ADB, SAFCO build Pakistan’s first sustainable aviation fuel plant

The Asian Development Bank (ADB) and SAFCO Venture Holdings have signed a landmark USD86.2 million financing package to establish a sustainable aviation fuel (SAF) facility in Sheikhupura, Pakistan. This project marks the first private-sector-led SAF initiative in Asia and the Pacific, excluding China, and is expected to make significant strides in decarbonising the aviation industry.

The financing includes USD41.2 million from ADB’s ordinary capital resources and USD45 million in syndicated loans from The Emerging Africa & Asia Infrastructure Fund and ILX, alongside a parallel loan from the International Finance Corporation. The facility will have a production capacity of 200 kilotons annually, using waste-based feedstock such as used cooking oil to produce up to 145,000 tons of SAF and 18,000 tons of bionaphtha per year.

“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 ADB Director General for Private Sector Operations Suzanne Gaboury. “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.” 

SAFCO CEO Ali Shaikh highlighted the partnership’s transformative potential, bringing together SAFCO, Axens, and Rothschild & Co for the first time in Pakistan’s history. SAFCO has also signed a long-term offtake agreement with Shell Eastern Trading for up to 145,000 tons of SAF annually, reinforcing Shell’s strategy to supply low-carbon fuels globally.

The project, the first financed under ADB’s Innovative Finance Facility for Climate in Asia and the Pacific (IF-CAP), aims to reduce carbon emissions by up to 500,000 tons annually. SAF is a crucial alternative in aviation, capable of reducing carbon dioxide emissions by up to 85% compared to traditional jet fuels. The new facility is expected to create jobs, promote cutting-edge technology, and set a benchmark for future private-sector SAF projects in the region.