AIIB approves $100m for Uzbekistan energy supply and security

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Support announced for private sector investment in efficient energy generation through Sirdarya 1,500 MW combined cycle gas turbines (CCGT) power project. 

The Asian Infrastructure Investment Bank (AIIB) has approved a $100m loan to ACWA Power Sirdarya LLC to support the construction of the Sirdarya 1,500MW Cpower project in the Republic of Uzbekistan. The project, AIIB’s first non-sovereign-backed financing (NSBF) in Uzbekistan, aims to increase the availability of high efficiency gas power generation capacity in the country.

Uzbekistan’s electricity system faces major supply gaps estimated to be almost 10% of total demand, and it lacks the reserve capacity to balance the upcoming rise in intermittent renewable energy such as solar and wind. The construction of new, high-efficiency gas power stations, which would replace older and less efficient assets, is seen as a now crucial modernisation step that complements the early growth of renewable energy towards eventual net zero in 2050.

The project’s technology-enabled features will also increase water use efficiency, helping alleviate water scarcity in the region that is aggravated by climate change. The technology adopted by the project is also expected to achieve much lower greenhouse gas emissions per unit of power generation compared with Uzbekistan’s power grid emission factors.

AIIB vice president for investment operations, Konstantin Limitovskiy, said: “This project sets an outstanding example of a private sector investment in our lower-middle-income Member, which will support its transition to a competitive energy sector. It is fully aligned with the Bank’s Energy Sector Strategy and will help Uzbekistan to reduce the carbon intensity of its energy supply.”

This is the AIIB’s largest such project in Central Asia and is the first large-scale independent power producer project in Uzbekistan to date, a product of the long reform and liberalisation process of Uzbekistan’s energy sector. The project is being developed by ACWA Power, a developer, investor and operator of power, desalinated water, and green hydrogen plants in the Middle East, Africa, Central Asia and Southeast Asia.

Rajit Nanda, chief portfolio management officer, ACWA Power, said, “Our partnership with AIIB on the Sirdarya CCGT power plant in Uzbekistan is a testament to the financial institution’s confidence in ACWA Power’s mission to provide power reliably and responsibly at the lowest cost possible. This project is yet another significant example of our commitment to supporting governments around the world in delivering on their ambitious decarbonization efforts and energy transition journey.”

Along with AIIB, the other participating lenders are European Bank for Reconstruction and Development (EBRD), OPEC Fund for International Development and Deutsche Investitions- Und Entwicklungsgesellschaft Mbh (DEG); with some commercial lenders backed by Multilateral Investment Guarantee Agency guarantees.