• EAAIF’s USD 20 million debt investment will contribute to the global uptake of sustainable aviation fuel (SAF) to reduce CO2 emissions in the industry.
• The transaction marks EAAIF’s first investment in the region as the Fund expands into Asia and identifies high-impact projects to drive climate action.
Islamabad, 9th December 2024: The Emerging Africa & Asia Infrastructure Fund (EAAIF), a Private Infrastructure Development Group (PIDG) company, managed by Ninety One, has announced its first transaction in Asia with a USD 20 million debt investment in a first-of-its-kind sustainable aviation fuel (SAF) facility in Pakistan. The pioneering project, developed by Safco Ventures (SAFCO), will have a feedstock processing capacity of 200,000 tonnes and will deliver 145,000 tonnes of SAF per annum (and 18,000 tonnes of bio-naphtha), supporting the global pursuit of net zero by reducing carbon emissions in the aviation industry. The facility will convert locally-sourced feedstock, such as used cooking oil, into clean fuel, while supporting income increases for Pakistan’s small businesses, hotels and restaurants which provide the feedstock.
The total debt financing of USD 86.2 million comprises a USD 41.2 million senior secured loan from the Asian Development Bank (ADB), USD40 million of syndicated senior secured B-loans from EAAIF and the ILX Fund (USD20 million each), and a USD 5 million syndicated parallel loan from the International Finance Corporation (IFC). ADB acted as the sole mandated lead arranger and bookrunner (MLAB) and arranged, structured, and syndicated the financing package.
Tidiane Doucoure, Director, Emerging Market Alternative Credit at Ninety One, the Fund Manager of The Emerging Africa & Asia Infrastructure Fund (EAAIF), a Private Infrastructure Development Group (PIDG) company said, “With this investment, we are affirming our commitment to expand EAAIF in south and southeast Asia through major infrastructure projects that play a transformative role and set new standards. Sustainable aviation fuel supply must increase by more than 150x to meet the aviation industry’s needs and support the sector’s ambition to reach net zero by 2050. As a result of the provision of financing to Safco Ventures on this landmark project, upon completion it will be one of the largest sustainable aviation fuel plants in the world. The Asian Development Bank played an integral role on this transaction, and we look forward to more collaborations with it in Asia.”
Aviation accounts for approximately 2.5 per cent of global CO2 emissions, a share projected to rise to 5 per cent by 2050 without significant mitigation measures. In response, the International Air Transport Association (IATA) and the International Civil Aviation Organization (ICAO) have set ambitious targets for net zero CO2 emissions by 2050.
SAF has emerged as a cornerstone of these efforts, offering up to 85 per cent reductions in lifecycle CO2 emissions compared to traditional jet fuel (kerosene)3, and playing a critical role in the energy transition for the aviation sector. The IATA estimates that SAF could be the largest contributor
towards the reduction in emissions needed by the aviation sector to reach net zero in 2050. The 1450,000 tonnes of SAF from the Pakistan facility are expected to result in avoided emissions totalling 489,000 total carbon dioxide equivalent (tCO2e) per annum*.
SAFCO, a leading biofuel producer in Pakistan, will operate the SAF facility and has secured a long-term offtake agreement with Shell Eastern Trading (Pte) Ltd, a Shell Group company. The project will use innovative technology from the French group, Axens, incorporating its patented technology to convert vegetable oils and waste oils into renewable fuels.
The investment underlines EAAIF’s expansion into Asia as the Fund plans to invest over USD1 billion in emerging African and Asian economies over the next few years. The commitment to the SAF facility supports EAAIF’s and PIDG’s mandate to identify and finance transformative infrastructure projects that maximise climate impact and advance the transition to net zero.
Ali Shaikh, CEO at Safco Ventures (SAFCO) said: “The investment marks a pivotal step in Pakistan’s development, introducing a cutting-edge technology to the nation. We are grateful to the Asian Development Bank (ADB) for its pivotal role as the sole bookrunner and lead advisor, enabling us to establish the first and largest SAF plant in South Asia. We are thrilled to have EAAIF involved in their inaugural transaction in Pakistan, and we look forward to a cleaner, more sustainable future.”
Suzanne Gaboury, Director General for Private Sector Operations at the Asian Development Bank (ADB) said: “This financing reinforces ADB’s commitment as the Asia and the Pacific’s climate bank and addresses the limited decarbonization options in the aviation sector. ADB has been a driving force behind this transaction, providing and mobilizing long-term financing to fuel the development of the region’s first SAF project and reinforce market confidence.”
*Based on an upper estimate of the production emissions. The avoided emissions assessment assumes a consistent lower heating value of 42.8 MJ/kg for both SAF and kerosene, and uses the fossil fuel comparator of 89 gCO2e/MJ, as per ISCC EU / CORSIA nomination.
