The Asian Development Bank (ADB) and SAFCO Venture Holdings Limited (SAFCO) have signed an $86.2 million financing deal to build and operate a sustainable aviation fuel (SAF) facility in Sheikhupura, Pakistan. This landmark project marks the first private sector-led SAF initiative in Asia and the Pacific.
The financing package includes $41.2 million from ADB’s ordinary capital resources (OCR) and $45 million in syndicated loans. It features B-loans from The Emerging Africa & Asia Infrastructure Fund, managed by NinetyOne and ILX. The International Finance Corporation (IFC) has also contributed a syndicated parallel loan. ADB acts as the lender of record for the B-loans and the mandated lead arranger for the full financing package.
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Suzanne Gaboury, ADB’s Director General for Private Sector Operations, said, “The aviation sector has limited decarbonization 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 decarbonizing this hard-to-abate sector.”
She added, “The assistance will promote the development of the renewable fuels market in Pakistan, exemplifying ADB’s commitment as Asia and the Pacific’s climate bank to support innovative and sustainable solutions that fight climate change.”
Aviation’s Carbon Footprint and SAF’s Role
Aviation accounts for about 2.5% to 3.5% of global CO2 emissions. The new SAF facility in Sheikhupura will use waste-based feedstocks, such as used cooking oil, to produce sustainable aviation fuel. With an annual output of 145,000 tons of SAF and 18,000 tons of bionaphtha, the facility aims to reduce CO2 emissions by as much as 500,000 tons annually.
Shell Eastern Trading has secured a long-term offtake agreement with SAFCO to purchase up to 145,000 tons of SAF annually.
ADB financed this project as the first SAF facility under its newly launched Innovative Finance Facility for Climate (IF-CAP). This financing mechanism leverages guarantees to promote climate investments, which is key in advancing ADB’s climate agenda.
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Capacity and Environmental Impact
The Sheikhupura SAF facility is expected to produce 145,000 tons of SAF and 18,000 tons of bionaphtha annually. This production will help cut greenhouse gas emissions by up to 500,000 tons of CO2 equivalent each year. The project contributes to lowering aviation’s carbon footprint and advancing renewable energy solutions by using waste feedstocks to produce SAF.
