ADB’s infra portfolio grows to $6.1bn

Asia’s development bank committed a record $1.7bn to infrastructure, with the lion’s share allocated to the energy sector.

The Asian Development Bank’s infrastructure portfolio, managed by its private sector operations department, grew by nearly $1.3 billion, or 26 percent, to $6.1 billion in 2017, with the majority of commitments being made to the energy sector, the Manila-based multilateral said in its latest report.

Of the $1.7 billion committed last year, nearly $1.1 billion was allocated to three large transmission projects, the bank said. These included India’s Green Energy Corridor initiative, which will facilitate the transfer of power from renewable-energy rich areas in India to other parts of the country; Armenia’s grid modernisation; and the financing of 4MW of solar energy generating capacity in Samoa.

ADB also increased its financing to the renewables sector, committing $300 million to seven solar, wind, geothermal and waste-to-energy projects.

“Energy generation projects committed in 2017 will add generation capacity of more than 3,000MW, resulting in annual generation of 7,750 GWh of additional electricity, enough to power over 870,000 average Asian households,” the bank stated. “They will also connect 21,000 people to the power grid.”

Other infrastructure sub-sectors that received ADB support – a combined $147.5 million – were transport, telecommunications and wastewater treatment.

An ADB spokesman declined to comment on financial returns of the portfolio, but stressed that the effectiveness of the investments is measured through developmental achievements, in addition to investment profitability, work quality and additionality.

Infrastructure currently accounts for 55 percent of the department’s portfolio, which now stands at over $10.9 billion, with the rest comprising investments in finance, agriculture and other sectors.

The department will continue to “ambitiously work to expand its private sector operations from 13.4 percent to 20 percent of total commitments by 2020, including by working in new frontier markets and sectors and increasing support to high-level technologies to improve development impact,” Diwakar Gupta, vice president for private sector and co-financing operations at ADB, said in a statement.

It wasn’t clear what portion of that increase would be dedicated to infrastructure. According to the bank’s estimates, developing Asia would require infrastructure investments of $1.7 trillion per year through 2030 to fill the infrastructure gap and tackle climate change. More than half that amount is needed in energy infrastructure, and around one third is needed in transport.

The ADB private sector operations unit, headed by director general Michael Barrow, is responsible for catalysing, structuring, financing and funding investments in private-held and state-sponsored businesses and projects in its 67 member countries on a commercially viable, non-sovereign basis.