Energy in the Country of Khans. Rafako S.A.’s expansion in Mongolia 12 april 2018
“The energy situation of the motherland of Genghis Khan shows that our services are needed there and we may do a lot to improve the quality of life of local people,” says Agnieszka Wasilewska-Semail, RAFAKO S.A. President of the Board and General Director.
Mongolia is one of the world’s largest manufacturers of coal, over 30 per cent of which is exported and 66 per cent – used inside the country. Burning of this fuel produces as much as 95 per cent of electrical power generated in Mongolia.
“All these installations require maintenance. It is also necessary to upgrade new power plants, particularly in the country’s capital, Ulaanbaatar,” says Jakub Sitek, RAFAKO S.A. Management Board’s representative for Client Relations in Asian Markets. Nearly a half of this huge country’s population lives in the capital city or in its suburbs. As a consequence, newcomers live in deteriorating conditions and the power network keeps struggling with greater and greater problems to satisfy the demand for power for new dwellers.
The main reason for people’s migration is zud, which is a traditional Mongolian word for an exceptionally tough winter.
“There are multiple reasons for this phenomenon, one being the changing climate. Built during the communist era, industries in Russia, China and Mongolia itself did not recognize environment protection as a priority. As a result, the country’s temperature increased by 2.07 degree Celsius, while the average increase for the world is 0.85 degree,” explains Jakub Sitek. “Tougher and hotter summers make the zud phenomenon even more frequent and more intensive.”
Another reason was termination of central planning in the Mongolian economy.
Electro-yurts in steppe Krakow
During the past three decades, climate and civilization changes made even as many as 600 thousand shepherds and nomads permanently settle in the country’s capital city, which in practice doubled the city’s population .
“These people are used to tough life and no-one is surprised by seeing yurts right next to Soviet blocks of flats. No-one has a problem with living in a traditional nomadic tent. This, however, does not mean that authorities have no obligation to ensure access to basic utilities such as electricity or heating,” says Jakub Sitek.
However, having no such utilities, even if accepted by the inhabitants, is a cause of other problems, smog being the key one. Concentration of PM2.5 dust, a type which is the most hazardous to human health as it may penetrate into the human blood system, in the Mongolian capital city, seven times exceeds the acceptable norm (recommended by WHO). Poor newcomers from the steppes, to heat their yurts and houses, use coal stoves, which cover the city with fog, making it impossible to breathe. Slums around Ulaanbaatar host as many as 300 thousand houses, with 800 thousand people.
“Mongolian authorities decided to fight this problem. In January 2018 a decision was made that prohibited people to migrate into the capital city. Those who already settled in Ulaanbaatar will get fuel that is of a better quality than the sulphur-rich coal used in the stoves, ” says Jakub Sitek. “However, this is only a part of the solution. In practice, only modernization of the city’s heating system, which will provide heating to as many houses as possible, will resolve the problem of smog and the difficult conditions during winter months. The fact that the city lies in a narrow valley, which makes it impossible for the wind to dispel the exhaust cloud, makes the situation even worse, ” adds Sitek.
Rafako S.A. with a range of services
These difficult conditions and a strong tradition of the coal-based power industry make Mongolia a very attractive market to RAFAKO S.A.
“This is a country that for many years imported electricity and powered up its industry from outside. Mongolia’s geopolitical situation was not as attractive as Poland’s and thus the country did not undergo such economic transformation,” explains Jakub Sitek. “Thus, I am even happier that RAFAKO S.A. was invited to participate in oil and coal energy projects,” asserts Sitek. He adds that the country’s lack of its own power industry, combined with the challenges of transformation, was very often a factor that contributed to the falls of smaller urban centres.
“A good example may be Darkhan – country’s third biggest city. It used to be an important centre of Soviet industry, while now it is just another city from which the capital extracts better educated people,” says Jakub Sitek. He stresses that despite such a difficult situation, the country constitutes an exceptional prospect for RAFAKO S.A.
“Our technologies allow generating low-emission energy from coal. We are able to install modern filters and modernize old power grids. Our polygeneration system technology allows gasification of waste and consequently, further reduction of smog and generation of clean energy,” enumerates Jakub Sitek. “Therefore, I am sure that Mongolia will be one of RAFAKO S.A.’s most interesting markets and that our company will start improving the local people’s quality of life, not only in Ulaanbaatar,” he sums up.
“I am not denying that large industrial plants pollute air, however, with cleansing technologies, mainly desulphurization and denitriding of exhaust, power as well as heat and power plants are capable of fulfilling the most rigorous standards. The problem is the lack of central power installations in cities,” explains RAFAKO S.A.’s Jakub Sitek. He adds that central systems like a small, metropolitan heat and power plant are more easily controllable than hundreds of small heating systems in each house.