BAKU, Azerbaijan, October 12. Asian Infrastructure Investment Bank (AIIB) will continue building a diversified and high-quality portfolio that is aligned with Azerbaijan’s development priorities, contributes to regional connectivity and climate objectives, and delivers sustainable development impact, Director General, Public Sector Clients Department (Region 2), AIIB, Xiaohong Yang, told Trend in an interview.
AIIB sees new projects in various sectors in Azerbaijan
Yang noted that the scope of AIIB’s partnership with Azerbaijan is broadening and the current engagement spans urban mobility, renewable energy, water and regional connectivity.
“We see significant opportunities across all of these areas. Alongside the approved Baku Metro Phase I project, AIIB is considering the proposed $820 million Green Line expansion. In renewable energy, we are assessing a proposed 200 MW Absheron-Garadagh wind project,” she said.
According to her, the AIIB Board of Directors has approved $45 million in non-sovereign financing for 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,” Yang explained.
She noted that transport and logistics offer significant potential given Azerbaijan’s role in the Middle Corridor.
“Renewable energy, storage and power infrastructure can support the country’s energy transition and regional energy connectivity objectives. Water infrastructure can contribute to long-term water security and climate resilience, while sustainable urban mobility can support the continued development of Baku and other urban centers. Green and sustainable finance can also help broaden the sources of capital available for infrastructure investment,” the AIIB director general added.
Azerbaijan's role in regional connectivity is strengthening
Yang noted that Azerbaijan is a founding member of AIIB, and the bank greatly values the strong partnership with the country.
“Its strategic position connecting Central Asia and the South Caucasus, Türkiye and European markets gives it an important role in advancing regional connectivity, trade and energy integration.
The Joint Declaration signed between AIIB and Azerbaijan in 2025 provides an important framework for taking this partnership forward. It envisages a dynamic multi-year investment program and identifies opportunities around climate-resilient infrastructure and decarbonization, next-generation transport, energy and digital infrastructure supporting Azerbaijan’s role as an international trade and logistics corridor, and greater private-sector participation through innovative financing and PPPs.
Looking ahead, our approach will be to work closely with the Government to identify and develop multi-year rolling pipelines that are aligned with Azerbaijan’s national priorities while also contributing to broader regional public goods, particularly connectivity, energy security and climate resilience.
As an MDB, our role is to bring not only financing, but also international experience, project preparation capacity, risk management and the ability to mobilize other sources of capital. We see considerable scope to deepen this partnership through a well-prepared and diversified investment program,” she said.
$28 billion investment need for development of Middle Corridor
The bank’s director general noted that the Trans-Caspian International Transport Route has significant long-term potential as part of an increasingly interconnected network of trade routes between Asia and Europe.
“Estimates discussed at the IsDB Annual Meeting in Baku indicate investment needs of approximately $28 billion for the corridor over the next 15 years. This demonstrates both the scale of the opportunity and the importance of developing a strong pipeline of well-prepared bankable projects.
Railways and roads remain fundamental, but the performance of the corridor depends on the entire logistics chain. Ports, shipping capacity, logistics hubs, border-crossing infrastructure, operating systems and digital platforms all have an important role to play.
From an MDB perspective, the priority is therefore not simply to finance individual infrastructure assets, but to address the constraints that affect the corridor’s end-to-end performance. This requires coordination among the countries involved, harmonization of systems and standards where appropriate, and investment decisions that reinforce rather than duplicate one another.
AIIB is already supporting major connectivity investments associated with the Trans-Caspian route, including road and railway projects. Going forward, we see opportunities to work with our Members and other development partners to strengthen the corridor as an integrated, reliable and commercially relevant transport network,” she emphasized.
Preparations for development of Baku port begin
Yang noted that the Baku port and the Alat area hold a significant position in the development of the Middle Corridor.
“Baku Port and the wider Alat area are strategically positioned at the intersection of maritime transport across the Caspian and the rail and road networks extending toward Georgia, Türkiye and European markets.
Continued investment in port and logistics infrastructure can strengthen this role. Increased handling capacity, efficient intermodal transfers, modern logistics services, digital cargo management and effective connections with the wider transport network can all contribute to more predictable and efficient movement of goods along the Corridor,” she said.
The AIIB senior noted that the preparation of the Baku Port project has already begun with the development of the master plan.
“More broadly, strengthening the Baku Port and Alat logistics ecosystem will contribute to Azerbaijan’s development objectives while also generating wider regional connectivity benefits.
Baku Metro expansion to enhance urban mobility
Yang recalled that the AIIB approved $180 million in financing for the first phase of the Baku Metro expansion project in February 2026.
“Phase I, for which AIIB approved $180 million in February 2026, focuses on the construction and equipping of the Darnagul and Khojasan depots and targeted improvements at existing Green Line stations. These investments will enhance service reliability, maintenance efficiency and operational safety. They will also enable the separation of the Red and Green Lines at May 28 Station, creating additional network capacity to support the future expansion envisaged under the Government’s Baku Metro Expansion Program.
The proposed Phase II would build on this foundation through a 7.4 kilometer extension of the Green Line, including four underground stations and modern signaling and communications systems.
Taken together, these investments can strengthen the capacity, reliability and efficiency of Baku’s metro services while expanding access to high-capacity public transport. Over time, a more attractive and efficient public transport system can support a shift toward lower-emission urban mobility and contribute to climate and environmental objectives.
From an MDB perspective, the importance of the program is broader than the individual investments. It is about supporting a sustainable urban transport system that can accommodate Baku’s growth, improve accessibility for residents and strengthen the long-term efficiency and resilience of the city’s infrastructure.
The phased approach also allows infrastructure, operational capacity and network expansion to develop progressively, consistent with the city’s evolving transport needs.
Key priorities in global infrastructure investments
The AIIB senior said that changes in the global economy have increased the importance of sustainable infrastructure investments.
“Reliable energy systems, efficient transport networks, digital connectivity, water security, and climate-resilient infrastructure are essential foundations for sustainable growth, productivity, and economic competitiveness.
AIIB’s approach is guided by our Corporate Strategy through 2030 and our mission of Financing Infrastructure for Tomorrow (i4t). By 2030, AIIB aims to reach $17 billion in annual financing, while continuing to deepen our climate impact and support cross-border connectivity within and across our Members.
Looking ahead, we see significant investment needs in areas such as renewable energy and grid modernization, climate adaptation, water security, sustainable transport and logistics, and digital infrastructure. We will continue to work with our Members to identify projects that address their development priorities while strengthening resilience, improving economic efficiency, and mobilizing additional sources of finance.
For an MDB like AIIB, our objective is not simply to increase infrastructure investment, but to help countries develop infrastructure that is economically viable, climate-resilient, financially sustainable and capable of delivering lasting development impact,” she stressed.
Attracting private capital has great importance
Yang noted that mobilizing private capital is one of AIIB’s four thematic priorities.
“Given the scale of infrastructure needs in emerging and developing economies, public resources and MDB balance sheets alone cannot meet the investment requirements. The objective is therefore to use public and MDB financing strategically to help crowd in additional sources of long-term capital.
AIIB has a broad financing toolkit, including sovereign backed financing, non-sovereign financing, guarantees, blended finance and co-financing with other development institutions. The appropriate instrument depends on the characteristics of the project, the risk allocation, the policy and regulatory environment, and the capacity of the market to attract private investment.
Public-private partnerships can be effective where there is a clear institutional and regulatory framework, a viable long-term business model, and an appropriate allocation of risks and responsibilities between the public and private sectors. They are not an objective in themselves; their value lies in whether they can deliver infrastructure efficiently and sustainably while providing value for money for the public sector,” the director general pointed out.
Energy transition and energy security interconnected
The AIIB representative highlighted importance of considering energy security together with the energy transition.
“A successful transition needs to expand access to cleaner energy while maintaining reliability, affordability and the capacity required to support long-term economic growth.
Our approach therefore looks at the energy system as a whole. Renewable generation is an important part of this, but it needs to be supported by transmission and distribution infrastructure, modern grid management, energy storage, and other investments that can provide greater flexibility and resilience. We are already seeing this approach reflected in our portfolio.
In Uzbekistan, for example, AIIB is financing battery energy storage alongside renewable energy investments, helping integrate variable renewable generation while strengthening the flexibility of the power system.
For developing economies, the transition also requires institutional and regulatory capacity, sound sector planning and appropriate risk allocation. MDBs can play an important role by providing long-term financing, technical expertise and risk-sharing instruments, while helping create the policy and market conditions needed to mobilize private investment.
Ultimately, the objective is to support an energy transition that is both ambitious and grounded in the realities of each country’s development needs, fiscal capacity and energy system,” she said.
AIIB supports development of Middle Corridor
Yang underscored that connectivity has been central to AIIB’s mandate since the Bank was established, and its importance continues to grow as global trade and production patterns evolve.
“We see transport corridors as an opportunity to develop more diversified, efficient and resilient networks connecting economies and markets. Central Asia, the South Caucasus and Türkiye are particularly important in this context, with the Trans-Caspian International Transport Corridor (also referred to as the Middle Corridor) providing a link between two large markets, Asia and Europe.
The development challenge, however, extends well beyond individual infrastructure assets. The Corridor is inherently multimodal, bringing together railways, roads, ports, maritime transport, logistics facilities and increasingly digital systems. The effectiveness of the corridor will depend on how well these components operate as an integrated system, including through efficient border procedures, interoperable systems and reliable logistics services.
Azerbaijan has an important role in this regional network. During my recent visit, I was impressed by the scale of infrastructure modernization underway. It also underscored the leadership’s commitment to operational efficiency and strategic collaboration across both the public and private sectors within and beyond the region.
For AIIB, the broader objective is to support infrastructure that improves regional connectivity, reduces logistics constraints, and facilitates trade and economic integration across the countries along the corridor,” she concluded.
