France commits $104mln soft loan for water resources

ISLAMABAD: France on Thursday pledged $104 million in soft loan for Pakistan to help the country improve water resources in the industrial city of Faisalabad.

Secretary Economic Affairs Division Noor Ahmed, French Ambassador to Pakistan Marc Barety, and Country Director of the French Agency for Development (AFD) Jacky Amprou signed the credit facility agreement worth Euros 94.010 million for extension of the water resources Faisalabad phase-II project. Adviser to the Prime Minister on Finance, Revenue and Economic Affairs Abdul Hafeez Sheikh witnessed the signing ceremony.

AFD will provide a soft loan for the project for a period of 20 years, including a grace period of six years at interest rate of six months Euro Interbank Offered Rate with a spread of 52 basis points. The mega water supply project’s cost is estimated at around Rs14 billion.

AFD has been operating in Pakistan since 2006. The agency offers financing solutions and technical assistance to support the Pakistani government in its development policy.

AFD works with government partners and local authorities to develop low-carbon infrastructures and improve access to essential services for the population, according to its website.

AFD said the water resources in the country also offer a massive hydroelectric generation potential. Only 12 percent of the hydropower – out of the total potential of 54 gigawatts – has so far been tapped. The French development bank is therefore increasingly involved in the financing of energy effectiveness by optimising the performance of the country existing hydroelectric plants, in addition to improving access to reliable and affordable energy.

Groundwater quality of Faisalabad city is brackish. “The proposed project will augment Faisalabad Water and Sanitation agency capacity to provide 30 MGD (million gallons/day) of additional clean drinking water to citizens of Faisalabad through surface water treatment plant,” an official statement said.

France through the French Agency for Development is providing technical and financial support in energy and urban development sector in the country. The project is AFD’s first investment in water and sanitation sector opening avenues for more collaboration with the government of Pakistan.

Earlier, the ambassador called on the finance adviser and exchanged views on matters pertaining to enhancement of bilateral cooperation. Highlighting the significance of the project, the ambassador informed that the project would provide better service and clean drinking water to the population of Faisalabad.

“The project will contribute towards the government of Pakistan’s strategy for improving the urban services and health conditions,” the statement added.