The Asian Development Bank has agreed worth $86.2 million with SAFCO Venture Holdings Limited to construct and operate a sustainable aviation fuel (SAF) facility in Sheikhupura, Pakistan. This is the first-ever SAF project in the private sector in Asia and the Pacific.
This financing includes $41.2 million from ADB’s ordinary capital resources and $45 million in syndicate loans, B-loans portioned from The Emerging Africa & Asia Infrastructure Fund. A parallel loan is also being syndicated by the International Finance Corporation. ADB is the lender of record as well as the lead arranger for the financing.
According to Suzanne Gaboury, Director General for Private Sector Operations at ADB, “The new facility is expected to contribute significantly to the decarbonization of the aviation sector which has very few options available in terms of decarbonization especially for larger aircraft.”
The project intends to introduce renewable fuels in Pakistan as a reflection of ADB’s commitment to supporting sustainable solutions toward climate change. “This initiative has the potential to create jobs as well as reduce significant greenhouse gas emissions, which is a pioneering collaboration in Pakistan between Axens, Rothschild & Co, and SAFCO,” said Ali Shaikh, CEO of SAFCO.
Also Read Marriyum Aurangzeb claims inflation dropped to 4.9% under PML-N
Facility SAF 200 kt per annum will produce SAF from waste-based feedstock which includes used cooking oil. Shell Eastern Trading has entered into a long-term offtake agreement with SAFCO for up to 145,000 tons of SAF per year after the facility starts to operate. The facility is expected to produce 145,000 tons of SAF and 18,000 tons of naphtha annually and is capable of reducing as much as 500,000 tons of carbon dioxide emissions per year.
It is the first SAF initiative funded by ADB and that makes a major anchor for the SAF production driven by the private sector in this region. Financing is further promoted through ADB Innovative Finance facility for Climate in Asia and the Pacific which is an excellent pioneering mechanism for climate finance. ADB’s commitment to sustainable development continues as it forges ahead with inclusive growth and improving response mechanisms to climate change challenges within Asia.