ISLAMABAD: The Asian Development Bank (ADB) and SAFCO Venture Holdings Limited (SAFCO) have signed an $86.2 million financial package to develop Pakistan’s first sustainable aviation fuel (SAF) facility in Sheikhupura. The initiative marks the region’s first private sector-led SAF project and a significant step towards decarbonizing the aviation sector.
The financing structure includes $41.2 million from ADB’s ordinary capital resources and $45 million in syndicated loans. These loans incorporate contributions from The Emerging Africa & Asia Infrastructure Fund and ILX, an Amsterdam-based asset manager specializing in sustainable development strategies. The International Finance Corporation is also participating through a parallel loan.
Suzanne Gaboury, ADB’s Director General for Private Sector Operations, highlighted the importance of the initiative, stating, “This new facility is a significant step towards decarbonizing the hard-to-abate aviation sector. ADB’s support showcases our commitment to innovative solutions that combat climate change in Asia and the Pacific.”
The SAF facility, with a capacity of 200 kilotons per annum, will utilize waste-based feedstocks like used cooking oil. It is expected to produce 145,000 tons of SAF and 18,000 tons of bionaphtha annually, contributing to a yearly reduction of up to 500,000 tons of carbon dioxide equivalent emissions. Aviation accounts for 2.5%–3.5% of global CO₂ emissions, and SAF can reduce such emissions by up to 85%.
SAFCO has secured a long-term offtake agreement with Shell Eastern Trading (Pte) Ltd for volumes of up to 145,000 tons of SAF annually. Geoffrey Mansfield, Shell’s General Manager of Low Carbon Fuels Trading, emphasized Shell’s commitment to low-carbon fuels, stating, “This agreement aligns with our strategy to create more value with fewer emissions, providing airlines with greater access to SAF.”
This project is the first financed by ADB under its Innovative Finance Facility for Climate in Asia and the Pacific (IF-CAP), a new leveraged guarantee mechanism aimed at accelerating climate finance. The partnership also marks the first collaboration between SAFCO, Axens, and Rothschild & Co in Pakistan.
SAFCO’s CEO, Ali Shaikh, described the project as a groundbreaking initiative for Pakistan, promoting cutting-edge technology, job creation, and significant reductions in greenhouse gas emissions.
ADB continues to work towards a sustainable and resilient Asia-Pacific region, leveraging partnerships to deliver innovative climate solutions while fostering inclusive economic growth.
