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China-based MDBs wrap up 2016 with $3.2bn financing

The AIIB ended its inaugural year with the approval of its largest loan ever, a commitment to back a $8.6bn gas pipeline project in Azerbaijan.

The Beijing-based Asian Infrastructure Investment Bank and Shanghai-based New Development Bank have approved financings of over $1.7 billion and $1.5 billion respectively in their first year of operations, both lenders said at year-end.

The AIIB approved a loan of $600 million, the largest so far, on 21 December for the construction of a natural gas pipeline from Azerbaijan through Turkey, bringing the total amount of lending to $1.73 billion in nine projects during its inaugural year. It approved two standalone projects in Oman with a combined lending of $301 million the same month. 

The 1,850km Trans Anatolian Natural Gas Pipeline, to be co-financed with the World Bank and other entities, has a project cost of $8.6 billion and is part of a bigger gas pipeline programme – the 3,500km Southern Gas Corridor. It is expected to supply gas to Southern Europe through Turkey.

On the other hand, the NDB, formerly known as the BRICS Development Bank, approved a 2 billion yuan ($288 million; €276 million) loan for a 250MW offshore wind project in China and a $350 million loan to a road project in India the week before Christmas. 

The former will allow the Chinese government to develop the phase 2 of Putian Pinghai Bay Offshore Wind Power Project, while the US loan is designed to help the Indian government upgrade about 1,500km of major district roads in the state of Madhya Pradesh. 

Total approvals for the first full year of the NDB’s operations stood at seven projects, representing over $1.5 billion in financing. The NDB’s approved projects comprise the installation of 1.5GW of new renewable energy capacity, according to the bank. 

The NDB said it aims to offer $2.5 billion of loans in 2017. The AIIB had not responded to queries regarding its financing target for 2017 by press time.