Members of the government and the National Committee for Energy Reform have long stated that “in order to overcome the combined technical and financial crisis facing the energy sector, there is no choice but to revise electricity and heating tariffs.” After much public debate and division, the first “reform” was implemented last October. This involved increasing the electricity tariffs for households and businesses by 30 to 85 percent per kilowatt-hour, depending on their consumption levels. This reform, initiated by L.Oyun-Erdene’s government, is now being continued by G.Zandanshatar’s cabinet, and there is a possibility that water and heating bills will also be increased to the same extent as electricity during the autumn and winter of 2025–2026.
When announcing the electricity price hike, ministers and officials revealed that they had “planned to increase water tariffs by 25 percent starting from early 2025, and heating tariffs by 85 percent from May 1.” Later, the Energy Regulatory Commission (ERC) announced its decision to increase heating prices gradually from July and August this year.
However, this planned decision was curtailed by a statement from the Bank of Mongolia, the fall in global commodity prices (especially mining products), the resulting shadow cast on Mongolia’s economy, and public resistance and criticism. The bank issued repeated warnings that “raising the base utility cost, namely electricity tariffs, by 30 to 85 percent poses risks of increased prices for goods and services, worsening living standards and reducing the purchasing power of citizens. If water and heating bills are increased in the same way, it will negatively affect efforts to keep inflation within target levels.”
Following this, the government postponed the implementation of the decision. Specifically, L.Oyun-Erdene’s cabinet, taking the current situation into account, announced in March that the increase in water and heating tariffs would be delayed until autumn 2025.
Now, that scheduled time is fast approaching. Whether the government will delay it again or proceed as planned remains a matter of attention. So far, the government and relevant ministries have not issued any official statements regarding the increase in water and heating prices. When asked, the Ministry of Energy stated, “It’s a matter currently being discussed at the government level.” Meanwhile, ERC stated, “We have submitted our decision, based on studies and calculations, showing that it is necessary to raise electricity and heating prices, to the appropriate higher-level authority. We do not know when it will be implemented,” thereby avoiding a direct answer.
A source from the department in charge of public housing and utilities said, “There are indications that water prices—both clean and wastewater—will be increased this autumn, and heating prices from January 1 next year. The timeline and rate of the increase may be adjusted, but there’s no notion of cancelling the decision altogether.”
The most recent update in this regard came from Minister of Energy B.Choijilsuren. During an extended meeting held the day before yesterday to review winter preparation efforts, he pointed out the extremely dire financial condition of thermal power plants and the coal mines supplying them. He stated, “Unless electricity and heating tariffs are raised, large amounts of debt and losses will continue to accumulate. We must again present the issue of tariffs for electricity and heating supplied by local thermal power plants and the central energy system to the Prime Minister. If these difficult and controversial issues are not resolved, we will continually face this kind of situation.”
The Minister of Energy’s current position clearly shows that raising water and heating prices is merely a matter of time—and perhaps even another revision of electricity tariffs could be on the horizon. What remains unclear is exactly when these changes will take place. At the end of last year, when electricity prices were increased, B.Choijilsuren expressed a similar tone—listing out the sector’s hardships, at times sounding tearful and pleading, while persistently making various statements until he ultimately achieved his goal.
Although ERC claimed that the proposal was based on a realistic assessment of the sector’s condition, the minister himself played a key role in pushing the decision through. He shifted blame onto others, saying, “Previous cabinet members and sector ministers failed to raise electricity and heating prices due to political maneuvering, which left the energy sector in a difficult state.” He insisted that “long-standing, deeply rooted issues must be addressed through systemic reforms, and that even if criticized, electricity prices must be raised to recover losses.” So, the tariffs were revised.
Just before doing so, the minister launched a coordinated public campaign highlighting the sector’s financial difficulties: delays in repair and modernization work, fuel and spare part shortages, and problems with wages and bonuses for workers. However, since the electricity tariff was increased, these issues have essentially disappeared from public discussion.
Within the National Committee for Energy Reform, internal conflicts have emerged due to financial and budgetary issues. Transmission and distribution companies, even after the peak winter load period had passed, imposed prolonged power outages on Ulaanbaatar residents under the guise of repair and maintenance. In essence, nothing has improved in the energy sector since electricity prices were raised. So now the question is: if water and heating prices are raised, what exactly will change?
The most clear and tangible outcome of increasing water and heating tariffs will be a rise in the prices of consumer goods and services. As inflation grows, it is inevitable that people’s living standards and purchasing power will decline. This decision will hit the most vulnerable—those barely scraping by—and the already precarious middle class the hardest.
In Ulaanbaatar, households living in apartments currently pay a heating fee calculated at 506 MNT per square meter. If this rate increases by 85 percent, a family living in a 55-square-meter apartment that used to pay 27,830 MNT will now have to pay 51,485 MNT. For businesses and factories, heating fees are 100 MNT higher per square meter than for residential users, and will likewise increase proportionally.
In essence, this decision will place an additional financial burden on citizens. It will not, as officials claim, lead to any meaningful reform, modernization, or development. What it might do, however, is provide government officials with greater budgetary space—and possibly expand their opportunities for luxury and excess.
In a country like ours, where inflation and tax burdens are already high, those in power must take a cautious and comprehensive approach to issues related to base costs. Decisions must be made thoughtfully and responsibly. But in reality, the underlying difficulties in the energy, housing, and public utilities sectors are being pinned solely on tariff restrictions. Under the guise of reform and bold problem-solving, the government seems more focused on dipping into the pockets of citizens and businesses.
No one is denying the need for genuine, reform-driven changes in the energy sector. Reducing state interference and allowing prices to be set by market principles is indeed necessary. But in a situation as chaotic and unstable as the current one—where there’s no clear vision or foundation—it would be far more effective and realistic to diagnose the root problems of the sector and curb the waste, extravagance, and mismanagement of ministers and officials, rather than arbitrarily raising prices.
When it comes time to raise tariffs, we constantly hear complaints about mounting losses and unmanageable debts. But when it’s time to celebrate anniversaries or national holidays, those same officials have no hesitation about handing out billions in donations. It’s hard to believe such people have the genuine will or dedication to bring about real reform in the energy sector.
That’s why we hope the government of G.Zandanshatar—which claims to be pursuing citizen-centered budgeting and investments, and to be limiting taxes and public fees—will approach such hasty, crisis-masked decisions with greater scrutiny.
Recently, especially since the accident at Thermal Power Plant No. 3 last June, we’ve been hearing more and more about the operational disruptions, capacity shortages, delays in repairs and modernization, and financial constraints faced by thermal power plants. Alarmist messages like “We may have no choice but to limit electricity and heating supply this winter” are also being circulated in society—seemingly on purpose.
By now, we have come to understand—through years of experience—that those in power do not talk about hardship or difficulties without a reason or without a goal in mind. It’s very possible that this is all part of a performance meant to smooth the way for yet another “reform” involving a hike in water and heating prices.
