Pakistan and Denmark have signed a concessional loan agreement for the construction of a major Wastewater Treatment Plant (WWTP) in Faisalabad to address urban environmental challenges.
The agreement was signed by Muhammad Humair Karim, Secretary of the Ministry of Economic Affairs, and Tina Kullerup Hausen, Managing Director of Danida Sustainable Infrastructure Finance (DSIF).
The project, titled “Construction of Eastern Wastewater Treatment Plant (33 MGD) of Faisalabad City Phase-I,” will have a treatment capacity of 200,000 cubic meters per day. It aims to contribute to sustainable urban development by significantly improving wastewater treatment facilities in the city, thereby supporting environmental protection, public health, and resilient urban infrastructure.
Read: Pakistan, Denmark push $2b partnership
The project is financed through a concessional loan from DSIF, which offers highly favourable terms to support sustainable infrastructure. Such loans carry significant concessionality – a measure of how much more generous they are than standard market loans – of 35%. This makes the financing terms considerably softer and more affordable for Pakistan.
The signing demonstrates the Government of Pakistan’s commitment to strengthening cooperation with development partners to tackle pressing urban challenges
Denmark is the lead on renewable energy, and is actively following developments in Pakistan’s energy sector.Danish engineering companies and contractors, known for their extensive expertise in building water treatment plants—including those running on green energy—are expected to be involved in the project.
Read more: Pakistan to leverage Danish mining technology
DSIF is also preparing to finance 75% of a feasibility study for a proposed Wastewater Treatment Plant at Kattar Bund in Lahore.
Earlier in April, both countries reaffirmed a $2 billion partnership to modernise Pakistan’s maritime infrastructure, improve port operations, and promote sustainable practices, during a meeting between Federal Minister for Maritime Affairs Junaid Anwar Chaudhry and Danish Ambassador Jakob Linulf.
It is Denmark’s first development sector intervention in Pakistan after a long hiatus. It is also the first loan finalized under the Pakistan-Denmark Framework Agreement, concluded in 2022.
The new wastewater plant in Faisalabad represents a concrete step in the growing green infrastructure collaboration between the two nations.
