Pakistan, the sixth most populated country of the world, is facing pressure from its strong demographic growth. The country must not only satisfy the essential needs of its population, but also deal with an energy crisis that is threatening its development. Since 2006, AFD has been working with Pakistan to develop renewable energies and energy efficiency.
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AFD and Pakistan: promoting green and inclusive growth
lake, Pakistan, wilderness

Developing renewable energy

hydroelectricity, energy, water, Jaggran, Pakistan

Developing renewable energy

Pakistan’s energy sector is undergoing a major crisis: the country manages to meet only half of electricity demand. The frequent electricity outages handicap businesses and interrupt industrial production, contributing further to the degradation of the economic situation.

To deal with these shortages, AFD is becoming especially involved in the financing of energy effectiveness and is counting on Pakistan’s huge and still largely unexploited hydroelectric potential.

For example, we are financing the rehabilitation of the Warsak, Dargai and Chitral hydroelectric power stations and the construction of the Jaggran-II and Harpo hydroelectric power stations in order to guarantee access to reliable and environment-friendly energy that will help improve people’s living conditions.

Strengthening the water and sanitation sector

woman, water access, Pakistan, woman, Pirozzi

Strengthening the water and sanitation sector

Since April 2018, AFD has been investing in a new intervention sector in Pakistan: that of water and sanitation. AFD has granted a loan of 95 million euros to the Faisalabad Water and Sanitation Agency (F-WASA). The objective is to increase drinking-water production by 30 million gallons per day, by building a new drinking-water production plant, by increasing the existing plant and by improving the effectiveness of its distribution network.

We are also providing capacity building for the sector by supporting Al Jazari Academy, the institution that ensures the training of Pakistan’s water agency professionals.

In the coming years, AFD intends to continue supporting this sector because of its strategic importance for the country’s future.

Helping to guide urban development

Lahore, city view, Pakistan

Helping to guide urban development

AFD is helping to guide the development of several major cities of Pakistan. For example, with the Asian Development Bank (ADB), it’s providing co-financing of 130 million euros for the first BRT (Bus Rapid Transit) network in Peshawar, in Khyber Pakhtunkhwa (KP) Province. This means rapid, regular and priority buses that run in dedicated lanes and are accessible to persons with reduced mobility. The project will enable the financing of 65 km of bus-reserved lanes, 150 stops and 450 hybrid buses, etc. A similar project could be financed in Karachi in the coming years.

In partnership with Punjab Province and the Aga Khan Trust for Culture, AFD is currently examining the possibility of a loan to rehabilitate Lahore Fort and to improve access to it and its immediate vicinities (parking areas, landscapes, etc.). The objective is to help promote tourism in this historic city emblematic of Pakistan and to enhance its image abroad.

years of presence in Pakistan
projects currently being implemented
million euros of accumulated commitments
million euros of grants since 2007

Pakistan is the sixth most populated country of the world and lies at the crossroads of several highly strategic Asian regions. Bordered by the Arabian Sea and surrounded by the two giants of the continent (India and China) as well as by Afghanistan and Iran, Pakistan plays a crucial role in the region’s geopolitical balance. Since it obtained its independence in 1947, Pakistan’s foreign policy has been very influenced by its rivalry with India, which has given rise to three wars between the countries. Even though relations have calmed down since the 2000s, the question of Kashmir still remains very sensitive.

Pakistan’s demography is dynamic, and the emergence of a consumer middle class has generated growth in the population’s needs. Pakistan is currently facing a serious energy crisis, and the frequent electricity outages have a considerable negative impact on the Pakistani economy (estimated at a loss of 2 or 3 percentage points in GDP growth rate) and on the living conditions of the country’s inhabitants.

AFD has been active in Pakistan since 2006 with a “green and inclusive growth mandate”. It’s especially involved in financing energy efficiency and the production of hydroelectricity. Its actions thus target renewable energies in order to further climate change mitigation and adaptation. To fulfill its goals, AFD provides sovereign and non-sovereign loans, and it mobilizes European Union grants as part of the Asia Investment Facility.

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Funding type


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  • Climate
  • Education
  • Employment and Shared Prosperity
  • Energy
  • Health
  • Sustainable Consumption and Production
  • Water and Sanitation

Funding type

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  • Delegation of European Union Funds
  • Fund for Technical Expertise and Experience Transfers (FEXTE)
  • Grant
  • Loan
  • Non Sovereign Concessional Loan
  • Sovereign Concessional Loan


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Pakistan: winds of hope

In Pakistan, a new wind farm was built in the province of Sindh. Developed thanks to AFD's private sector branch, Proparco, the project is a factor in creating local jobs and bolstering renewable energy in a country marked by a shortfall.
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Institutional document

AFD and Pakistan

Oct 2018