, organization, reporting and monitoring procedures.

7.3.The Government shall support the development of effective and stable partnerships between the public and the private sector, and ensure a cooperation of state authorities.

Article 8.Power of state central administrative body in charge of partnership matters

8.1.The state central administrative body in charge of partnership matters shall exercise the following powers within the framework of partnership:

8.1.1.to receive project proposals to be implemented through partnership from the state central administrative body in charge of the sector, review and confirm a preliminary evaluation of project proposals;

8.1.2.to include a pre-assessed project to be implemented through partnership in the long-, medium-, and short-term development policy documents in accordance with the Law on Development Policy, Planning, and Its Management;

8.1.3.to review a complete analysis of the project specified in paragraph 20.4 of this Law, make a conclusion, submit it to the state central administrative body in charge of finance and budgetary matters, and obtain permission for consideration by the Government;

8.1.4.to manage a partnership project development facility, to take necessary measures to create facility's resources, and to submit proposals for inclusion of funds to be financed from the budget;

8.1.5.to organize a selection of private sector partners and to conclude partnership agreements;

8.1.6.to participate in negotiations of partnership agreements and conclude a partnership agreement jointly with the state central administrative body in charge of the sector;

8.1.7.to strengthen the effective and stable partnership environment between the public and the private sector, to develop a partnership, to provide professional and methodological support and assistance in connection with a partnership project;

8.1.8.to prepare an annual report on an implementation of partnership laws, partnership projects, and the fulfillment of contracts, and present them to the Government every year;

8.1.9.to develop procedures and standard documents for selecting private sector partners and consulting services;

8.1.10.to develop a procedure for concluding a partnership agreement, a standard contract model, and a set of contract documents;

8.1.11.to develop risk assessment and distribution methodology within a partnership;

8.1.12.to develop procedures for implementation, financing, organization, reporting and monitoring of partnership projects;

8.1.13.to organize information and advertise a partnership in cooperation with the Partnership Center, to ensure the transparency of the partnership, and to deliver information about the partnership project to the public in accordance with this Law;

8.1.14.to establish a project team for a full analysis of a partnership project based on the Partnership Center in accordance with this Law;

8.1.15.to establish a project selection working group for selection of private sector partners and participate in partnership agreement negotiations in accordance with this Law;

8.1.16.to submit proposals for partnership agreements and amendments to partnership agreements to the state central administrative body in charge of finance and budgetary matters, and obtain permission for consideration by the Government;

8.1.17.to organize measures to transfer and register any assets created or belonging to a partnership to state or local property in accordance with a partnership agreement, this Law and relevant legislation;

8.1.18.to ensure and monitor an implementation of partnership legislation and the fulfillment of agreements.

8.2.A member of the Government in charge of partnership matters shall approve and implement procedures for creating an integrated database of partnership information, receiving information, recording and reporting.

Article 9.Power of state central administrative body in charge of financial and budgetary matters

9.1.The state central administrative body in charge of financial and budgetary matters shall exercise the following powers within the framework of partnership:

9.1.1.to control a budget risk assessment of the project to be implemented through partnership, to make a conclusion about sources of funds to finance a project and an impact on a budget and risks;

9.1.2.depending on a type of partnership agreement, according to the agreement, to include the budget financing in a budget draft based on an implementation and performance evaluation, and to coordinate the project financing with the budget;

9.1.3.based on full analysis of partnership project, to evaluate a type of support provided by the Government within the framework of the partnership agreement, a guarantee of the Government's debt, compensation, budget risk, financial capacity issues and the impact on an amount of the Government's debt;

9.1.4.based on full analysis of a project to be implemented through partnership submitted by the state central administrative body in charge of partnership matters, review the budget risks, impact on the budget and capital sources, give permission for discussion at the Government meeting, and in case of disapproval, submit the reasons and explanations to the state central administrative body in charge of partnership matters;

9.1.5.to review a draft of partnership agreement, control an impact on the budget, risk evaluation and analysis, grant approval for a conclusion of the partnership agreement and amendments to the partnership agreement, and in case of disapproval, submit the reasons and explanations to the state central administrative body in charge of partnership matters;

9.1.6.within the framework of partnership project, to monitor the total financial and payment obligations of the current year and entire duration of the partnership project, to participate in negotiations of the partnership agreement with an obligation of budget payments, to make conclusions, to cooperate with the relevant state authorities on matters related to the budget planning, costs, and risks of the partnership project, and get necessary information;

9.1.7.to develop procedures for the Government support and Government guarantees for an implementation of partnership projects in accordance with the provisions of this Law;

9.1.8.to review a full analysis of the project implemented by partnership and develop a procedure for granting approval for a conclusion of partnership agreement, amendments to the agreement.

9.2.A member of the Government in charge of financial and budgetary matters shall approve and implement a model for evaluating an impact and risk on the partnership budget.

Article 10.Power of state central administrative body in charge of the sector matters  

10.1.In an implementation of a partnership project, the state central administrative body in charge of the sector matters shall exercise the following powers:

10.1.1.to propose a project to be implemented through partnership;

10.1.2.to carry out a preliminary evaluation of the project implemented by partnership;

10.1.3.to submit a preliminary evaluation report to the state central administrative body in charge of partnership matters;

10.1.4.to receive proposals for projects initiated by aimags, the capital and the private sector, to evaluate them in accordance with this Law, to determine a possibility of implementing a project through partnership, and to make a conclusion;

10.1.5.to include project proposals whose preliminary assessment has been reviewed and verified in a development policy document;

10.1.6.to work as part of a project team to conduct a full analysis of the partnership project, to conduct a full analysis together with the project team;

10.1.7.to work as part of a working group for a selection of private sector partners and participate in negotiations of partnership agreements;

10.1.8.to conclude a partnership agreement with a private sector partner on behalf of the state partner in accordance with this Law;

10.1.9.to implement functions of the state partner in an implementation of the partnership project in accordance with this Law and a contract, to supervise and report on an implementation of the project;

10.1.10.to prepare an annual report on an implementation of a partnership project and fulfillment of a contract, and submit it to the state central administrative body in charge of partnership matters;

10.1.11.to ensure an implementation of partnership legislation, to ensure fulfillment of contracts, and to monitor their implementation;

10.1.12.to include details of partnership projects, project documents, partnership agreements, and financing information into the integrated database of the partnership, inform the public, and ensure transparency;

10.1.13.Information required by participants in partnership projects, documents, instructions, forms for selection, standard form of partnership agreement, upload relevant information on the website, deliver and inform the public in a transparent, regular and accessible manner.

Article 11.Powers of the Citizens' Representatives' Khurals of aimags and the capital, and the Governors

11.1.The Citizens' Representatives' Khurals of aimags and the capital shall exercise the following powers within the framework of partnership:

11.1.1.to monitor an implementation of partnership laws and partnership agreements for projects to be implemented in that locality;

11.1.2.to discuss a proposal of project to be implemented by partnership in the locality as submitted by the Governor;

11.1.3.to support and cooperate with an implementation of the project implemented in partnership in the locality.

11.2.Governors of aimags and the capital city shall exercise the following powers within the framework of partnership:

11.2.1.to develop a proposal for a project to be implemented through partnership in the locality and discuss it at the Citizens' Representative Meeting;

11.2.2.to submit a proposal of the partnership project to the state central administrative body in charge of the sector;

11.2.3.to ensure the implementation of the project implemented by partnership in the locality, to support and cooperate with parties, to monitor a fulfillment of the partnership agreement in accordance with this Law and the partnership agreement;

11.2.4.to participate in a project team for the full analysis of the project and participate in negotiations of the partnership agreement, and conclude the partnership agreement jointly with the state central administrative body in charge of partnership and the sector matters on behalf of the state partner;

11.2.5.to transfer and register any assets created by a partnership or belonging to the partnership to local property in accordance with the partnership agreement, this Law, and relevant legislation.

Article 12.Partnership center, its functions

12.1.The partnership center shall be established by a decision of the Government under the jurisdiction of the state central administrative body in charge of partnership matters.

12.2.The partnership center shall exercise the following functions within the framework of partnership:

12.2.1.to ensure an implementation of partnership legislation, to support the implementation and development of effective and sustainable partnership between the state and the private sector;

12.2.2.to conduct research on whether a proposal of a partnership project can be implemented through partnership, to provide professional and methodological assistance to the partnering parties;

12.2.3.to develop preliminary assessment, full analysis, preliminary and detailed technical and economic basis, risk analysis and assessment of a project to be implemented through partnership with the state partner, professional consultant and project team;

12.2.4.to present results of the research and analysis specified in sub-paragraph 12.2.3 of this Law to the state central administrative body in charge of the sector and partnership matters, and provide necessary information to evaluate the project and decide whether it is suitable for implementation through partnership;

12.2.5.to determine possibility of a partnership project, explore participation, capabilities and interests of a private sector, develop a presentation for investors and other interested parties;

12.2.6.to obtain services of professional experts and consultants for research, analysis and evaluation, and concluding contracts;

12.2.7.for projects initiated by private sectors, with financing of the private sector, conduct necessary analysis of the project and present results to the state central administrative body in charge of the sector and partnership matters;

12.2.8.to cooperate with the state central administrative body in charge of financial and budgetary matters and provide professional support in evaluating an impact on the budget of the project implemented through partnership;

12.2.9.according to the procedure specified in paragraph 49.3 of this Law, to deposit facility's resources in the Partnership project development facility;

12.2.10.to report financial and risk monitoring and analysis of project implementation;

12.2.11.to develop information, procedures, documents, instructions and forms required for a partnership project, a standard partnership agreement model, relevant documents required for parties participating in a partnership, regular uploading of the information to the integrated database of the partnership, and transparent and accessible delivery to the public.

12.3.The partnership center shall be a state-owned industrial organization, established by the Government and approved by the rules in accordance with the Law on State and Local Property.

CHAPTER THREE

TYPES OF PARTNERSHIP, PLANNING OF PARTNERSHIP PROJECT, PREPARATORY PROCEEDINGS AND REQUIREMENTS

Article 13.Industry/sector applying partnership

13.1.The Government shall approve sectors and areas of public infrastructure and public services to be implemented in sectors other than those specified in paragraph 3.2 of this Law in accordance with sub-paragraph 7.1.2 of this Law.

Article 14.Types of partnership

14.1.Depending on the form of financing, the partnership will be implemented in the following three types:

14.1.1.to finance costs of a partnership project with users' fees and project income;

14.1.2.to finance costs of a partnership project from the budget according to a partnership agreement;

14.1.3.mixed types according to sub-paragraphs 14.1.1 and 14.1.2 of this Law.

14.2.Pursuant to sub-paragraph 14.1.1 of this Law, costs of partnership project shall be financed and implemented by the private sector partner from the project's public infrastructure, public service users' fees and project income as specified in a contract.

14.3.Pursuant to sub-paragraph 14.1.2 of this Law, costs of partnership project of private sector partner shall be financed and implemented from the budget based on the project's efficiency, service quality, availability, performance evaluation, and payment schedule.

14.4.If it is determined that project costs cannot be financed by users' fees and charges based on conclusion of full analysis of partnership project, and it is determined that a certain part must be financed from the budget, the type specified in sub-paragraph 14.1.3 of this Law may be implemented.

14.5.Depending on full analysis of project to be implemented through partnership, an operation and characteristics of the project, the type of partnership specified in paragraph 14.1 of this Law shall be determined by a partnership agreement between partnering parties.

Article 15.Type of partnership agreement implementing partnership project

15.1.Depending on characteristics of the project to be implemented through partnership, the partnership agreement has the following types:

15.1.1.development, construction, use and transfer of designs and budgets;

15.1.2.construction, use, transfer;

15.1.3.construction, transfer, use;

15.1.4.build, lease, use, transfer;

15.1.5.construction, ownership, use, transfer;

15.1.6.rent and provide public services by renting;

15.1.7.implementation of operation and maintenance;

15.1.8.restoration, possession, use, transfer;

15.1.9.implementing management;

15.1.10.other types of partnership agreements determined by complete analysis of the project.

15.2.Depending on full analysis of the project to be implemented through partnership, an operation and characteristics of the project, the type of contract specified in paragraph 15.1 of this Law shall be determined by a partnership agreement between partnering parties.

15.3.Within the framework of this Law, it is prohibited to enter into a "build-and-transfer" type of contract with the condition of direct transfer, implementation in a short period of time, indistinguishable from budget investment, and implementation through partnership.

Article 16.Partnering parties

16.1.The following persons are state partners:

16.1.1.Ministry of Mongolia;

16.1.2.governors of aimags and the capital;

16.1.3.State or local ownership, state or local ownership dominates legal entities.

16.2.Private sector partner is a person specified in sub-paragraph 5.1.26 of this Law.

Article 17.Stages of partnership project

17.1.The partnership project has the following stages:

17.1.1.stage of planning a project or analyzing whether the project will be implemented through partnership:

17.1.1.a.preliminary assessment of the partnership project;

17.1.1.b.based on conclusion of the preliminary assessment, include the project to be implemented through partnership in a development policy document.

17.1.2.full analysis and evaluation stage of the partnership project included in the development policy document to be implemented through partnership:

17.1.2.a.analyze the partnership project;

17.1.2.b.development of preliminary and detailed technical and economic basis of the partnership project;

17.1.2.c.develop the original project of partnership;

17.1.2.d.study and determine risks of the partnership project.

17.1.3.define and implement a partnership project;

17.1.4.selection of private sector partners;

17.1.5.negotiate and conclude a partnership agreement;

17.1.6.the stage of implementation of the partnership project and the management of the contract;

17.1.7.implementation of partnership project implementation control, evaluation and monitoring;

17.1.8.termination of the partnership agreement, acquisition and registration of partnership objects in state or local property.

Article 18.Requirements for partnership project

18.1.The partnership project meets the following general requirements:

18.1.1.it has been determined that the project is suitable for implementation through partnership in the field of public infrastructure and public services in the assessment, analysis and research provided for in this Law;

18.1.2.compliance with long-, medium-, and short-term development policy documents, regional development policies, and medium-term budget framework statements;

18.1.3.to be a priority development project, to be consistent with a type and form of partnership specified in this Law;

18.1.4.to be able to improve quality and accessibility of public services, to introduce innovations and new technologies by constructing and maintaining infrastructure based on private investment, providing public services for the public;

18.1.5.have no negative impact on the environment, support green economic development aimed at reducing climate change;

18.1.6.it has become clear that investors and financiers are interested in implementing the project.

18.2.The partnership agreement signed and implemented project shall meet the following special requirements:

18.2.1.project budget, financial assessment, preliminary and detailed technical and economic basis have been developed;

18.2.2.based on measurable objectives of the project, needs and requirements of the project must be determined;

18.2.3.legal analysis, social and environmental impact analysis and confirmation;

18.2.4.according to complete analysis of the project, the public services provided to the public within the framework of the partnership project meet requirements of the relevant standards;

18.2.5.define technical requirements, project inputs, outputs and results;

18.2.6.determine activities, measures, and scope of the project to be executed according to a private sector partnership agreement;

18.2.7.specify special and ordinary permits to be granted according to the Law on Permits necessary for operation of the project;

18.2.8.assess project risks and determine risk mitigation measures within a contract;

18.2.9.define a type and form of support required by the Government to implement the project;

18.2.10.budget impact, risk assessment and analysis must be reviewed by the state central administrative body in charge of finance and budgetary matters;

18.2.11.during implementation period of the project, activities, implementation, and performance of the private sector partner must be monitored and evaluated in accordance with the contract;

18.2.12.before concluding the partnership agreement, negotiation with the private sector partner and main conditions have been mutually agreed upon;

18.2.13.the total cost of the project should be defined as a total amount including all costs of project stages;

18.2.14.public services provided under the partnership project is for the public, the payment is in line with the market price, and registration is possible;

18.2.15.introduce environment-friendly technology;

18.2.16.meet other requirements set forth in the partnership agreement and project documents for the purpose of proper management of partnership property.

18.3.Projects that do not meet the requirements set forth in this Law shall not be implemented through partnership.

Article 19.Planning, preliminary assessment of partnership project

19.1.The state central administrative body in charge of the sector, aimags, capitals and the private sector have a right to submit proposals for the implementation of projects in partnership that meet the conditions and requirements set forth in this Law.

19.2.Suitability of the proposal for the project to be implemented through partnership will be determined through a preliminary assessment.

19.3.After receiving the project proposal specified in paragraph 19.1 of this Law, the state central administrative body in charge of the sector and the partnership center shall jointly conduct a preliminary assessment within 30 days and submit the conclusion to the state central administrative body in charge of partnership matters.

19.4.The issue of inclusion of the project implemented through partnership under the supervision of the state central administrative body in charge of partnership, finance and budget matters in the development policy document shall be implemented in accordance with the schedule specified in the Law on Development Policy, Planning and Its Management.

19.5.In accordance with this Law, projects that have not been pre-assessed and are not included in the development policy document are prohibited from being subjected to a full partnership analysis.

Article 20.Full analysis of partnership project

20.1.In the project included in the development policy document to be implemented through partnership, a full analysis of the project shall be conducted in order to determine efficiency and importance of the project to be implemented through partnership, to make a conclusion about a possibility of implementation, and to determine the type of partnership and the type and form of the contract for implementing the project.

20.2.The state central administrative body in charge of partnership and sector matters shall jointly establish a project team for full analysis of the project at the partnership center, and the period for full analysis is specified in the relevant regulations.

20.3.The composition of the project team specified in paragraph 20.2 of this Law shall include representatives of the state central administrative body in charge of partnership and sector matters, relevant state authorities, aimags and capital cities where the project shall be implemented depending on the partnership project, and at least 30 percent of the project team composition shall be independent consultants and researchers in fields of finance, economy, national and international professional in law, social, environmental and other relevant fields.

20.4.In accordance with the relevant methods and procedures, the project team shall determine needs and requirements, financial and economic efficiency, social importance, impact on the budget, risk, financial and other resources and opportunities of the project through a complete analysis as follows:

20.4.1.perform value for money analysis;

20.4.2.preliminary and detailed technical and economic basis;

20.4.3.type, model, main terms and conditions of the partnership agreement, evaluation of whether the requirements for the project have been met;

20.4.4.legal analysis, social and environmental impact analysis;

20.4.5.conclusion of the risk analysis, which defines risks of the project and measures to reduce them;

20.4.6.type of partnership for project implementation, form of contract, project implementation period;

20.4.7.type of Government support required for the project.

20.5.The project team shall prepare the original partnership project of the project proposed to be implemented through partnership.

20.6.In accordance with the methods and models specified in sub-paragraph 7.2.4 and paragraph 9.2 of this Law, as well as conclusions of the risk analysis specified in paragraph 20.4, risk management measures such as assessment, distribution, reduction, and control of project risks to be implemented through partnership are planned.

20.7.When assessing the impact and risks of the project budget, the project team shall cooperate with the state central administrative organization in charge of financial and budgetary matters, and in accordance with the model specified in paragraph 9.2 of this Law, the impact and risk of the project on the budget shall be assessed, as well as whether direct or indirect payment obligations and responsibilities shall be created in the budget according to the partnership agreement.

20.8.In the event that the project team concludes that the partnership project is high-risk based on the budget risk assessment and that the state cannot provide the support specified in sub-paragraph 20.4.7 of this Law, it shall make a proposal to withdraw the proposal for the project to be implemented through partnership, make amendments  to the development policy document, and change the source of the project. .

20.9.The project team may organize a discussion with the public, citizens, Government and other organizations about the project and get their opinions.

20.10.Depending on results of complete analysis of the project, the project team may make a proposal for joint implementation if it is considered efficient to combine some related projects to be implemented in partnership.

Article 21.Determining partnership project, and making a decision

21.1.The partnership project team determines that the project is suitable for implementation by partnership, the project shall be submitted to the state central administrative body in charge of partnership and sector matters, together with the complete project documents, within 5 working days after full analysis and conclusion.

21.2.The project team shall submit a checklist containing the following information in the project documentation package:

21.2.1.The following information related to state partners shall be included in the checklist specified in paragraph 21.2 of this Law:

21.2.1.a.capacity to provide advice and support for financial resources and partnerships;

21.2.1.b.information of employees and specialists of state authorities;

21.2.1.c.level of interest and support for partnership implementation at management level;

21.2.1.d.other relevant factors.

21.2.2.the following partnership information shall be reflected in the checklist specified in paragraph 21.2 of this Law:

21.2.2.a.project information, presentation, readiness for project implementation, total cost of the project, period of operation, implementation schedule;

21.2.2.b.the original project of the partnership, which includes the need for project implementation, risk analysis, risk distribution proposal and all other issues;

21.2.2.c.type of partnership, financing schedule to be financed from the budget, users' fees research, cost and benefit calculation, project financing information;

21.2.2.d.description of construction and operation of the project;

21.2.2.e.State authority that shall support and cooperate with the implementation of the project;

21.2.2.f.type of Government support required to implement the project;

21.2.2.g.social protection, environmental impact, ensuring gender equality, climate risks and challenges, measures to reduce them;

21.2.2.h.other related factors.

21.3.Based on full analysis of the partnership project and the risk assessment report, the state central administrative body in charge of partnership matters shall submit the proposal to implement the project in partnership with a draft decision of the Government to the state central administrative body in charge of finance and budgetary matters within 15 working days.

21.4.The state central administrative body in charge of finance and budgetary matters shall review the complete analysis report and conclusion of the project and whether it meets the requirements specified in this Law, and submit the permission for discussion at the Cabinet meeting to the central state administrative body in charge of partnership within 15 working days.

21.5.The state central administrative body in charge of financial and budgetary issues shall base the following calculations and studies on granting permission:

21.5.1.general conditions, demand, supply, tariffs, market variable indicators approved on detailed technical and economic grounds, and risk conclusions made on them;

21.5.2.opinions and conclusions about the impact on the budget, risks, flows to be included in the budget and investment costs and allowances within the framework of government support, and their compliance with the special requirements of the Law on Budget Stability;

21.5.3.analysis of potential liabilities to the budget within the support provided by the government, types of guarantees issued by the government, opinions and conclusions on whether it meets the requirements stipulated in the Law on Budget Stability and Debt Management.

21.6.Based on the approval of the state central administrative body in charge of partnership matters, the proposal of the partnership project shall be submitted to the Government within 5 working days.

21.7.The Government shall make a decision on whether or not to implement a project approved by the central state administrative organization in charge of finance and budget issues in accordance with Article 20 of this Law.

21.8.The state central administrative body in charge of partnership and sector matters shall organize activities of announcing the approved partnership project and selecting the private sector partner to implement the project in accordance with sub-paragraph 21.7 of this Law.

21.9.Duration of selection of private sector partners shall be governed by the selection procedures specified in sub-paragraph 7.2.2 of this Law.

21.10.If the state central administrative body in charge of partnership matters determines that the project is not suitable for implementation through partnership after a complete analysis of the project specified in this Law, it shall decide to return the project to the project initiator.

Article 22.Initiating partnership project by private sector

22.1.The private sector may submit a proposal for the implementation of a project with the purpose of providing public infrastructure and public services in partnership, and the project proposal shall be submitted to the state central administrative body in charge of the sector.

22.2.The state central administrative body in charge of the sector shall conduct a preliminary assessment of the project proposal submitted by the private sector and submit it to the state central administrative body in charge of partnership matters.

22.3.In connection with the project, detailed technical and economic basis, environmental impact assessment, project implementation principles and technological solutions shall be obtained from the private sector, and based on that, the project team, specified in paragraph 20.2 of this Law, shall conduct a full analysis to determine whether the project is suitable for partnership implementation.

22.4.In accordance with paragraph 22.3 of this Law, the state central administrative body in charge of partnership and sector matters shall examine the following matters when evaluating project proposals:

22.4.1.whether the project can be effectively implemented without using the intellectual property, business secrets and other special rights of the project initiator;

22.4.2.whether any payment or contingent payment obligation or liability will arise from the budget for the implementation of the project;

22.4.3.whether the technological solution of the project is innovative.

22.5.When evaluating project proposals initiated by the private sector, intellectual property and business secrets related to the project proposal and information submitted by the project initiator will be used only for official evaluation purposes.

22.6.The project initiator private sector shall finance costs related to full analysis of the project proposal with its own funds.

22.7.Requirements, conditions and procedures specified in this Law shall apply to project proposals initiated by the private sector.

22.8.If, after a full analysis of a project initiated by the private sector, it is found to be unimportant and inefficient for implementation through partnership, the proposal for the project will be returned to the person who made the proposal.

22.9.If it is determined that a project initiated by the private sector is suitable for implementation through partnership, a selection of a private sector partner to implement the project shall be organized in accordance with this Law.

22.10.When participating in the selection, the private sector project initiator is subject to the same evaluation criteria as any other participant, and has the right to receive priority points specified in the selection procedure.

22.11.In the event that a specific offer is not received during the selection period, negotiations will be held with the participant who submitted the first offer, and if a decision is reached to conclude a contract, a partnership agreement will be concluded in accordance with this Law.

22.12.Regardless of whether the project is supported or not, the expenses specified in paragraph 22.6 of this Law will not be refunded.

CHAPTER FOUR

ANNOUNCEMENT OF PARTNERSHIP PROJECTS AND SELECTION OF PRIVATE PARTNERS

Article 23.Announcement of partnership project

23.1.The state central administrative body in charge of partnership matters may pre-announce partnership projects for up to 12 months after a preliminary assessment has been conducted and included in the development policy document in order to conduct market research, attract investment, and identify private sector partners.

23.2.Pre-announcement of the partnership project aims to inform the public interested in the partnership project, to attract private sector partner investments, and to make research.

23.3.The preliminary assessment stipulated in Article 19 of this Law must be carried out in the project to be implemented through the previously announced partnership, and the full analysis stipulated in Article 20 of this Law may not be carried out.

23.4.Pre-announcement of the partnership project shall not be considered as a decision to implement the project through partnership, and shall not oblige to announce the selection of the private sector partner.

23.5.The private sector interested in implementing a pre-announced partnership project may submit a proposal expressing its interest in implementing the project to the state central administrative body in charge of partnership matters in accordance with paragraph 22.1 of this Law.

23.6.The state central administrative body in charge of partnership matters shall regularly organize activities to inform the public about partnership projects in cooperation with the partnership center.

Article 24.Announcing a selection and informing the public

24.1.Pursuant to the decision of the Government specified in paragraph 21.7 of this Law, the state central administrative body in charge of partnership matters shall establish a project selection working group /hereinafter referred to as "working group"/ from time to time in cooperation with the state central administrative body in charge of the sector matters, a selection process will be held to select a private sector partner to implement the project.

24.2.At least 30 percent of members of the working group are external independent members.

24.3.The working group will prepare the selection documents according to the standard documents, contract models, selection procedures and methods approved by the Government.

24.4.The working group is responsible for providing information to the public by announcing the project selection invitation through the media, uploading it to the website of the state central administrative body in charge of partnership matters, making presentations about the selection, and organizing meetings.

24.5.When organizing the selection process, participants shall create conditions for equal participation, provide information, set requirements, and adhere to the principles of transparency in the selection process.

24.6.Activities of accepting and evaluating proposals of private sector partners shall be open to the public, and the working group will work to ensure the availability of information in order to transparently and openly announce and provide information about the selection process, and to ensure the balance of competition.

24.7.The state central administrative body in charge of partnership matters shall inform and present results of the selection of private sector partners openly to other participants and the public, and shall work to ensure the transparency of the selection process.

Article 25.Stages of selection of private sector partners

25.1.The selection of private sector partners has the following 2 stages:

25.1.1.preliminary selection;

25.1.2.competitive selection.

25.2.During the preliminary selection stage, the following activities shall be organized:

25.2.1.the working group prepares pre-selection documents in accordance with the relevant regulations and has them approved by the state central administrative body in charge of partnership matters;

25.2.2.In addition to what is specified in the relevant regulations, the pre-selection document shall include criteria for the following information:

25.2.2.a.presentation of the partnership project, project tasks, technical specifications, standard forms, information and explanations about the state partner implementing the project;

25.2.2.b.information about the main factors of the partnership project, the services provided by the private sector partner, and the support provided by the Government;

25.2.2.c.financial, management, and human resource capacity of the private sector partner in implementing the project, experience in implementing similar projects;

25.2.2.d.selection criteria, selection stages, methods, instructions to participants, form and time for sending documents;

25.2.2.e.other required documents and information.

25.2.3.announce a preliminary selection;

25.2.4.the working group organizes meetings and discussions with state partner organizations and provides information about documents related to the project;

25.2.5.accept proposals from the private sector to participate in the preliminary selection and issue selection documents for the preliminary selection;

25.2.6.evaluate whether the project proposals submitted by the private sector in the preliminary selection meet the selection requirements, and if they do not meet the requirements, notify the participants within the period specified in sub-paragraph 25.2.7 of this Law;

25.2.7.prepare a summary list of the participants who meet requirements for the implementation of the partnership project or pass the pre-selection, and deliver the notice of participation in the next selection within 5 working days after the summary list is issued.

25.3.In accordance with sub-paragraph 25.1.1 of this Law, the period for submission of proposals for participation in the pre-selection of private sector partners shall be no less than 2 months after the announcement of selection process.

25.4.The participant who meets the requirements of this Law shall submit the project proposals prepared in accordance with the pre-qualification documents in a sealed manner to the working group, and the proposals shall be registered in the order of the submission period.

25.5.Participants who meet the pre-selection criteria shall submit a notification for participation in the competitive selection in accordance with sub-paragraph 25.2.7 of this Law.

25.6.The following activities will be organized during the competitive stage:

25.6.1.develop the model and criteria of the partnership agreement and have it approved by the state central administrative body in charge of partnership matters;

25.6.2.in addition to the relevant regulations, the tender documents shall include the following information:

25.6.2.a.main terms of the partnership agreement;

25.6.2.b.requirements for participants;

25.6.2.c.selection criteria and methods of selection, instructions to participants, form and time for sending documents;

25.6.2.d.other required documents and information.

25.6.3.issue selection documents to the participants that reflect the terms of a contract;

25.6.4.organize meetings and discussions consisting of representatives of participants, working groups, state partner organizations, financiers, and persons related to the project;

25.6.5.a participant shall prepare and submit the project documents reflecting conditions of the contract in accordance with this Law and relevant regulations;

25.6.6.receive the participant's competitive selection documents;

25.6.7.the working group evaluates the proposals submitted by the private sector and selects them sequentially, starting with the proposals with the best conditions;

25.6.8.evaluate tender proposals and deliver notices to qualified and unqualified participants;

25.6.9.the working group negotiates the terms of the contract with the selected participant;

25.6.10.the state central administrative body in charge of partnership matters informs the state central administrative body in charge of finance and budgetary matters about the selection results and submits a request for permission to conclude a contract with the selected participant;

25.6.11.The state central administrative body in charge of finance and budgetary matters shall review the proposal of the negotiated project, and if it meets the requirements set forth in this Law, the permission to enter into a partnership agreement will be sent to the state central administrative body in charge of partnership matters.

25.6.12.in case the state central administrative body in charge of partnership matters has been granted permission to enter into an agreement specified in sub-paragraph 25.6.11 of this Law, the proposal and conclusion of entering into an agreement with a partner shall be considered by the Government;

25.6.13.according to the decision of the Government, to conclude a contract with a private sector partner and inform the public.

25.7.The period of development of the project documents of the private sector participant in the competitive selection shall be reflected in the project documents.

25.8.In the event that the state central administrative body in charge of partnership matters and the private sector stakeholders mutually agree that needs and requirements of the project need to be changed or improved, the general requirements mentioned in the information specified in sub-paragraphs 25.2.2 and 25.6.2 of this Law on the partnership project and main requirements of the agreement between the parties, project documents can be changed without changing the terms.

25.9.Falsified or incomplete submission of project proposal documents shall be grounds for withdrawal of the participant's project proposal.

Article 26.Selection of a private sector partner and decision to enter into a partnership agreement

26.1.The state central administrative body in charge of partnership matters is obliged to publicly inform and present results of the preliminary and competitive selection specified in paragraph 25.1 of this Law to other participants and the public.

26.2.The working group will start negotiations and evaluate the project proposal with the best conditions in accordance with sub-paragraph 25.6.7 of this Law.

26.3.The state central administrative body in charge of partnership matters shall, as a result of negotiations, draw a conclusion on the conclusion of a partnership agreement with one participant who has mutually agreed on the terms of the contract, and submit the conclusion to the state central administrative body in charge of finance and budgetary matters within 5 working days.

26.4.The state central administrative body in charge of finance and budgetary matters shall review results of the selection process, negotiations with the partner, and the conclusion of the working group from the perspective of the impact on the budget and risks, and shall issue approval for the conclusion of the partnership agreement within 10 working days.

26.5.In case the state central administrative body in charge of finance and budgetary matters grants permission to enter into a partnership agreement, the state central administrative body in charge of partnership matters shall present proposals and conclusions on conclusion of the partnership agreement to the Government and make a decision on whether to enter into the partnership agreement.

Article 27.Requirements for participants

27.1.The participant in the selection process as a private sector partner must meet the following basic requirements:

27.1.1.have the financial capacity, management, professional human resources, technical and technological skills, and work experience to implement the project;

27.1.2.in accordance with the Law on Permits, the requirements for obtaining the permit must be met for business activities conducted with ordinary permits or licenses;

27.1.3.liquidation or bankruptcy of the said legal entity has not been initiated, its assets have not been sealed, and its activities have not been terminated in accordance with legislation;

27.1.4.in last 3 years, there has been no valid court decision on non-fulfillment of the partnership agreement;

27.1.5.shareholder of the legal entity and the authorized official of the company must not have been convicted, have no common interest with an executive officer of the state partner, or are not related parties, and have no conflict of interest;

27.1.6.the final owner of the company participating in the selection process and the dependent and subsidiary companies must not be related to each other;

27.1.7.participants in the selection process should not be related to each other according to sub-paragraph 4.1.6 of the Law on Competition.

27.2.In connection with the partnership project, special requirements other than those specified in paragraph 27.1 of this Law may be set by the selection document for participants as private sector partners.

27.3.Participant as a private sector partner shall provide information on meeting the requirements set forth in this Law according to the selection document.

27.4.If it is determined by the court that a person participating as a private sector partner has submitted false documents while participating in the selection process, he/she is not allowed to participate in partnership projects and activities for 5 years after the final court decision.

27.5.The state central administrative body in charge of partnership matters shall maintain the register of persons whose rights are restricted as specified in paragraph 27.4 of this Law and shall make it available to the public in the organization's electronic database.

27.6.In the event of a conflict of interest as stipulated in the law on regulation of public and private interests and prevention of conflict of interest in public service, the person shall not be included in the partnership.

CHAPTER FIVE

PARTNERS' FUNCTIONS, RISK MANAGEMENT, PARTNERSHIP GUARANTEE AND SUPPORT

Article 28.Functions of partnering parties

28.1.In the partnership, the state partner has the following common functions:

28.1.1.to monitor activities of the private sector partner related to the implementation of the project, to involve an audit organization in accordance with the partnership agreement and relevant legislation;

28.1.2.to obtain necessary documents within the framework of the partnership agreement and unimpeded access to the object;

28.1.3.to ensure an implementation of partnership projects, contracts and laws, monitor, evaluate, and give opinions;

28.1.4.to create conditions for ownership and use of infrastructure facilities by private sector partners in accordance with the partnership agreement;

28.1.5.based on terms and conditions specified in the partnership agreement, grant rights of partnership objects to private sector partners;

28.1.6.to fund the project costs from the budget according to the partnership agreement;

28.1.7.implementation of Government support measures necessary for the implementation of the project in cases specified in the partnership agreement;

28.1.8.to establish, monitor, evaluate and report the quality and level of services provided by the partnership project, as well as the criteria for determining them;

28.1.9.partnership agreement and other functions prescribed by law.

28.2.In the partnership, the private sector partner has the following common functions:

28.2.1.performance-based, high-quality and accessible performance of obligations under the partnership agreement;

28.2.2.formation of investment and financing sources for the partnership project with own funds and other financial means;

28.2.3.to introduce the best practices, innovation and know-how of operations and management in the field;

28.2.4.to strengthen the capacity of own and partner organizations;

28.2.5.to exercise rights related to partnership in accordance with conditions specified in the partnership agreement;

28.2.6.the state central administrative body in charge of partnership, finance and budget matters shall provide the state partner with quality and availability of partnership project services, financial information, reports and information necessary for the implementation of the functions specified in this Law, and be responsible for its accuracy and reliability;

28.2.7.other functions and prescribed by partnership agreement and law.

28.3.The partnering parties shall implement risk management optimally and ensure balance in the partnership according to the terms of risk distribution.

Article 29.Functions of other participants in the partnership  

29.1.In the event that a financier of the partnership project or a party interested in financing the partnership project terminates the contract prematurely due to the obligation to repay the collected loan, the financier's right to intervene shall be exercised in accordance with this Law and the partnership agreement.

29.2.Other parties participating in implementation of the partnership project shall exercise rights and obligations stipulated in the relevant law and the main and ancillary agreements of the partnership.

Article 30.Management of partnership risks

30.1.Partnering parties shall implement a risk management of the partnership project in accordance with the methodology specified in sub-paragraph 7.2.4 of this Law in order to study and identify, allocate, reduce and control risks of the project to be implemented through the partnership.

30.2.Arrangements related to risk distribution, risk prevention, and risk resolution between the partnering parties shall be included in the partnership agreement.

30.3.When allocating risks, taking into account the specifics of the project, the ratio of price and quality shall be maintained, and the risk shall be allocated to the partner who can better solve the risk at a lower cost, or ensure appropriateness of risk allocation.

30.4.Depending on characteristics of the partnership project, based on risk analysis, the risk may be allocated to private sector partners or state partners, and some parts to consumers and insurance companies.

Article 31.The Government guarantee  

31.1.Based on results of full analysis of the project, the Government may provide the following guarantees for projects implemented through partnership:

31.1.1.guarantee of an obligation to finance the partnership project from the budget in case of violation of the partnership agreement and ancillary agreements established along with it, and their main conditions;

31.1.2.purchase of goods, works and services created during the implementation of the partnership project, use and guarantee of use for public needs.

31.2.Member of the Government in charge of finance and budgetary matters shall present to the Government and resolve the matter of issuing the guarantees specified in paragraph 31.1 of this Law and in connection with this, entering into a contract with the private sector partner.

31.3.The guarantee specified in paragraph 31.1 of this Law does not apply to the Government's debt guarantee, and issues related to issuance of the guarantee and the conclusion of the contract shall be regulated in accordance with the procedure specified in sub-paragraph 7.2.5 of this Law.

31.4.In the event that the Government issues a debt guarantee for the loan necessary for the implementation of the partnership project based on full analysis of the project specified in this Law, private sector partners may issue the Government debt guarantee in accordance with conditions and requirements specified in the Law on Debt Management and the special budget requirements specified in the Law on Budget Stability.

31.5.Pursuant to paragraph 31.4 of this Law, the issue of Government debt guarantee shall be governed by the Law on Debt Management.

Article 32.The Government support

32.1.According to a decision of the Government, within the framework of the partnership agreement, private sector partners may be provided with the following support:

32.1.1.to be provided with rights to possess and use land in accordance with the Law on Land;

32.1.2.to be provided with conditions for the provision of public services, to grant a right to use state and local property assets;

32.1.3.to be provided with tax benefits and exemptions in accordance with relevant legislation;

32.1.4.according to the partnership agreement, finance a certain part of project financing from the budget;

32.1.5.to insure partnership objects if necessary;

32.1.6.to provide public infrastructure and public services necessary for the implementation of projects other than those created through partnership projects;

32.1.7.to provide support in other forms prescribed by law.

32.2.In accordance with the partnership agreement, the state partner may transfer the exclusive rights of intellectual property belonging to the state property, which are necessary to fulfill obligations of the private sector partner under the agreement, under certain conditions and periods.

32.3.The total amount to be financed from the budget related to the implementation of the partnership project cannot exceed the total cost of the project.

32.4.Government support for partnerships shall be implemented within the framework of relevant laws and partnership agreements.

CHAPTER FIVE

PARTNERSHIP AGREEMENT

Article 33.Partnership agreement

33.1.The partnership agreement and ancillary agreements shall be civil law agreements based on the principle of equal rights and shall not be subject to provisions of the General Administrative Law.

33.2.The parties to the partnership agreement are, on the part of the state partner, the state central administrative body in charge of the sector and partnership matters related to the project, representatives of local organization where the project will be implemented, and on the other hand, the private sector partner or the project implementing company, a legal entity financing the project.

33.3.The partnership agreement shall be signed and confirmed by a member of Government member in charge of the project implementation sector and partnership, and a governor of the aimag or capital city representing the locality where the project will be implemented.

33.4.Public and private partners have a right to enter into a partnership agreement under conditions stipulated in this Law, and the partnering parties shall participate in the agreement with equal rights.

33.5.The Government shall grant the right to conclude a partnership agreement.

33.6.Type and form of the agreement shall be determined in accordance with the nature of partnership project implementation and specifics of the work to be performed under the project.

33.7.Parties to the partnership agreement are fully responsible for and fulfill the obligations and responsibilities assumed by the agreement and participate in the partnership relationship within the scope of functions and powers specified in this Law and the agreement.

33.8.When concluding a partnership agreement, ancillary agreements, project milestones, contract payments, financing schedules, implementation plans, and other relevant documents shall be included as attachments, and these shall be an integral part of the partnership agreement.

33.9.Template of the partnership agreement will be developed by the state central administrative organization in charge of partnership matters and approved by the Government.

33.10.It is prohibited to enter into a partnership agreement for a project that does not meet the conditions and requirements specified in this Law and is not included in the partnership specified in paragraph 3.2 of this Law.

Article 34.Including an obligation to finance from the budget of partnership agreement in the budget

34.1.In accordance with conditions and requirements set forth in this Law, the partnering parties mutually agree to implement the partnership project, and citizens and communities who signed the partnership agreement and started receiving products and services of the partnership project shall be the basis for recording financial and other related obligations of the state partner related to the partnership and including them in the budget project.

34.2.Upon a conclusion of the partnership agreement, the record of the project shall be entered in the database of the partnership in section of the ongoing project and in the record of contingent liabilities.

34.3.In accordance with the Law on Debt Management and the Budget, payment obligations of the partnership agreement shall be recorded as contingent liabilities in accordance with the period of implementation, and shall be included in the mid-term budget framework statement and an annual budget draft.

34.4.The state central administrative body in charge of finance and budgetary matters shall review the information, impact on the budget, risk assessment and analysis of the partnership agreement submitted by the state central administrative body in charge of partnership matters, and the budget financing according to the partnership agreement shall be included in an annual budget draft based on the implementation and performance of the project.

Article 35.Terms of partnership agreement  

35.1.Terms of the partnership agreement shall be flexibly determined in accordance with functions of partnering parties, terms and conditions of the sector in which the project will be implemented, and the principle of partnership stipulated in this Law shall be governed.

35.2.The following main conditions are included in the partnership agreement:

35.2.1.scope of partnership, types and amounts of work and services, rights and obligations of private sector partners;

35.2.2.information about the duration of the project, partnership objects, property rights related to the duration of the project;

35.2.3.legislation to be followed in the agreement, explanation of terms used in the agreement;

35.2.4.rights, duties and responsibilities of parties to the partnership agreement;

35.2.5.risk distribution and risk management between partnering parties;

35.2.6.project investment source, amount and plan;

35.2.7.determine the type of partnership and finance the project costs in the manner specified in paragraph 14.1 of this Law;

35.2.8.type, amount, period and conditions of the Government's guarantee and support provided by the Government, in case the parties agree on the sources of compensation and income for the project;

35.2.9.conditions for delivery of public services during the period of the partnership agreement at a price consistent with financial capacity of the Government and users;

35.2.10.support from the Government in obtaining necessary licenses for implementation of the project;

35.2.11.rights of the partnering parties regarding income from partnership activities, services, or buildings and assets for projects that can generate income;

35.2.12.quality requirements and standard conditions for goods, works and services created within the framework of partnership;

35.2.13.procedures for determining and approving the amount of user fees, charges, and tariffs for goods, works, and services created within the project;

35.2.14.goods, works and services to be purchased within the project;

35.2.15.a procedure for appointing sub-contractors and persons responsible for repair, maintenance, and service of partnership objects, and concluding subcontracts;

35.2.16.requirements regarding labor hygiene and safety conditions, norms, rules, and standard conditions;

35.2.17.right to protect one's investment, to have a foreign currency account in a bank in Mongolia or abroad, to trade in foreign currency, to withdraw and convert income;

35.2.18.determine the monetary value of partnership objects, review and confirm whether terms of ancillary agreements, expansion, repair and maintenance of buildings and facilities, and services meet an approved design, set requirements, and quality standards;

35.2.19.conditions limiting rights and activities of the private sector partner within the partnership;

35.2.20.project implementation guarantees, securities, other guarantee instruments and insurance contracts issued by the private sector partner for the implementation of the partnership;

35.2.21.implementation of the partnership agreement, project implementation, monitoring and evaluation of results;

35.2.22.control of works and services performed by the private sector partner by the relevant state authority and, if necessary, grounds for limiting conditions of works and services;

35.2.23.regulation of other measures necessary for the implementation of public services in accordance with the relevant legislation and the partnership agreement within the framework of the proper implementation of the partnership project;

35.2.24.provisions related to project stability, environment, society and community;

35.2.25.duty of the private sector partner to report on the implementation and operation of the project and to provide necessary information to the state partner;

35.2.26.right of the state partner to control and approve large-scale and conflict of interest contracts and agreements with shareholders or other related parties related to the financial capacity of the private sector partner to implement the partnership;

35.2.27.rights and obligations of the parties related to transparency of the partnership agreement and project implementation information, and confidentiality of information;

35.2.28.period and conditions of possession and use of assets transferred under the partnership agreement;

35.2.29.rights and obligations of the parties after termination of the partnership, the measures to be taken by the parties in the event of a violation, a right of the state partner and a borrower to assume obligations on behalf of others;

35.2.30.dispute resolution procedure within the partnership;

35.2.31.conditions for making amendments, or termination of the partnership agreement, grounds for unilateral withdrawal from the partnership agreement;

35.2.32.criteria for evaluating the fulfillment of obligations assumed by the parties under the partnership agreement, regulation of liability in case of non-fulfillment of obligations or non-fulfillment of obligations;

35.2.33.return of partnership objects upon termination of the partnership agreement, method of calculating compensation to the parties in case of termination of the partnership agreement;

35.2.34.full name of the parties to the partnership agreement, place of residence /legal entity's official address/, bank information, information about a person authorized to represent the parties;

35.2.35.conditions for the parties to be released from liability if they fail to fulfill their contractual obligations or are delayed due to sudden or force majeure or unforeseeable circumstances;

35.2.36.grounds for termination or cancellation of the partnership agreement, terms and amount of compensation;

35.2.37.other relevant conditions required by the agreement.

35.3.In case of specific requirements for a specific type of partnership to be implemented by the partnership agreement, requirements shall be determined by relevant legislation.

Article 36.Duration of partnership agreement

36.1.The term of the partnership agreement shall be determined by mutual agreement of the parties depending on the sector of the project implementation, the main nature of the project and type of agreement.

36.2.The term of the partnership agreement does not exceed 30 years.

36.3.The following factors shall be taken into account when determining the term of the partnership agreement:

36.3.1.conditions and amount of private investment;

36.3.2.the period of construction, commissioning, expansion, and improvement of infrastructure and buildings within the project;

36.3.3.depreciation period of project infrastructure and buildings;

36.3.4.construction according to laws, rules, regulations, norms and standards facility operation and service requirements;

36.3.5.policies related to competition and market system established by law in the infrastructure and service sector.

Article 37.Conditions for negotiation and conclusion of agreement

37.1.In the following cases, an agreement may be concluded with a private sector partner for the implementation of the partnership project specified in paragraph 21.7 of this Law without the selection process specified in Article 25 of this Law:

37.1.1.if works or services can be performed only by an owner of the intellectual property rights, or by only one official person who has received the right to use it according to the license agreement, in accordance with requirements of the protection of intellectual property rights;

37.1.2.If the project is implemented urgently in connection with meeting needs and requirements arising from establishment of a state of emergency or transfer to the general preparedness for disaster protection.

37.2.Proposals specified in paragraph 37.1 of this Law shall be made by the state central administrative body in charge of partnership and sector matters, presented to the Government for decision, and an issue of concluding a contract shall be regulated in accordance with the procedure specified in sub-paragraph 7.2.3 of this Law.

37.3.Relations other than the selection of partnership projects with a condition of concluding an agreement through negotiation shall meet conditions and requirements stipulated in this Law.

37.4.It is prohibited to negotiate and enter into an agreement except as specified in paragraph 37.1 of this Law.

37.5.An official who makes a decision to enter into a contract in violation of paragraph 37.1 of this Law shall be responsible for paying damages related to that decision with his/her own funds, and it is prohibited to issue funds from the budget.

Article 38.Confidentiality of partnership agreement

38.1.The relevant official of the state partner organization is responsible for maintaining legally protected secrets submitted by the private sector during conclusion of the partnership agreement and negotiations.

Article 39.Amendments and renewals of partnership agreements

39.1.Based on approval of the state central administrative body in charge of finance and budgetary matters, the Government shall decide on issue of amendments to the partnership agreement in the following cases with a proposal of the state central administrative body in charge of partnership matters:

39.1.1.the important relations of the content of the partnership agreement has completely and significantly changed since the conclusion of the agreement, if it is determined that one of the parties to the agreement will no longer be able to adhere to the original arrangement of the agreement, and if the parties request changes to the partnership agreement;

39.1.2.due to sudden, force majeure or unforeseen circumstances, technical specifications of the project or agreed total amount of investment have changed, a detailed technical and economic feasibility report has changed according to the law, or unexpected or force majeure factors have arisen, and the agreement shall be amended or amended if the parties mutually agree;

39.1.3.if the state partner expands the scope of the partnership agreement and needs to perform additional works and services by the private sector partner that are not included in the original agreement, but it is necessary.

39.2.The additional works and services of the partnership project specified in sub-paragraph 39.1.3 of this Law shall meet the following requirements:

39.2.1.in terms of economic and technical solutions, currently used equipment, works and services performed within the framework of the original agreement should be coordinated, interdependent and interchangeable;

39.2.2.If it is not in the public interest to have another private sector partner, it will require more work and time for the state partner, and additional costs will be incurred.

39.3.If the issue of amendments to the partnership agreement will increase the value of the originally agreed agreement by more than 15 percent, or if it has an effect of the private sector partner providing additional works and services not specified in the original agreement, the state central administrative body in charge of partnership matters will decide whether to amend the agreement or not by obtaining permission from the state central administrative organization in charge of finance and budgetary matters, discuss and decide at the Government meeting.

39.4.When making amendments to the partnership agreement, it is prohibited to change the main terms of the partnership agreement.

39.5.The state partner has a right to terminate the partnership agreement without renewing it when the term of the partnership agreement expires, and the parties may agree to extend the term of the agreement in the following cases:

39.5.1.due to unexpected or force majeure circumstances beyond the control of one of the parties to the agreement, the operation of the project was stopped;

39.5.2.the total cost of the project increased to meet the requirements not included in the partnership agreement issued by the state partner, and the private sector partner could not cover the cost without extending the contract period.

39.6.The parties may extend the term of the contract for up to 10 years once, based on the Government's approval, based on requirements and grounds specified in this Law and the agreement.

Article 40.Termination and cancellation of partnership agreement

40.1.The partnership agreement shall be terminated in the following cases:

40.1.1.validity period of the partnership agreement has expired and the parties have not applied for an extension;

40.1.2.one party to the partnership agreement violated contractual obligations and did not take effective measures to remedy the violation;

40.1.3.a sudden or force majeure event has occurred and cannot be eliminated;

40.1.4.unless otherwise specified by law or the partnership agreement, the private sector partner becomes insolvent or liquidated;

40.1.5.the agreement is terminated in accordance with this Law and the partnership agreement.

40.2.Unless otherwise specified in the partnership agreement, the partnership agreement shall be terminated/cancelled at the initiative of the state partner in the following cases:

40.2.1.serious breach of the agreement by the private sector partner, failure to fulfill contractual obligations, or failure to properly fulfill them, is a reason for termination of the agreement according to the agreement;

40.2.2.if impossibility of implementing the partnership project due to liquidation of the private sector partner will cause damage to the public interest, to prevent such damage or eliminate it;

40.2.3.if it is determined that the partnership agreement was concluded in violation of this Law and other legislation.

40.3.Unless otherwise specified in the partnership agreement, the agreement may be terminated at the initiative of the private sector partner in the following cases:

40.3.1.the partnership project was suspended due to wrongful actions of the state partner organization;

40.3.2.the state partner organization intervened in the business activities of the private sector partner and made illegal decisions or took prohibited measures that made it impossible for the private sector partner to further fulfill its obligations under the partnership agreement;

40.3.3.it was found that there was a debt before entering into the agreement on the land, other movable or immovable property owned and used by the private sector partner for implementation of the partnership project, or there were violations that the private sector partner did not know at the time of entering into the agreement, and these are situations that make it impossible for the agreement to continue normally.

40.4.The agreement shall specify how to calculate the compensation to be given to the parties upon termination of the partnership agreement, and may include the appropriate value of the work performed under the partnership agreement, expenses incurred, and actual damages suffered by that party.

40.5.Unless otherwise specified in this Law and the partnership agreement, issues related to transfer of rights, possession, use, and disposal of partnership objects upon termination of the agreement shall be regulated in accordance with Chapter 7 of this Law.

CHAPTER SEVEN

IMPLEMENTATION OF PARTNERSHIP PROJECT

Article 41.Rights of place where the project will be implemented

41.1.The private sector partner shall exercise a right to own and use the land necessary for project implementation in accordance with the partnership agreement and relevant legislation.

41.2.Rights of the project land and its transfer shall be detailed in the partnership agreement, and before a decision to implement the project, the feasibility of the project land shall be studied and, if necessary, it shall be decided whether to replace or reclaim the project land.

41.3.The state partner undertakes the following duties related to the project implementation area:

41.3.1.to replace, reclaim and, if necessary, buy the land owned, possessed or used by others, which is necessary for implementation of the project, with compensation in accordance with the relevant laws;

41.3.2.to use state-owned land for private sector partnership according to certain conditions and contracts;

41.3.3.to provide conditions and opportunities for the private sector partner to enter and pass through the land owned by a third party, to perform work and maintenance on the owned land;

41.3.4.to establish a temporary easement on the public land of the project implementation area;

41.3.5.not to interfere the private partner to use the land according to the purpose specified in the partnership agreement, and to provide conditions and opportunities for carrying out works and services on the said land;

41.3.6.not to illegally confiscate a right to own and use the project land from other state authorities.

41.4.Unless otherwise specified in the law or the agreement, the private sector partner is not allowed to partially lease or transfer the project land to a third party for the purpose of making additional profit outside the scope of the project.

Article 42.Structure and organization of private sector partners and special-purposed companies for project implementation

42.1.In the partnership agreement, the private sector partner or other company nominated by him/her may establish a special purposed company for the purpose of implementing the project.

42.2.Special purposed company for the project shall established and registered in accordance with the Law on Company.

42.3.A foreign legal entity registered in a foreign country may own part or all of the shares of a special purposed company for project implementation.

42.4.A foreign legal entity registered in a foreign country may participate in the private sector partner selection process and submit proposals together with a Mongolian legal entity.

42.5.State authorities, state-owned and local-owned legal entities, state-owned and local-dominated legal entities and their authorized officials are not eligible to participate in the selection of private sector partners.

42.6.It is prohibited to be a partner company of the private sector or a shareholder of a special purposed company.

42.7.In the event that rules of the special purposed company need to be changed during the implementation of the project, or changes of an owner of the company, the state partner will be informed and permission will be sought, and the permission must not be delayed without reason.

42.8.In the period after registration of the special purposed company as a legal entity, rules and procedures for changing the amount of the company's equity capital and obtaining permission from the state partner, as well as the conditions for making fundamental changes to them, shall be specified in the partnership agreement, and these conditions and procedures shall be the same as those specified in the initial selection document.

Article 43.Ownership and registration of project properties

43.1.The ownership of project assets shall be regulated by relevant laws and partnership agreements and may be included in the agreement as follows:

43.1.1.assets to be transferred to state partner entities;

43.1.2.assets to be purchased by the state partner;

43.1.3.assets that remain in the ownership of the private sector partner.

43.2.Unless otherwise specified in the partnership agreement, object of partnership belongs to state and local property.

43.3.Physical assets and intellectual property, intellectual values created during the use of partnership objects belong to state or local property.

43.4.Unless otherwise specified in the partnership agreement, profits and income earned during the period of ownership and use of partnership object, other than those specified in paragraph 43.3 of this Law, belong to the property of the private sector partner during the partnership agreement.

43.5.Unless otherwise specified in the partnership agreement, partnership objects, land and other property transferred to the private sector partner for use cannot be further used for the purpose specified in the agreement or are no longer needed, it is prohibited for the state partner or other state authorities and officials to take them back or spend them before the partnership agreement is terminated.

43.6.The private sector partner may own, use and mortgage the partnership object in accordance with terms, conditions, and procedures of the agreement, if specified in the agreement.

43.7.Depending on terms of the partnership agreement, at the end of the term of the agreement, the private sector partner shall transfer any assets created within the framework of the partnership or belonging to the partnership to state or local property in accordance with the agreement.

Article 44.Project investment, collateral, project implementation guarantee

44.1.Private sector partner partnership project investment can be financed from the following sources:

44.1.1.private sector partner's equity;

44.1.2.debt financing;

44.1.3.release certain funds from the budget;

44.1.4.other financial sources.

44.2.Funding and investment from the Development Bank of Mongolia and the Government's special facilities are not included in the sources specified in sub-paragraph 44.1.4 of this Law.

44.3.The total costs related to investment and project implementation of the private sector partner shall be financed in accordance with paragraphs 14.2, 14.3, and 14.4 of this Law.

44.4.The partnership agreement may regulate collateral of the partnership project, and the collateral may be movable or immovable property other than real estate for public ownership, or sales receivables.

44.5.The private sector partner shall notify the state partner in each case when exercising its lien rights in accordance with paragraph 44.4 of this Law, and it is prohibited to lien the rights of project operations and licenses obtained for the purpose of project implementation.

44.6.A shareholder of a private sector partner company may pledge the shares of the project's special purposed company if the state partner agrees.

44.7.The private sector partner shall provide a guarantee that the partnership project will be executed on time in accordance with terms, standards and costs specified in the main and ancillary partnership agreements, and transfer payment to the Partnership Project Development Fund within 5 working days before signing the agreement.

44.8.Depending on type of project and the form of the agreement, the partnering parties shall agree on the percentage of the project implementation guarantee, which shall not exceed 5 percent of the total contract value.

44.9.According to the partnership agreement, the private sector partner has a right to receive rent, fees, and charges related to the use and services of public buildings, and the method of determining the amount of fees and charges, and changing them shall be specified in the partnership agreement.

44.10.Payments and fees paid by users related to the use of public buildings and services by state partners shall be transferred to private partners in accordance with the partnership agreement.

Article 45.Determining users' fees

45.1.The partnership agreement and its attached documents shall clearly state how to determine amounts of users' fees, charges, and tariffs depending on specifics of the project, as well as rights and obligations of the partnership parties in this regard, and the decision to set the amounts of users' fees shall be public.

45.2.Depending on specifics of the project, the state partner may mutually agree on the amounts of users' fees to be included in the partnership agreement in order to work with the private sector partner in the long term and ensure stability, and make a decision in accordance with sub-paragraph 7.1.7 of this Law.

45.3.The state partner shall develop a methodology for determining the amounts of users' fees, charges, and tariffs in accordance with the characteristics of the project, within the framework of calculation of the rate of return, or price restrictions, or a combination of these two methods, and shall include it in the partnership agreement.

45.4.The private sector partner is obliged to comply with the restrictions on the amount of fees, charges and tariffs set by the partnership agreement.

45.5.When determining the users' fees, charges and tariffs in the partnership agreement, it shall be publicly announced and implemented.

Article 46.Transferring the control right of private sector of partnership agreement

46.1.A private sector partner may not transfer rights and obligations under the partnership agreement to others without a consent of the state partner.

46.2.In the event that the state partner has a right to terminate the agreement due to wrongful actions of the private sector partner, or in the event of termination of the agreement or other conditions specified in the agreement, a financier or creditor of the project may exercise the financier's right to intervene in accordance with the agreement.

Interpretation: "The financier's right to intervene" means that a financier or creditor transfers rights and obligations of the private sector partner who violates obligations of the partnership agreement to another person who meets the requirements of this Law, based on consultation with the state partner.

46.3.In the case specified in the partnership agreement, if there is a risk to the public or consumers due to an unexpected or force majeure situation, or if there is a condition for the state partner to terminate the partnership agreement, the state partner shall suspend all or part of the private sector partner's right, and has right to obtain the rights until the situation is removed.

46.4.Shareholder of the private sector partner company may transfer up to 50% of the shares of the special purpose company of the project to a third party with a permission of the state partner, after the completion of public infrastructure and construction works, as specified in the partnership agreement.

46.5.In the case specified in paragraph 46.2 of this Law, the partnership agreement shall specify conditions for granting permission to transfer rights and obligations from the state partner to a third party, and the requirement to prove whether a new partner, who has accepted all contractual obligations, has sufficient technical and financial capacity to provide services.

46.6.The state partner shall exercise control rights specified in the partnership agreement at all stages of the partnership project.

Article 47.Use of public infrastructure buildings

47.1.According to the partnership agreement, relations related to acceptance and use of public infrastructure buildings shall be regulated in accordance with the partnership agreement and relevant legislation.

47.2.The construction, commissioning, testing, use, maintenance, safety, quality and standards of the public infrastructure buildings of the partnership project shall be regulated in accordance with the partnership agreement and relevant legislation.

47.3.The state partner and the professional organization of the sector shall exercise the functions of monitoring the use of public infrastructure buildings and structures.

47.4.The following issues related to the use of public infrastructure and construction projects shall be included in the partnership agreement:

47.4.1.conditions for changing the type of service according to the user's needs;

47.4.2.requirement to ensure continuity and availability of services;

47.4.3.provide services to all customers on equal terms.

47.5.It is prohibited to set restrictions on connection of other users to network of infrastructure and buildings for public purposes under responsibility of the private sector partner.

47.6.With a consent of the state partner, the private sector partner has a right to establish and enforce rules for the use of public infrastructure and buildings.

47.7.When implementing the partnership project, the private sector partner is responsible for meeting the outcome indicators for the infrastructure and public services.

Interpretation: "Outcome Indicator" refers to the services, standards and requirements of the partnership project.

47.8.The private sector partner shall be responsible for any damage caused by failure to meet technical safety and terms and conditions of the partnership agreement, and shall be responsible for compensation with its own funds.

Article 48.Funding and transfer of rights upon termination of partnership agreement

48.1.In connection with the termination of the partnership agreement, the private sector partner shall hand over to the state partner the rights related to movable and immovable property, innovation, know-how, intellectual property, technical documents and project activities owned and used within the project.

48.2.The operations specified in paragraph 48.1 of this Law shall be organized by a joint working group in accordance with conditions and procedures specified in the partnership agreement, and the joint working group shall be established by a decision of the state central administrative body in charge of the partnership and the project sector, including representatives of relevant professional organizations.

48.3.The financial rights and obligations of the partnering parties and the financing party related to the termination of the partnership agreement shall be defined in the partnership agreement, and how to deal with investments, liabilities, compensatory earnings, additional financing, cost overruns, and financial losses.

48.4.In connection with termination of an agreement in accordance with this Law, the Government shall make a decision on additional investment in the project, whether to restart the project, or transfer rights and obligations of the partnership to a third party.

48.5.The following issues related to termination of the agreement and transfer of rights shall be included in the partnership agreement:

48.5.1.procedures for transferring assets to state and local property;

48.5.2.conditions and processes of technology transfer necessary for the operation of public infrastructure and buildings;

48.5.3.training of employees of the state partner, or the new partner of the private sector, which has been transferred to be responsible for operation and maintenance;

48.5.4.service conditions to be continued for a certain period of time after the transfer of rights to the state partner or the next partner to continue the operation, such as the supply of spare parts.

CHAPTER EIGHT

PARTNERSHIP PROJECT DEVELOPMENT FACILITY, PARTNERSHIP TRANSPARENCY, REPORTING AND MONITORING

Article 49.Partnership project development facility, its management

49.1.The partnership project development facility (hereinafter referred to as the "Facility") was established by the Government's decision to implement the partnership stipulated in this Law, to decide on financing, to conduct project preparation, research and selection, to finance costs of consulting services and costs of operation of the partnership center.

49.2.The management of the facility shall be carried out by the state central administrative body in charge of partnership matters.

49.3.The Government shall approve and implement procedures related to management of the facility, management of its assets, formation of sources and monitoring of expenditure.

Article 50.Source of facility, expenditure and monitoring

50.1.Funds of the facility shall be formed from the following sources:

50.1.1.funding provided by the state budget;

50.1.2.concessional loans, aid, donations and other financing provided by international organizations;

50.1.3.facility's investment and partnership project preparation fees, income from partnership center activities;

50.1.4.Government guarantee fee;

50.1.5.others that comply with the law.

50.2.Funds of the facility shall be used for the following activities:

50.2.1.to develop partnerships, to advertise abroad and domestically, to raise public awareness, and to create a transparent and stable environment;

50.2.2.project preparation activities, complete project analysis and risk assessment;

50.2.3.expenses for operation of the partnership center and professional consulting services;

50.2.4.expenses related to selection and negotiation of private sector partners;

50.2.5.other operating expenses included in the fund regulations.

50.3.The administration and management of the facility related to project development will be supervised by the state central administrative body in charge of partnership matters.

50.4.Asset records of the facility shall be maintained in accordance with the Law on Accounting and international standards.

50.5.The facility shall be audited annually by a state audit organization and every three years by an international audit organization, and if necessary, financial control and inspection shall be conducted, and the report and conclusions shall be presented to the Government on a case-by-case basis.

50.6.The state central administrative body in charge of partnership matters is responsible for keeping the facility's operations, capital expenditure, and financial reporting transparent and open to the public, and the facility's income and expenditure reports will be published on the website from time to time.

50.7.It is forbidden to use funds of the facility for purposes other than those specified in this Law.

Article 51.Transparency of partnership

51.1.Partnership activities, information, registration and reporting shall be public and open to the public, except as specified in the legislation on confidentiality and the agreement of the partnering parties.

51.2.The state central administrative body in charge of partnership matters, the partnership center and the state partner shall ensure transparency of partnership in the following form:

51.2.1.to inform and report the activities of the partnership from time to time;

51.2.2.to inform and promote partnership projects;

51.2.3.publicly and transparently regularly report all activities and results of the selection of private sector partners;

51.2.4.to create an integrated database of information about partnership projects, public and private sector partners, maintain and regularly update records;

51.2.5.to report on the implementation of partnership laws and the planning and implementation of partnership projects to the Government and the state central administrative bodies in charge of partnership, financial and budget matters;

51.2.6.to submit and report the information related to the partnership required by the state central administrative body in charge of financial and budgetary matters;

51.2.7.to promote partnership projects through partnership conferences and discussions, inform investors about partnership laws, procedures, and methods;

51.2.8.to regularly inform partnership project evaluation and implementation reports through the partnership website and other information channels.

51.3.The partnership center will regularly organize partnership conferences in cooperation with the state central administrative bodies in charge of partnership, finance and budgetary matters, and other state partner entities, and ensure participation of the public, private sector, state authorities, domestic and foreign investors, and interested parties.

51.4.The state central administrative body in charge of partnership, financial and budgetary matters, and state partner entities shall ensure the transparency of partnership in accordance with the Law on Glass Accounts and Transparency of Public Information.

51.5.The state central administrative body in charge of partnership matters shall, through the partnership center, develop and publish a partnership manual containing recommendations, guidelines and instructions aimed at correct, rational and effective implementation of partnerships based on national and international research and analysis and best practices, and use them in partnership activities.

51.6.The partnership center shall update the partnership manual specified in paragraph 51.5 of this Law, introduce it to public and private sector partner organizations, foreign and domestic investors, and the public, promote and inform the understanding of partnership, and carry out activities related to organizing necessary training and seminars.

51.7.The state central administrative body in charge of the sector shall publish the following information about partnership projects on a website of the integrated database specified in sub-paragraph 12.2.11 of this Law:

51.7.1.details of the partnership project;

51.7.2.amount and term of partnership agreement and subsidiary agreement;

51.7.3.the right to use the assets of the partnership, the obligation to provide services, and rights and obligations related to maintenance.

51.8.The state central administrative body in charge of the relevant sector is obliged to post a copy of the partnership agreement and ancillary agreements in the integrated electronic database of partnership information and inform the public immediately after the partnership agreement is concluded.

Article 52.Database of partnership, reporting

52.1.The state central administrative body in charge of partnership matters and the partnership center shall establish a database of partnership information, update the information on website from time to time, and ensure transparency and openness.

52.2.The private sector partner shall be responsible for the accuracy of information and information of the partnership project, and shall provide the state partner and the state central administrative body in charge of partnership matters with the necessary information in accordance with the procedure specified in paragraph 8.2 of this Law.

52.3.The state central administrative body shall inform the public about the payment and financing of the partnership project and the information related to the guarantee and support of the Government.

52.4.The information specified in paragraph 52.3 of this Law shall reflect the following matters:

52.4.1.budget financing schedule, concessions, rent payments, and contingent liabilities included in the partnership agreement;

52.4.2.funding provided by the state to private sector partners from the budget;

52.4.3.assets registered in the balance sheet of the public and private sector partners;

52.4.4.information on the guarantee issued by the Government in connection with the partnership, its duration, the total financial responsibility of the Government and the budget expenses related to the guarantee.

52.5.The state partner or the state central administrative body in charge of the matter shall submit a report containing information about the project implemented in partnership by April 20 of each year and submit it to the state central administrative body in charge of the partnership matters, and upload and report to the integrated database of the partnership.

52.6.The state central administrative body in charge of partnership matters shall submit an annual consolidated report on partnership to the Government by June 10 of each year.

52.7.The state partner shall include the following issues in the information specified in paragraph 52.5 of this Law:

52.7.1.detailed information and implementation of the partnership project;

52.7.2.schedule and amount of investment, financing, user fees, fees and budget financing of partnership projects;

52.7.3.a right to use partnership objects, an obligation to provide services, a right and obligation to transfer movable and immovable property, plant and equipment to own assets;

52.7.4.an obligation to receive and transfer any assets at the end of the partnership period;

52.7.5.contract extension and termination provisions, other basic operation and maintenance information.

Article 53.Financial statements of private partnerships

53.1.The private sector partner or project implementing company shall issue its financial statements in accordance with the Law on Accounting and undergo an audit in accordance with the Law on Auditing.

53.2.The private sector partner or project implementing company shall follow the appropriate standards stipulated in paragraph 4.1 of the Law on Accounting, and shall prepare accounting and reports related to the project and keep them ready for inspection by the state partner.

53.3.The private sector partner or project implementing company shall submit the audited financial report and other related information to the partnership center and the state partner within 6 months after the end of the financial year.

Article 54.Monitoring of partnership agreement

54.1.The state central administrative and local organizations of the project implementation sector, as well as the state central administrative bodies in charge of partnership and financial and budgetary matters, which are state partners, shall monitor the implementation of the partnership agreement, take relevant measures and cooperate with the implementation of the agreement.

54.2.The partnering parties shall present to the Government from time to time whether the partnership agreement and its implementation meet the conditions stipulated in this Law, and shall cooperate by informing and reporting on the implementation of the project to the public.

54.3.In accordance with paragraph 55.3 of this Law, the State central audit organization shall monitor the implementation of the partnership agreement and submit an audit report with conclusions and recommendations to the Government.

Article 55.Monitoring and evaluation of partnership project implementation

55.1.The state partner will monitor the partnership process and present the project implementation monitoring and evaluation to the state central administrative body in charge of implementation, finance and budgetary matters from time to time in accordance with the agreement.

55.2.The Government may conduct an annual audit of the partnership's activities, the implementation of laws, and the management and expenditure of the facility's assets in accordance with the Law on State Auditing.

55.3.The State central audit organization shall audit the implementation of laws on public-private partnerships, partnership project planning, selection of private sector partner, partnership project implementation, and contract fulfillment.

55.4.The state partner may enter into an agreement with an external evaluation organization for the purpose of external monitoring of project implementation, and the organization shall be responsible for results and accuracy of the monitoring and evaluation in accordance with the relevant legislation.

CHAPTER NINE

MISCELLANEOUS

Article 56.Filing complaint, its resolution

56.1.A dispute resolution council shall be established by the Government's decision to regulate an issue of complaints and dispute resolution related to the selection of private sector partners, as well as to resolve the dispute.

56.2.The composition and working procedures of the council specified in paragraph 56.1 of this Law shall be developed by the state central administrative body in charge of partnership matters, approved and enforced by the Government.

56.3.If the selection of a private sector partner is considered to be in violation of this Law and related regulations, a participant in the selection may file a complaint to the dispute resolution council specified in paragraph 56.1 of this Law.

56.4.In accordance with sub-paragraphs 25.2.6 and 25.6.8 of this Law, the person has the right to file a complaint within 5 working days after receiving the notification.

56.5.At a participant's request, a national or international expert may be involved in the dispute resolution process related to selection of the partnership project, and the relevant costs shall be borne by the participant.

56.6.If the participant does not accept the decision of the dispute resolution council related to the selection of the partnership project, he/she has the right to appeal to the court.

Article 57.Dispute resolution

57.1.The partnering parties shall seek to resolve any disputes related to the partnership agreement and the partnership project by mutual agreement.

57.2.In the event that the partnering parties fail to reach a mutual agreement in accordance with paragraph 57.1 of this Law, the dispute shall be resolved by the courts of Mongolia or national or foreign arbitration according to the partnership agreement.

Article 58.Grounds for imposing a liability

58.1.If it is found that the partnership agreement has been signed by a state partner or a state authority or official in excess of the rights specified in the legislation, the agreement shall be canceled and damages caused by the agreement shall be compensated to a guilty party.

58.2.If a state partner or any official of a state authority commits a violation specified in paragraph 58.1 of this Law, that official shall be dismissed from public service.

58.3.The private sector partner has the right to claim damages as stipulated in the agreement due to non-fulfillment or non-proper fulfillment of the contractual obligations of the state partner.

58.4.Compensation for damages caused by failure of a party to a partnership agreement to fulfill contractual obligations, or due to failure to properly fulfill them, shall not be grounds for exempting that person from fulfilling contractual obligations.

Article 59.Liabilities to be imposed on the violators of the Law

59.1.If an act of an official who violates this Law does not constitute a criminal or a violation nature, he/she shall be held liable as provided in the Law on Civil Services.

59.2.Any person or legal entity who violates this Law shall be charged with the liability specified in the Criminal Code and/or the Law on Violations.

59.3.The imposition of a fine on a person who violates this Law shall not be a reason to remove the violation or to compensate for the damages caused to others due to the violation.

Article 60.Entry into force of the Law

60.1.This Law shall enter into force on December 31, 2023.

/This paragraph was amended according to the law as of June 16, 2023/

THE CHAIRMAN OF THE STATE GREAT KHURAL OF MONGOLIA G.ZANDANSHATAR