The Asian Infrastructure Investment Bank has approved $45 million in non-sovereign financing for a seawater desalination plant in the Sumgayit industrial zone of Azerbaijan. The reverse osmosis facility is planned at 300,000 cubic metres per day, or about 109.5 million cubic metres a year at full capacity, drawing water from the Caspian Sea.
The project will be delivered as a public-private partnership between Saudi Arabia’s ACWA Power and the Azerbaijan State Water Resources Agency, described by the bank as the first PPP in the country’s water sector. The partnership runs for 25 years from the start of commercial operations under the AIIB reporting, and a dedicated project company has been set up in Azerbaijan as borrower. The finance ministry provides a payment guarantee mechanism during operations, according to project reporting.
The AIIB loan is a small slice of the capital stack: project data compiled from the bank’s disclosures puts total project cost at about $431.5 million, and the OPEC Fund has separately approved a $40 million loan for the same plant. Treating the $45 million as the project value would understate the investment by an order of magnitude.
For Azerbaijan, desalination is a water security hedge for the Baku and Absheron corridor as pressure grows on conventional freshwater sources. For the lenders, the structure, a Gulf sponsor, a state offtaker and multilateral cover, is the template now being repeated across Middle Corridor infrastructure.