AIIB Approves $45M Loan for Caspian Desalination Plant

The Asian Infrastructure Investment Bank (AIIB) has approved up to $45 million in non-sovereign financing for a seawater desalination plant on Azerbaijan's Caspian coast, AIIB Director General Xiaohong Yang told Trend in an interview published on 12 October 2026. The plant, sponsored by Saudi Arabia's ACWA Power, has an estimated cost of $431.5 million, according to the bank's project summary.

The reverse osmosis plant is designed to produce about 300,000 cubic metres of drinking water a day from a 12.7-hectare site in Sumgait Industrial Park. AIIB describes it as Azerbaijan's first large-scale Caspian Sea seawater desalination plant. "This is also expected to be the country's first PPP in the water sector," said Yang, who heads AIIB's Public Sector Clients Department (Region 2).

The financing is a test of whether private capital can be brought into Azerbaijan's water infrastructure, and AIIB's loan covers only about a tenth of the cost. Under a public-private partnership agreement signed in December 2025, ACWA Power will supply the Azerbaijan State Water Resources Agency for 25 years from the scheduled commercial operation date, with the Ministry of Finance backstopping the agency's payments. A project company, Caspian Sea Azerbaijan Project Company, is the borrower. AIIB documents say the project will be financed in parallel with other multilateral development banks but do not name them.

Trend first reported the board approval on 8 October 2026. AIIB's own project page still listed the project as "Proposed" when CBJ checked on 13 October 2026; the bank's August summary had pencilled in financing approval for September 2026 and a final disbursement in the second quarter of 2029.

Environmental risks

AIIB rates the project Category B. Its summary identifies the main risks as roughly 2 km of intake and outfall pipelines during construction, brine discharge during operation and legacy contamination at the industrial site, and notes an overlap with the Caspian Seal Important Marine Mammal Area. The bank expects impacts to be localised and manageable, and says a cumulative assessment found the plant's contribution to Caspian Sea level decline negligible. Consultations showed broad community support but also concerns about marine ecosystems and fishing.

Metro and port next in line

Yang said AIIB approved $180 million in February 2026 for the first phase of the Baku Metro expansion, covering the Darnagul and Khojasan depots, upgrades at existing Green Line stations and separation of the Red and Green Lines at May 28 station. The bank is considering a proposed $820 million Green Line expansion, and a proposed second phase would extend the Green Line by 7.4 kilometres with four underground stations. Separately, Trend reported on 13 October 2026 that the Asian Development Bank had approved a $302.38 million loan for metro signalling and digitalisation, a project costing about $515.07 million in which AIIB is expected to provide $79.98 million.

On the port, Yang said preparation of a Baku Port project has begun with a master plan. She said Baku Port and the Alat area, at the junction of Caspian shipping and rail and road links towards Georgia, Türkiye and Europe, hold a significant position in the Middle Corridor (Trans-Caspian International Transport Route, TITR), the China to Europe route through Kazakhstan, across the Caspian, through Azerbaijan and Georgia to Türkiye and the Black Sea. She cited estimates of about $28 billion in investment needs for the corridor over 15 years. CBJ has tracked Baku Port container growth and AIIB's road lending in Georgia.

What to watch

• An update to AIIB's project page and the names of the parallel lenders, followed by financial close.
• The water tariff, which has not been made public in the documents reviewed by CBJ.
• Whether the proposed $820 million Green Line expansion and the Baku Port master plan turn into board-approved loans.
• Environmental monitoring: AIIB requires semi-annual reports in the first two years of operation, a check on the brine discharge concerns raised in consultations.

Sources: Trend, 12 October 2026; Trend, 12 October 2026; Trend, 12 October 2026; AIIB project page, accessed 13 October 2026; AIIB Project Summary Information, 10 August 2026; Trend, 8 October 2026; Trend, 13 October 2026