Pakistan and Denmark have taken a major step toward advancing sustainable urban infrastructure by signing a concessional loan agreement to build a large-scale wastewater treatment plant (WWTP) in Faisalabad. The project aims to address growing environmental concerns, strengthen public health safeguards, and support resilient urban development in one of Pakistan’s most industrialized cities.
The agreement was signed between Muhammad Humair Karim, Secretary of the Ministry of Economic Affairs, and Tina Kullerup Hausen, Managing Director of Danida Sustainable Infrastructure Finance (DSIF). It underscores the commitment of both governments to collaborate on long-term green infrastructure solutions.
The project, titled “Construction of Eastern Wastewater Treatment Plant (33 MGD) of Faisalabad City Phase-I,” will have the capacity to treat 200,000 cubic meters of wastewater per day. By significantly improving Faisalabad’s wastewater management, the initiative is expected to reduce environmental degradation, improve sanitation conditions, and create a foundation for healthier communities.
Financing for the project will come from DSIF through a concessional loan, which carries highly favorable terms. With a concessionality level of 35 percent, the loan offers far softer conditions than commercial borrowing, making the project more financially viable for Pakistan. This form of support reflects Denmark’s strategy of promoting sustainable infrastructure while strengthening partnerships with developing countries.
Officials have emphasized that the plant’s design will integrate modern technologies, and Danish engineering firms are expected to play a leading role in its construction. Denmark’s long-standing expertise in wastewater treatment and renewable energy solutions positions it as a key contributor to the initiative. The collaboration highlights not just financial support but also the transfer of technical knowledge and advanced engineering practices.
The Faisalabad plant is not the only water project under discussion. DSIF is also preparing to finance 75 percent of a feasibility study for a new wastewater treatment facility at Kattar Bund in Lahore. This broader engagement signals Denmark’s interest in becoming a consistent development partner for Pakistan’s urban infrastructure.
The agreement comes on the heels of wider bilateral cooperation. Earlier this year, both countries reaffirmed a $2 billion partnership to modernize Pakistan’s maritime sector, enhance port operations, and promote sustainable practices. That commitment was reinforced during a meeting between Federal Minister for Maritime Affairs Junaid Anwar Chaudhry and Danish Ambassador Jakob Linulf in April 2025.
For Denmark, the Faisalabad project marks its first development sector intervention in Pakistan in years. It is also the first concessional loan finalized under the Pakistan-Denmark Framework Agreement, signed in 2022. For Pakistan, the project reflects a growing emphasis on working with international partners to address pressing environmental and urban challenges.
The construction of the new wastewater treatment plant is more than just a local infrastructure project; it is a sign of Pakistan’s intent to pursue environmentally sustainable urban solutions. It also reinforces Denmark’s role as a partner in supporting projects that align with global sustainability goals, ensuring that development efforts address both immediate needs and long-term resilience.
Follow the PakBanker Whatsapp Channel for updated across Pakistan’s banking ecosystem.