IFC is providing up to $35 million in equity and debt financing to SAFCO Venture Holdings Limited (SAFCO Ventures) to help establish Pakistan’s first greenfield sustainable aviation fuel (SAF) facility, which will convert thousands of tons of used cooking oil and other waste oils into jet fuel, helping to reduce global emissions.
IFC’s investment, primarily in the form of long-term equity, was instrumental in anchoring this project and financing a nascent sector. The project is expected to help foster a circular economy in Pakistan, create jobs and export-led growth.
SAF, a biofuel made from renewable biomass and waste resources, can reduce lifecycle greenhouse gas (GHG) emissions by up to 94% compared to conventional jet fuel. The transportation sector is responsible for about a quarter of global greenhouse gas (GHG) emissions, with aviation contributing 13,9% of these emissions, making it the second largest source of emissions in the sector after road transport. Therefore, SAF production is expected to help reduce global emissions.
The new 200.000 tonnes per annum (TPA) facility in Sheikhupura, Punjab, will collect 250.000 tonnes of feedstock oil annually and convert it into SAF, helping to reduce over 500.000 tonnes of CO2 annually. It is also expected to create 300 direct jobs through technology transfer and technical training and lead to around 20.000 indirect jobs in the waste-to-fuel value chain, while generating foreign exchange earnings for Pakistan through SAF exports.
IFC’s $35 million financing package comprises $30 million in equity and $5 million in debt. Of the total equity contribution, $20 million is its own contribution and an additional investment of up to $10 million is from a recently launched climate-related blended finance program (CIFPAK) in partnership with the UK’s Foreign Commonwealth & Development Office.
The facility, the first of its kind in South Asia, will be operated by Safco OPCO, a subsidiary of SAFCO Ventures. Biotech Energy (BTE), another subsidiary of Safco Ventures, currently operates Pakistan’s first large-scale biodiesel refinery as well as one of its largest oil feedstock collection networks. The facility will produce SAF and Bionaphtha, a feedstock for making sustainable plastic products.
Pakistan generates over one million tonnes of collectible waste oils per year, including cooking oils and other waste that can be used to produce biofuel. By leveraging Pakistan’s abundant supply of waste oils and restoring hazardous waste, the initiative will help foster the development of a circular economy.
IFC has invested approximately $13 billion in Pakistan since 1956, ing diverse sectors such as renewable energy, financial inclusion, infrastructure development, agribusiness, manufacturing, housing, health and trade, among others.
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