The Asian Infrastructure Investment Bank (AIIB) has agreed to provide a $200m loan to the Industrial Development Bank of Turkey (TSKB) for the development of renewable energy projects in Turkey.
Image: AIIB to support Turkey in renewable projects. Photo: Courtesy of Debbie Mous/FreeImages.com.
The loan from AIIB is backed by a guarantee from the Government of Turkey and will support long-term financing, primarily for renewable energy and energy efficiency projects.
As per AIIB, the presence of long-term financing gap for infrastructure, can expose the projects to refinancing or rollover risk in the country. The loan is expected to fill this gap.
This investment will support renewable energy projects that qualify for the Turkish government’s Renewable Energy Support Mechanism ‘YEKDEM’, which promotes the participation of private sector in the renewable energy sector.
The loan will finance renewable energy projects such as solar, hydropower, wind, geothermal, biomass and energy efficiency projects, and to a lesser extent in other infrastructure sectors, including transport, water management and treatment, power transmission and telecommunications.
AIIB vice president and chief investment officer DJ Pandian said: “We are partnering with TSKB for our first on-lending program with a financial intermediary in Turkey because it will help reduce constraints on long-term capital in Turkey’s banking sector.
“This is well aligned with our mission to promote sustainable infrastructure and mobilize private capital investment in Asia.”
It is the second loan from AIIB in Turkey this year, the first being the $600m investment in the Tuz Golu Gas Storage Expansion Project.
AIIB investment operations director general Yee Ean Pang said: “This new investment program will primarily support sustainable energy projects in line with Turkey’s 2023 goal to alleviate the country’s dependency on energy imports.
“We also believe TSKB’s robust management procedures will ensure the extension of AIIB’s loan to renewable energy, energy efficiency and other infrastructure projects is of the highest quality.”
AIIB has also agreed to provide a loan of $300m to the Egyptian government to improve rural sanitation services for 892,000 people across 178,000 rural households in selected governorates in the country.
The program, co-financed with the World Bank, will finance the physical infrastructure to provide sanitation services in five governorates including Dakahliya, Sharkiya, Damietta, Menoufiya and Gharbiya in Egypt.
AIIB is investing in the second of a two-phase project and it will include the construction of new or expansion/rehabilitation of the existing wastewater treatment plants as well as upgrading and construction of pumping stations.