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.
