Over ten years of its existence, the Asian Infrastructure Investment Bank (AIIB) has considered just ten hydropower projects for financing. Three were cancelled, seven received approvals. Only one was implemented without co-financiers — a refinancing of an already-built hydropower plant in Vietnam. This record speaks for itself: the bank is in no hurry to put money into hydropower, and there are solid reasons for such caution.
In the bank’s approved energy portfolio, hydropower accounts for a mere 9%, while wind and solar generation combined with energy storage exceeds 40%. In absolute figures, that is $1.25 billion against $4 billion out of a total portfolio of $13.35 billion. If one also considers that hydropower construction costs three to five times more than renewables, the gap in installed capacity becomes even more striking.
Since 2022, the bank has officially stated that it will rely on co-investors when implementing hydropower projects. During this period, two such projects were approved — both involving major multilateral development banks. One of them, the refinancing of the Xekaman hydropower scheme in Laos, was subsequently terminated for reasons that have remained opaque. The second is the enormous Rogun HPP project in Tajikistan, carrying significant social and environmental damage.
The co-financing model creates a serious institutional problem. When AIIB enters a project not as the lead financier, it effectively sheds the bulk of its due diligence obligations. Even if the lead investor violates its own environmental and social standards, the AIIB retains no real tools of influence. This is not merely a procedural flaw — it is a systemic gap between declared commitments and actual practice.
The functioning of the complaints mechanism deserves particular attention. When projects are implemented jointly with other financiers, the bank effectively closes its independent accountability mechanism to citizen complaints almost automatically. Yet the bank’s own internal rules give it the discretion to act differently. Affected communities find themselves in a situation where a formally existing instrument for protecting their interests is, in practice, out of reach.
As of February 2026, among 15 publicly disclosed energy project proposals, only one co-financed hydropower project appears — Dudhkoshi in Nepal. This suggests that hydropower is drifting to the margins of the bank’s portfolio. Civil society organisations broadly view this trend as positive. At the same time, every newly approved project continues to carry serious risks and consequences for local communities and ecosystems.
The Rogun HPP has become the most instructive example of where the logic of «entering a project through a co-financier» leads. The bank has become associated with a large-scale facility raising acute questions around the resettlement of people, the flooding of territories, and transboundary impacts on water resources and biodiversity — while retaining very limited ability to influence how those questions are actually addressed.
What might change the situation? The answer does not require radical steps. It is about returning to basic principles: basin-wide strategic environmental assessments should precede specific project selection and financing decisions, not follow them. The pipeline of high-risk projects should be open to public scrutiny before any preliminary co-financing decision is taken. The complaints mechanism should function for all Category A projects — regardless of who serves as the lead investor. And perhaps most self-evident of all: greenfield conventional hydropower should not be counted as «green climate finance». That claim contradicts both the science and common sense.
Until these problems are addressed, a pause in financing new hydropower projects should be viewed not as a constraint, but as an acute necessity.
Eugene Simonov,
Coordinator of the Rivers without Boundaries International Coalition