ADB, SAFCO ink $86.2m deal

Aim to construct sustainable aviation fuel facility to reduce emissions by 85%

ISLAMABAD:

The Asian Development Bank (ADB) and SAFCO Venture Holdings Limited (SAFCO) have signed an $86.2 million financial package to construct and operate Pakistan's first private-sector-led sustainable aviation fuel (SAF) facility in Sheikhupura, Punjab, according to an ADB statement released on Wednesday.

As per details, the financing includes $41.2 million from ADB's ordinary capital resources (OCR) and $45 million in syndicated loans, including contributions from The Emerging Africa & Asia Infrastructure Fund and Amsterdam-based ILX. The International Finance Corporation is also providing a parallel syndicated loan. ADB is acting as the lender of record and lead arranger for the financing package.

"The aviation sector has limited decarbonisation options, large aircraft are unlikely to depend on electric or fuel-cell technology in the near future and this new facility is a significant step towards decarbonising this hard-to-abate sector," said Suzanne Gaboury, ADB's Director General for Private Sector Operations. "The assistance will promote the development of the renewable fuels market in Pakistan."

"ADB's financing represents a significant advance towards a sustainable future for the global aviation sector, promoting cutting-edge technology, job creation, and substantial reductions in greenhouse gas emissions," said SAFCO Chief Executive Officer Ali Shaikh.

The 200-kilotonnes-per-annum SAF facility will use waste-based feedstock, including used cooking oil. Once operational, it will produce up to 145,000 tonnes of SAF and 18,000 tonnes of bionaphtha annually, reducing carbon dioxide emissions by as much as 500,000 tonnes per year.

Shell Eastern Trading (Pte) Ltd has signed a long-term offtake agreement with SAFCO for up to 145,000 tonnes of SAF annually.

SAF, derived from waste-based bio-feedstock, can reduce aviation carbon dioxide emissions by up to 85%. This initiative is ADB's first SAF project and the first private-sector SAF facility financed in its developing member countries outside the People's Republic of China.

ADB's OCR financing leverages its Innovative Finance Facility for Climate in Asia and the Pacific (IF-CAP), a pioneering mechanism for climate finance. SAFCO, which also operates a biodiesel plant in Sheikhupura, aims to position Pakistan as a hub for sustainable aviation fuel production.