FINANCING OF GEOLOGICAL SURVEYS TO BE FUNDED BY STATE BUDGET AND ITS ECONOMIC INDICATORS

Abstract

Mongolian Government is focusing on ensuring its economic sustainable development by researching geological formations within the territory of Mongolia including exploration of their mineral deposits and planning tangible actions in the policy level as well as started to implement the actions in phases. In order to resolve these issues, we have to implement objectives to increase the potentiality of Mongolian geology-mineral resources with the economic indicators of the geological survey works.

Increment in the annual state budget to be spent on the works of geological mapping of the territory and mineral exploration and an adoption of the policy to increase mineral resource, that are included in the Government action plan for the year of 2012-2016, adopted by the Parliament resolution No. 37 in 2012 shows that the Government is supporting and more focused on the financing of geological works and its implementation.

Rate of investment funded by the State budget on the geological survey works have constantly been increasing since 2006 and has become an important factor in the contribution to further development of mineral sector. Financing on the geological survey works proposed to be made in 2014 has increased by 2,6 times or 162,5% in comparison with the investment, which was made in 2010, and is increased by 36,9% as compared with investment, which was made in the last year.

We have estimated and determined budgeted costs of the projects of 1:50 000 scales GMGEW (geological mapping and general exploration works), which were implemented by the state budget according its work types and the percentages of expenses in the packages is as following: field work 40,7%, site handling works 15,1%, laboratory works 11,2%, road transportation 11,9%, works of geophysics 5,3% and other works are 15,8%.

Average rate of self sustainability of the entities implementing project of geological surveys by state budget is 74,0% as estimated for the years of 1994-2013 whereas the rates of self sustainability of the entities implementing projects in 2013-2015 are 2,4 items lower than the average level or 3,24% percentage lower.

Rise of unit rate for geological mapping and general exploration works of 1:50 000 scales will probably be in average about 9% for the year of 2014-2016 and 8% for the 2015-2017 respectively depending on the economic condition, salary and inflation. For the projects started to be implemented in 2013-2015, the unit rate of the geological mapping and general exploration cost will probably be 186.353 MNT in average and it will be risen up to 203,124 MNT as the estimation of 9% cost of rise in 2014-2016.

We consider the following actions are required to be implemented in order to improve the financing of geological surveys funded by state budget and its economic indicators: here in:

1. Accelerate the financing of geological survey works implemented by State budget, and improve the monitoring on the financing of the works.
2. Determining new norms and normative for the estimation of cost and expenditures of geological works in all stages.
3. The Management of the entities executing geological survey works shall have to pay more attention to increase the “self sustainability" of their own companies and start implementing a complete action of marketing strategy.
4. The cost rise of unit rate for project area should be established as 9%
5. The unit rate of geological mapping should be varied according to its geographical zones.
6. Maximum and minimum offset between the unit rates shall not be exceed more than 30%.