AKIPRESS.COM - Russia’s concern about water rights is holding up a $1 billion loan package Mongolia is seeking from China to build a hydroelectric dam that would help the landlocked central Asian nation ensure independent supplies of energy, Bloomberg reports.

The Kremlin said in June the project to build the Egiin Gol Hydro Power Plant on the Eg River in northern Mongolia could threaten Lake Baikal 580 kilometers downstream. China is withholding funds until a compromise can be found with Russia, according to Mongolian government documents seen by Bloomberg News.

Mongolia wants to build the 103 meter high dam to generate more power during peak times and in the winter, easing its reliance on electricity from Russia and dependence on coal-fired generation. Its power imports from Russia cost Mongolia the nation of 2.8 million people more than $25 million a year.

“We need to know if we are independent or just a marionette of Russia and China,” Odkhuu Durzee, the director of the hydro-power project, said in an interview in Ulaanbaatar, the capital of Mongolia. “If we give up it means the Western coalition will lose Mongolia as a supporting nation -- the Mongolian people will know that we can do nothing without Russian or Chinese permission.”

The proposed Egiin Gol dam would lower energy costs by generating an additional 315-megawatts of renewable power. It would do so by harnessing the power of the Eg River, one the biggest tributaries flowing into the Selegne River, which eventually discharges into Russia’s Lake Baikal -- the biggest freshwater body on Earth.