KARACHI WATER INFRASTRUCTURE FRAMEWORK LOAN

The project will finance the rehabilitation and construction of water treatment facilities in Karachi to increase safe water supply and improve water security.

The aim is to rehabilitate and modernise water treatment facilities in Karachi to significantly enhance the city's water supply and improve water security for its rapidly growing population, as per the strategic objectives of the Sindh Water Policy 2023 and the Sindh WASH Sector Development Plan 2016-2026. The project also contributes to achieve several Sustainable Development Goals (1, 3, 6, 11, 13).

This operation will finance investments in water treatment plants in Karachi, Sindh Province, through a framework loan to the Government of Pakistan. It is expected to contribute fully (100%) to Climate Action (primarily adaptation) and Environmental Sustainability by improving water availability, quality, and security. The project supports the upgrade and modernisation of existing water supply infrastructure.

It aligns with the European Commission's Multi-Annual Indicative Programme (MIP) 2021?2027 under the Green Inclusive Growth priority, which recognises water as essential for health, nutrition, and economic opportunity. It also supports the Team Europe Initiative ? Green Economy and Jobs and the EU Global Gateway Strategy, contributing to improved health, job creation, and governance.

The operation is innovative, featuring co-financing from three international financial institutions (EIB, WB, and AIIB), collaborating for the first time in Pakistan. The EIB provides long-term financing not typically available in capital markets, addressing a key market failure. The loan offers flexible disbursement terms (tenor, interest, and repayment), diversifying the Borrower's funding sources.

Beyond financing, the EIB enhances project quality and sustainability by ensuring compliance with its Policies and Standards. It also provides technical support during procurement and construction. The project is expected to generate positive externalities, including improved public health, increased energy efficiency, and enhanced climate resilience, while supporting EU economic interests through the involvement of EU corporates and the acquisition of EU-made capital goods.

The promoter shall implement and operate the investments in conformity with national laws, as well as the EIB's environmental and social standards. The project intends to bring environmental benefits by reducing greenhouse gas emissions through the installation of more efficient equipment as well as by improving drinking water quantity and quality. This will also improve public health and climate change adaptation due to better availability and security of water supply. Most of the schemes to be financed under the investment loan are expected to have limited environmental and social impacts. However, some of the investments may fall under Annex II of the Environmental Impact Assessment (EIA) Directive 2014/52/EU (amending the EIA Directive 2011/92/EU) if located in the EU, requiring the competent authorities to determine whether an environmental impact assessment (EIA) is required. Where a formal EIA is required (or would be required, were the project located in the EU), a copy of the Environmental & Social Impact Study or the Non-Technical Summary (NTS) or equivalent document will be provided to the Bank, and published on its website. The promoter will also be required to verify that none of the schemes submitted for EIB financing have a significant negative impact on any site of nature conservation importance. Additionally, such schemes should comply with the EIB's environmental and social standards. The principles of relevant EU Directives will be also verified at appraisal. The project will contribute to climate action and environmental sustainability objectives, in particular to climate mitigation, climate adaptation, sustainable use of water resources.

The promoter shall ensure that implementation of the project will be done in accordance with the EIB's Guide to Procurement.

Under EFSD+ Guarantee