Saudi-based ACWA Power, through its subsidiary Caspian Sea Azerbaijan Project Company, is developing a US$418 million seawater desalination plant under a PPP with the Azerbaijan State Water Resources Agency near Sumgayit on the Caspian Sea coast of Azerbaijan, with the Asian Infrastructure Investment Bank (AIIB) approving a US$45 million loan to support the project. 

The desalination plant is planned for a site near Sumgayit on the Caspian Sea coast, northwest of Baku. Using reverse osmosis technology, the facility is designed to produce up to 300,000 cubic metres of potable water per day, equivalent to approximately 109.5 million cubic metres annually at full capacity. The project will supply Baku and the Absheron Peninsula, addressing growing demand for dependable water resources. AIIB’s US$45 million financing commitment accounts for around 11% of the project’s estimated total investment, rather than covering the entire funding requirement. The approval marks progress towards diversifying water supplies amid population growth and climate-related pressures on existing infrastructure, while also supporting the development of Azerbaijan’s nascent water-sector PPP market.

ACWA Power is responsible for delivering the desalination facility through Caspian Sea Azerbaijan Project Company, which serves as the designated borrower under AIIB’s financing. The developer has entered into a 25-year public-private partnership agreement with the Azerbaijan State Water Resources Agency, which will purchase the plant’s water output. The agreement’s term begins on the planned commercial operation date and follows a build-own-operate-transfer (BOOT) model. Power China Huadong Engineering Corporation has been appointed to undertake construction, while ACWA Operations will oversee the facility’s operation.

Azerbaijan has identified water security as a key infrastructure priority, with the government unveiling a 2026–2035 programme in January 2026 to upgrade water supply, wastewater and stormwater infrastructure, particularly across Baku and the Absheron Peninsula. Authorities anticipate that desalination could account for approximately 25% of the region’s water consumption. Completion of the plant is targeted for the end of 2028, although this remains a projected milestone. Feasibility studies have progressed with support from the Asian Development Bank, while the International Finance Corporation has provided transaction advisory services for the desalination project’s tender process.