By John — Desalination News
The Asian Infrastructure Investment Bank (AIIB) has approved $45 million in non-sovereign financing for Azerbaijan’s first large-scale seawater desalination plant, clearing a key financial hurdle for a reverse osmosis facility planned on the Caspian Sea coast at Sumgayit, according to Trend News Agency’s report on the bank’s October 8 board decision.
The plant, which will draw seawater from the Caspian and process it through reverse osmosis membranes, is designed to produce roughly 300,000 cubic meters of drinking water a day. It will be built inside the existing Sumgayit industrial zone, avoiding the need for new land acquisition. Azerbaijan’s state-owned Saudi-Gulf utility developer ACWA Power is the project’s sole sponsor, with a separate project company serving as the borrower on the AIIB facility. The State Water Resources Agency of Azerbaijan will act as the water off-taker under a roughly 25-year agreement, with the country’s Ministry of Finance guaranteeing payment obligations during operations.
Trend’s report describes the plant as Azerbaijan’s first public-private partnership (PPP) in the water sector — a structural milestone for a country whose water utilities have historically been run entirely by the state. ACWA Power won the project in a consortium with Turkey’s IC Ictas, according to earlier reporting from Argaam, with the facility intended to meet growing drinking-water demand in Baku and across the Absheron Peninsula.
AIIB has rated the project “Category B” under its environmental and social framework, meaning its potential impacts are judged significant but manageable rather than severe. The bank flagged offshore construction, seawater intake, and brine discharge as the main environmental risks, along with legacy contamination at the industrial site from decades of prior use. It said the project is not expected to cause significant irreversible harm to biodiversity — including the Caspian seal, an endangered species found only in the Caspian Sea — and that long-term environmental monitoring is planned alongside the completed public consultations and impact assessments.
The financing arrives against a backdrop of mounting concern over the health of the Caspian Sea itself, which five littoral states — Azerbaijan, Russia, Iran, Kazakhstan, and Turkmenistan — have in recent months been pressed to address jointly as water levels decline. For Azerbaijan, a large-scale desalination plant offers a way to diversify its drinking-water supply away from rivers and groundwater sources that are themselves under growing strain, while directly tapping the same sea whose long-term health is now a regional concern.
AIIB’s board approval does not by itself complete the project’s financing; it is non-sovereign financing, meaning it is backed by the project’s own revenues and the government guarantee rather than Azerbaijan’s sovereign credit, and will likely be paired with additional lenders or equity before the plant reaches financial close. No construction timeline or total project cost has yet been disclosed. The deal nonetheless marks a concrete step forward for a project that has moved slowly since its initial award, giving ACWA Power’s Caspian venture one of the clearer financing milestones of any Central Asian or Caucasus desalination project to date.
For Baku, the stakes go beyond a single plant. Officials have cast the project as a template for future PPP water deals, at a time when population growth and industrial demand on the Absheron Peninsula are pushing against the limits of existing supply. If the Sumgayit plant reaches construction on schedule, it would give Azerbaijan its first taste of large-scale seawater desalination — and give AIIB a foothold in a sector it has financed only sparingly to date.
(Source: Trend News Agency, Argaam)