The Asian Infrastructure Investment Bank’s (AIIB) Board of Directors recently approved two investment projects in Turkey totaling USD500 million. These projects will help the country advance its urban and energy infrastructure development.
Among these investments, a USD300-million sovereign-backed loan for the Istanbul Seismic Risk Mitigation and Emergency Preparedness Project will improve Istanbul’s disaster resilience against earthquakes and enhance the city’s emergency preparedness. It builds on a previous successful project initiated by the World Bank and similar projects supported by many International Financial Institutions.
As AIIB’s first urban project in Turkey, the investment will finance structural retrofitting and reconstruction of priority public buildings such as schools, hospitals and other social facilities. This will reduce potential future earthquake damage to these facilities and save lives. Emergency equipment such as power generators and water storage tanks will be supplied to enhance emergency preparedness. Energy efficiency and water conservation measures in targeted buildings will also be enhanced. The project will also support institutional capacity building, public awareness, training and project management.
“The project is aligned with the aspirations of AIIB’s Sustainable Cities Strategy by making Istanbul’s critical public buildings greener and more resilient to seismic shocks,” said AIIB Vice President and Chief Investment Officer D.J. Pandian. “As AIIB’s first urban project in Turkey, it will also diversify AIIB’s portfolio in the country.”
Furthermore, a USD200-million on-lending facility has been added to AIIB’s investments in Turkey to advance the country’s renewable energy and energy efficiency infrastructure. AIIB will provide long-term financing through Türkiye Kalkınma ve Yatırım Bankası (the Development and Investment Bank of Turkey or TKYB) to privately owned companies in Turkey for investments in renewable energy and energy efficiency infrastructure. These investments will cover power generation based on wind, solar, geothermal and biomass, along with energy efficiency projects that will result in energy savings and a reduction in carbon dioxide emissions.
Energy demand in Turkey is expected to increase by 50 percent over the next decade. The country aims to increase renewable energy’s share of total power generation to 50 percent by 2023 and reduce primary energy consumption by 14 percent in the same year.
“AIIB’s financing will help address TKYB’s need for long-term capital for infrastructure projects,” said AIIB Vice President Pandian. “The on-lending facility will help increase Turkey’s installed capacity of renewables-based power generation and improve energy efficiency of existing installations. It aligns with AIIB’s Energy Strategy and commitment to advancing sustainable infrastructure. The project will also allow AIIB to strengthen TKYB’s environmental and social capabilities.”
To date, AIIB has invested in five projects in Turkey with a total amount of USD1.4 billion covering infrastructure development in the energy, finance and urban sectors.