The Asian Infrastructure Investment Bank (AIIB) has approved three loans totaling US$285 million to finance water supply projects in Indonesia and improve a gas transmission network in Bangladesh.
The loans, which will bring the Beijing-based bank’s total lending to over US$2 billion, will contribute to the safety of the water supply from large reservoirs in Indonesia, improve access to infrastructure finance for regional Indonesian governments, and increase operational flexibility and supply integrity of a gas transmission network in Bangladesh, the bank said in an announcement today.
“The loans approved by our board of directors are different in their focus, but united in their efforts to leverage infrastructure spending to stimulate growth and improve the quality of life for local communities,” said D.J. Pandian, Vice President and Chief Investment Officer, AIIB. “We value the ongoing collaboration with our multilateral development bank partners to be able to bring this much-needed financing to Indonesia and Bangladesh.”
Specifically, a US$125 million loan will be used for the Indonesia Dam Operational Improvement and Safety Project Phase II, co-financed with the World Bank. The dam improvement project in Indonesia will play a critical role in boosting shared prosperity by increasing the resilience to changes in climate through better infrastructure safety and operations, more protection against dam failure, and enhancing reservoir operations to improve water delivery service for domestic and agriculture use.
A US$100 million loan will be for the Indonesia Regional Infrastructure Development Fund Project, co-financed with the World Bank. The investment in the Regional Infrastructure Development Fund will support Indonesian regional governments to address their critical infrastructure needs more effectively by overcoming annual funding constraints.
Currently available financing instruments in Indonesia are limited and ill-fitted for the nature and scale of the required urban and local municipal infrastructure investment. Facilitating medium- to long-term financing to meet the local infrastructure gap is a critical priority for the Government of Indonesia. Additional project details can be found here.
Another US$60 million loan will be for the Bangladesh Natural Gas Infrastructure and Efficiency Improvement Project, co-financed with the Asian Development Bank. To address the current gas supply deficit that will eventually impact Bangladesh’s energy security and constrain the nation’s economic growth, the Government of Bangladesh has taken steps to diversify the gas supply through imports either by cross-border gas transmission pipeline or as liquefied natural gas. The project fits within these development plans and will help avoid a gas crisis.
As a multilateral financial institution with developing countries as its majority shareholders, AIIB’s investments are focused on the areas that matter most to its clients. The bank is investing in sustainable infrastructure, cross-country connectivity and mobilization of private capital.
Based on these themes, the bank will leverage its relationships with other multilateral development banks and private financiers to meet Asia’s growing infrastructure demands and contribute to social and economic growth in the region.