Safco Ventures, a Pakistan-based biofuel producer, secured financing from a group of development finance institutions to build a biowaste-to-aviation fuel plant that would be among the largest in the world.
The $20 million senior secured loan is the first investment in Asia for the Emerging Africa and Asia Infrastructure Fund, or EAAIF. The firm was set up by the Private Infrastructure Development Group in 2002 to provide long-term commercial debt to infrastructure projects in Asia. In October, it expanded its regional mandate and added “Asia” to its name.
The Asian Development Bank provided a $41.2 million senior secured loan, the first project financed under its Innovative Finance Facility for Climate in Asia and the Pacific, or IF-CAP.
The aviation industry, which contributes 2.5% of global carbon emissions, is banking on sustainable fuel produced from organic waste and municipal refuse, to cut emissions by 70% by 2025.
Sustainable fuel
The project, in Sheikhupura, Pakistan, is one of the first in Asia to convert locally used cooking oil into clean aviation fuel. The facility is projected to generate 145,000 tons of sustainable fuel annually, creating 300 jobs, along with 20,000 indirect waste-to-fuel jobs.
Safco has a long-term offtake agreement with Shell Eastern Trading, a fuel supplier that is part of the Shell Group. The project is expected to cut more than a half-million tons of carbon dioxide annually. “The investment marks a pivotal step in Pakistan’s development, introducing a cutting-edge technology to the nation,” said Safco’s Ali Shaikh.
Amsterdam-based ILX Fund, a private debt provider for SDG-aligned projects in emerging markets, also provided $20 million in senior debt. International Finance Corp. came in with a $5 million syndicated parallel loan and $30 million in equity, its first investment in sustainable aviation fuel.
Infrastructure gaps
Pakistan faces a $124 billion infrastructure deficit between 2016 and 2040, across energy, water and transportation. In a separate intervention, the Private Infrastructure Development Group set up InfraZamin Pakistan with backing from InfraCo Asia and GuarantCo to provide credit guarantees for infrastructure loans.
The firm, in conjunction with Kashf Foundation, launched a bond last year to support small, women-led infrastructure projects like rural schools and climate-resilient low-income housing.
