The Asian Infrastructure Investment Bank (AIIB) and World Bank have co-financed hydropower work in Pakistan to the tune of US$720mn.

The World Bank will lend US$390mn and the AIIB US$300mn. The money will be used to fund an extension to the Tarbela-Fifth hydropower plant, which will add 1,410MW to Pakistan’s electricity grid.

Three additional power generating units will be added to the plant, bringing total capacity to 6,298MW. The remainder of the US$823.5mn project cost will come from government bodies.

The funding continues the collaboration between two development financiers which were billed as rivals rather than partners, when the AIIB commenced operations in 2016.

Already this year, the pair have collaborated on the huge TANAP gas pipeline project connecting Azerbaijan with Europe, while six of the nine projects the AIIB has approved to date have been in co-operation with more established development banks.

In its second year, the AIIB has set itself a modest lending target of US$2.5bn, having exceeded 2016’s target of US$1.2bn comfortably. The bank has confirmed that 20 projects are in its pipeline, with half set for approval this year.

Its website lists 10 of these proposed projects, spread across Bangladesh, India, Indonesia and Kazakhstan. Many involve renewable energy or an element of energy efficiency at least, which seems to confirm President Jin Liqun’s assertion that the AIIB would be “clean, lean and green”, in 2015.

An article in The Times today (January 23) confirms that the AIIB will not finance coal projects. Vice-president Joachim von Amsberg told the newspaper that while there is an ongoing discussion about coal between member states, “there’s a strong consensus that AIIB has to be a green bank and the portfolio has to show that it’s a green bank and if the portfolio is full of coal projects you won’t look like a green bank”.

This stance will please environmental campaigners who are looking to China for leadership on climate change, following the election of Donald Trump in the US and his appointment of a fossil fuel-friendly cabinet.

Von Amsberg also said that “we have to implement Paris [the climate change agreement] if we want to be relevant in the world. Yet there’s a tension with the tremendous need for expanding electricity supply in member countries”.

The comments will, however, disappoint coal exporters in Asia Pacific, notably Australia, which had been lobbying the AIIB to finance coal projects.

“The government wants the AIIB energy strategy to acknowledge that fossil fuels will play a significant role in energy generation in the region for decades to come,” Kate Williams, an Australian Treasury spokesperson, told the Financial Times late last year.

Indonesia has also applied for AIIB funding for coal-powered plants, but it would appear that the China-backed lender is determined to stick to its guns on energy financing.