BAKU, Azerbaijan, October 8. The Board of Directors of the Asian Infrastructure Investment Bank (AIIB) has approved $45 million in non-sovereign financing for the project to build Azerbaijan's first large-scale seawater desalination plant.
The project entails the design, construction, and operation of a seawater reverse osmosis desalination plant capable of producing approximately 300,000 cubic meters of drinking water per day from the Caspian Sea.
The plant will be located on the Caspian coast within the industrial zone of Sumgayit. The bank noted that this will be Azerbaijan's first large-scale seawater reverse osmosis desalination plant, as well as the first public-private partnership project in the country's water sector.
According to AIIB project details, a public-private partnership agreement has been signed for a 25-year term between the project sponsor, ACWA Power, and the water off-taker, the State Water Resources Agency of Azerbaijan. Meanwhile, the Ministry of Finance of Azerbaijan is providing a guarantee mechanism for payment obligations during the operational period.
Currently, ACWA Power is the sole sponsor of the project. A separate company has been established for the project and will act as the borrower within the financing framework.
The main objective of the project is to expand drinking water supply capacity in Azerbaijan and strengthen the resilience of the water system.
Project will be implemented with due regard for ecological characteristics of Caspian Sea
According to the AIIB's assessment, the project has been classified as Category B in terms of environmental and social risks. The Bank indicates that the primary risks are associated with offshore construction activities, seawater intake and the discharge of saline water back into the sea, as well as contamination resulting from past activities at the industrial site.
The project involves the installation of pipelines approximately 2 kilometers in length for seawater intake and wastewater discharge during the plant's construction. Appropriate measures will be taken to minimize the impact of these activities on seawater quality and benthic marine life.
The AIIB noted that the discharge of saline water and other wastewater into the sea will be the primary environmental issue during the plant's operation. The project design includes a discharge system that ensures the rapid dispersion of saline water at a distance of several hundred meters from the shore. According to the bank, assessments indicate that the project is not expected to cause significant or irreversible negative impacts on biodiversity, including the Caspian seal. Furthermore, long-term monitoring of marine biodiversity and water quality will be conducted as part of the project.
The project is planned to be implemented within an existing industrial area and does not require land acquisition. However, the bank noted that the water transmission pipeline may result in limited impacts on livelihoods, and such instances will be addressed through appropriate compensation and other measures.
According to the AIIB, environmental and social assessments, stakeholder consultations, and public hearings have been conducted for the project. Mechanisms have been established to manage environmental and social risks during the construction and operational phases, as well as to handle grievances from individuals affected by the project.
