VBE, F.2 No.

2017-23060
DBF/IFU No. L662-1
Concept Note: Faisalabad Wastewater Treatment Plant Project, Pakistan.
Danish Ministry of Foreign Affairs
Ref. no. F.2 No. 2017-23060, IFU No. L662-1
Department VBE and Danida Business Finance
Date: 14th December 2017
Programme Title Faisalabad Wastewater Treatment Plant Project, Pakistan
Country Pakistan
Implementing Partners Buyer: Water & Sanitation Agency – WASA, Faisalabad
Borrower (guarantee of the later DBF loan): Ministry of Finance, Revenue, Economic affairs,
Statistics & Privatization (Economic Affairs Division – EAD)
Contractor: Danish company selected through Tender
Implementation Period Feasibility study: mid-January 2018 – September 2018.
See enclosed PAP for the complete project.
Key results SDG 6, Target 6.3: Improve water quality by reducing pollution, eliminating dumping and
minimizing release of hazardous chemicals and materials, halving the proportion of untreated
wastewater and substantially increasing recycling and safe reuse globally.
SDG6, Target 6.7: Expand international cooperation and capacity-building support to devel-
oping countries in water and sanitation-related activities, including waste water treatment
Indicators: To be defined
SDG17, Target 17.3. Mobilize additional financial resources for developing countries from
multiple sources
Indicator: amount mobilised (target: DKK 400-500 million)
Other potential results the relevance of which will be assessed include SDG8, direct jobs cre-
ated during construction and during operation; SDG9 on resilient infrastructure; SDG12 on
sustainable consumption and production; and SDG 13 on climate.
ODA Budget in DKK mil- DBF Subsidy to the Construction of the most sustainable and fea- 262.5
lion sible Wastewater Treatment Plant(s) including 5 years of operation
and maintenance.
TA, Monitoring & Verification, Evaluation, Budget margin etc. 63
Total (DBF) 325.5
Financed by DBF Project Feasibility Study covering both Western and Eastern zones of Fai- 6.5
Development Facility salabad in view of Wastewater Treatment solutions.

1
 Table of Content

Contents
Foreword ........................................................................................................................................ 3
Introduction ..................................................................................................................................... 3
Danish Pakistani context ................................................................................................................. 4
Water and Wastewater context ....................................................................................................... 4
The Project ..................................................................................................................................... 5
Theory of change ............................................................................................................................ 7
Main scope of work of the feasibility study ...................................................................................... 8
Budget ............................................................................................................................................ 8
Brief outline of processes after the feasibility study ......................................................................... 8
Environmental, social, and human rights sustainability issues......................................................... 9
Potential risks ................................................................................................................................. 9
Annexes: ....................................................................................................................................... 10
Process Action Plan .................................................................................................................. 10
Risk Assessment ....................................................................................................................... 10
Signed Memorandum of Understanding between the Government of Punjab through WASA
Faisalabad and the Embassy of Denmark, Islamabad. ................. Error! Bookmark not defined.
Terms of Reference for Feasibility Study ...................................... Error! Bookmark not defined.

2
Foreword
A new procedure is expected to be agreed whereby a Danida Business Finance project is pre-
sented to the Ministry of Foreign Affairs Programme Committee prior to a feasibility study of
the project, if there is a need for such study. In the context of Danida Business Finance, a fea-
sibility study is a comprehensive study, providing analysis and justification for a solution to a
problem, the solution of which contributes significantly to the SDGs. A feasibility study also
outlines in some detail the most feasible solution. A feasibility study should thus provide a
thorough analysis and description of a project and form basis for a decision on whether to fur-
ther develop and present the project for funding to the Council for Development Policy and
the minister for development cooperation. A feasibility study could take up to 6-8 months and
could cost DKK 4-8 million. It would be financed by the Danida Business Finance Project De-
velopment Facility that has an annual financial frame of DKK 50 million that has been made
available by the Ministry of Foreign Affairs to IFU as the manager of the Danida Business Fi-
nance programme.
The concept note would thus present the necessary justification for a decision to initiate a fea-
sibility study. The final terms of reference of the feasibility study would take the comments of
the programme committee, including comments from external stakeholders (civil society, pri-
vate sector etc.) into account.
As this procedure is new, the present project is more advanced than will be the case in the fu-
ture. The feasibility study for the present project has thus be tendered based on the terms of
reference annexed to this concept note, and proposals from qualified consultants have been
received. The contract has not been signed yet with a consultant. Therefore, to some extent
terms of reference can be amended, based on recommendations of the Programme Committee.

Introduction
By letter of 6th March 2017, the government of Pakistan, Ministry of Finance, Revenue, Eco-
nomic affairs, Statistics & Privatization (Economic Affairs Division – EAD) submitted a re-
quest to the Royal Danish Embassy in Islamabad from the provincial Government of Punjab to
consider the financing of a feasibility study for construction of Wastewater Treatment Plants in
Faisalabad. After consultations with Danida Business Finance in Copenhagen, the Danish em-
bassy informed EAD that Denmark would proceed further on this matter. It was – and is – the
assessment that the project fits well with Danida Business Finance strategic guidelines including:
- waste water treatment is a prioritised sector where Denmark has competitive solutions
to offer to promote the achievement of the SDGs,
- Pakistan is a partner country to Denmark with important economic and political rela-
tions,
On November 15, 2017, a Memorandum of Understanding was signed between the Govern-
ment of Punjab through the Water & Sanitation Agency (WASA), Faisalabad, and the Danish
Embassy in Islamabad on collaboration between the Pakistani and Danish governments on an
important wastewater treatment project in Faisalabad.

3
Danish Pakistani context
Danish – Pakistani diplomatic relations date back to 1969, when Denmark opened its Embassy
in Islamabad. Over the years, Danida has supported Pakistan in the areas of Education, Human
Rights, Gender Equality, Democratization, Peace and Stability – often with NGOs or UN
agencies as implementing partners. The latest support programme (DKK 229 million), which
builds on previous support from 2010 to 2012, was provided through a 2013-2016 programme
to peace building, livelihoods, and education and to civil society organisations with a clear rights
mandate in the areas of democratisation, human rights and gender equality. Danish develop-
ment assistance to Pakistan is being phased out by the end of 2016, but Danish Refugee Coun-
cil, Danish Red Cross and International Media Support will continue their activities in the
country under framework agreements with the Ministry of Foreign Affairs in Denmark.
Danish strengths and interests
Pakistani-Danish trade relations have grown steadily over the last years. At present, over 40
Danish companies are active in Pakistan through local distributors. They operate in sectors
such as Food & Agribusiness, Energy & Water, Life sciences (pharmaceuticals, hospital sup-
plies & equipment), Chemicals, Software Development and Textiles. Danish companies present
in Pakistan are: Maersk, Damco, Novo Nordisk, Lundbeck, Novozymes, Vestas, FLSmidth,
Grundfos, and Danfoss. Haldor Topsoe has a long history of doing business in Pakistan, main-
ly in the fertilizer business where IFU had also made investments.
The Trade Department of the embassy functions as secretariat of the Pakistani-Danish Busi-
ness Club, which has 25 members. Faisalabad is the centre for the textile industry in Pakistan.
Some of the textile manufacturers are members of the Pakistani-Danish Business Club and ex-
port textiles to Denmark. During a recent visit to Faisalabad, the ambassador met with leading
business people and Pakistan Hosiery Manufacturers & Exporters Association. They expressed
a keen interest to increase trade with Denmark and saw the proposed Wastewater Treatment
project as an important step to boost commercial cooperation. A successfully implemented
project could strengthen the likelihood that Danish solutions be chosen in other prioritised
wastewater treatment projects in Pakistan, including those financed by others.

Water and Wastewater context

Pakistan has a National Sanitation Policy dating from September 2006. Regarding Urban Sani-
tation, the policy states: “Wherever sewage has been planned to dispose in storm water drains,
such drains will be converted into box trunks, or trunk sewers will be laid in them or on either
side of them to terminate in treatment facilities. The treated effluent may then be discharged
into natural water bodies, used for agricultural purposes or converted in lakes and ponds, as
part of recreational areas. The government will develop necessary National Effluent Quality
Standards (NEQS) for effluent to be used for these different purposes.” The Sanitation Policy
also states: “Bye-laws on sanitation related issues will be developed by the provincial govern-
ments and implemented by the Tehsil Municipal Administrations (now transformed into Water
and Sanitation Agencies - WASAs) and development authorities for developing sanitation sys-
tems including sewage and wastewater treatment facilities for housing and other development
schemes in private sector. The proportionate costs of appropriate sanitation system developed
will be charged from the developers by the local governments.”

4
Punjab (the Province in which Faisalabad is located) is the most populous province of Pakistan with ap-
proximately 55.6% of the total population of the country. With present growth rate of the population,
Punjab is expected to have population of 130 million in 2030 and about 181 million in 2050. Rapid urban-
isation and fast-growing population will continue to increase demands for sector and sub-sector services,
as the current share of urban population is 31.3%.

The Government of Punjab has steadily been increasing its investments in water supply and sanitation,
despite major emergencies and disasters. The investment trends show an increase from PKR 8.9 billion in
2009-10 to PKR 36 billion in 2015-16 and PKRs 53 billion in 2017-2018. Of the total allocation of 53
billion in 2017-18, the Government of Punjab has set aside PKR 24 billion for clean water in 2017-18 as
part of special projects and PKR15 billion for sanitation and solid waste management. One of the Provin-
cial Government’s objectives is “By 2025, develop mechanisms for reuse, recycle and recharge of
wastewater for other municipal and productive uses in all major cities and towns. All municipal discharges
comply with National Environment Quality Standards (NEQS).”
Each province in Pakistan has its Water and Sanitation Agency – WASA, responsible for
providing drinking water as well as sewerage connection to the population. However, though a
sewerage network exists in all major cities, the wastewater is NOT treated, but led directly out
into a river.
A study by the Pakistan Council of Research in Water Resources from 2006 - “Impact Assess-
ment of sewerage and industrial effluents on water resources, soil, crops and human health in
Faisalabad” - documents very well the situation and gives good recommendations, including on
future strategies.
However, as no action has been taken over the last 10 years to improve the sewerage situation
in Faisalabad – or anywhere else in Pakistan – it is obvious that there is an urgent need for im-
plementation of wastewater treatment facilities in Faisalabad.
DBF has had a meeting with all donors in the Water & Sanitation Sector in Pakistan, and it is a
general perception among donors in the Water & Sanitation Sector in Pakistan that WASA Fai-
salabad is a very professional and serious collaboration partner. This has been confirmed by the
preliminary discussions with WASA Faisalabad in the preparations of the project during the last
year.
Several big donors are assisting the sector, e.g. JICA (Japan) with a Master Plan for wastewater
in Faisalabad, and AFD (France) with an Extension of Water Resources Project for Faisalabad
WASA, as well as an institutional reform of all WASAs in Pakistan. AFD also intends to sup-
port WASA Faisalabad with use of the treated water (from the planned Danish supported pro-
ject) for irrigation to the farmers.

The Project
Faisalabad is the third largest city in Pakistan with a population of some 3.5 million people in
2016. The total area of Faisalabad District is 5,856 km2, but WASA´s responsibility area is 225
km2. The existing sewerage and drainage system is divided into two zones (East and West). The
West zone has almost double population as of the East zone. There is no treatment plant in the
East zone, and an old plant in the West zone is malfunctioning and can only treat 10% of the
produced domestic wastewater.

5
Faisalabad has become an important industrial centre, especially for textiles. Drawing fine cot-
ton from all over Punjab, it processes cotton textiles that have exceptionally high quality,
known especially for their capacity to absorb and hold dyes. However, the textile industry poses
challenging problems for the sewerage system. Presently, untreated wastewater from the East-
ern zone is collected and carried through two open storm water channels to the Maduana Drain,
which discharge into the river Ravi. From these channels, the farmers take water for irrigation
for growing their crops, including food. Furthermore, toxic chemicals/elements in the industri-
al effluent are a source of contamination of rivers, which are sources of water supply for many
downstream users as well as aquatic life.
WASA Faisalabad has asked for solutions to both the Eastern and Western zones' wastewater.
However, they have stressed that the Eastern zone has priority, in case it will not be possible to
get sufficient funds for the waste water treatment plants to cover the whole city.
The feasibility study has been in tender, and the winning company has proposed a convincing
approach and methodology. The Study is expected to start mid-January 2018.
When the draft feasibility study is ready having described feasible technological solutions and
their estimated costs, WASA Faisalabad and DBF will decide on the solution for which the
consultants will make the Preliminary Engineering Design which is part of the Final Feasibility
Study Report. An appraisal of the project will be carried out and a project document will be
drafted and further processed for final approval of the minister for development cooperation.
Subject to approval of the project, Consultants will assist WASA Faisalabad in elaborating the
Tender Documents, of which the Preliminary Engineering Design is part, for a Design, Build,
Operate and Transfer – DBOT contract. WASA Faisalabad will tender the project among
Danish contractors in accordance with Danida Business Finance rules.
The specific outcomes and outputs of the project have not been established yet. This will be a
result of the appraisal and the project document, respectively.
The outcomes of the project have relevance to the following SDGs and their targets:
SDG 6: Ensure availability and sustainable management of water and sanitation for all.
Target 6.3: By 2030, improve water quality by reducing pollution, eliminating dumping and
minimizing release of hazardous chemicals and materials, halving the proportion of untreated
wastewater and substantially increasing recycling and safe reuse globally.
Target 6.7: By 2030, expand international cooperation and capacity-building support to devel-
oping countries in water- and sanitation-related activities and programmes, including water har-
vesting, desalination, water efficiency, wastewater treatment, recycling and reuse technologies.
SDG 12: Ensure sustainable consumption and production patterns.
Target 12.4: By 2020, achieve the environmentally sound management of chemicals and all
wastes throughout their life cycle, in accordance with agreed international frameworks, and sig-
nificantly reduce their release to air, water and soil in order to minimize their adverse impacts
on human health and the environment.

6
SDG17: Partnership for the Goals
Target 17.3: Mobilize additional financial resources for developing countries from multiple
sources. Indicator: amount mobilized (target: DKK 4-500 million of private capital).
Other results would relate to SDG8 in terms of direct jobs created during construction and
during operation; SDG9 on resilient infrastructure as the project would be adapted to manage
climate change impact etc.; and possible SDG 13 on climate as the project would reduce emis-
sions by recovering energy and promote climate change resilience.

Theory of change
The sewerage treatment system of the city of Faisalabad is in a very poor condition with severe
negative impact on the surrounding communities and environment. Untreated wastewater is
discharged directly into the river contaminating the environment and negatively affecting con-
sumers downstream – households as well as local farmers who use the water for irrigation.
The local water utility (WASA) wants to establish water treatment facilities in the Eastern and
Western zones to reduce adverse effects to the environment and improve the livelihood of lo-
cal farmers and households.
DBF will provide support to WASA for a feasibility study that would thoroughly describe and
analyse the current situation in the two zones and propose appropriate technological and insti-
tutional solutions for construction and operation of one or more treatments plants to remove
all hazardous elements from the wastewater of Faisalabad being led into Maduana Drain.
With the DBF focus on Life Cycle Cost, the feasibility study will assist and capacitate WASA
Faisalabad to design and implement a cutting-edge sustainable technological solution, including
reaching their aim of having 90% of energy recovery from the treatment plant as well as re-use
possibilities of the treated wastewater.
Based on the findings of the feasibility study, DBF is expected to provide funding for the estab-
lishment of a wastewater treatment plant with a grant element of 35%, which will mobilize the
other 65% of the necessary financing from the private sector (a bank with a Danish subsidiary)
within a suggested maximum cost of a full project of DKK 750 million.
DBF support to Faisalabad WASA, being tied to Danish solutions, will introduce advanced and
sustainable Danish water treatment technologies to Pakistan and possibly provide for more
engagement.
The overall assumption for the support is that Punjab Provincial Government will continue to
prioritize treatment of wastewater and that Faisalabad WASA has the capacity and sets aside
resources needed for the management of the project. It is further an assumption that the Envi-
ronmental Protection Agency (EPA) carries out the control of industries as prescribed by the
law, in order to prevent e.g. industries from letting out wastewater with higher pollution than
prescribed by the law. It is also assumed that farmers do no longer use polluted wastewater for
irrigation of their food crops. A technical solution to the presently open channels leading the
wastewater from the sewerage system to the WWTP will be proposed by the feasibility study.
Further, Agence Francaise de Developpement (AFD) intends to finance a project using the
treated wastewater from the expected Danish financed Faisalabad WWTP for irrigation availa-

7
ble to the farmers. In addition, it is a critical assumption, without which the project will not be
viable, that Danish contractors are willing to bid. Danish companies have been consulted and
expressed that they would be interested in the project.

Main scope of work of the feasibility study

The scope of the consultancy work is comprehensive and follows Danida Business Finance'
Guidelines for Water & Sanitation, March 2015, including recent updates for sustainability and
life-cycle costing aspects. The feasibility study and recommendations for a technical and eco-
nomical sustainable setup of a wastewater treatment project in Faisalabad will thus comprise,
but not be limited to: i) Background; ii) Demographic and socio-economic data, including as-
sessment of the possible negative and positive human rights impact of the project during con-
struction and operation; iii) Sector description; iv) Project justification; v) Technology (sustain-
able technology, including energy recovery from the wastewater/sludge); vi) Project Organiza-
tion, including assessment of capacity of Faisalabad WASA to implement and operate the pro-
ject, and the need for technical assistance; vii) Tasks and Processes towards Sustainability to
ensure that the project complies with the Performance Standards of IFC; viii) Environmental
impact assessment (WASA Faisalabad will carry out a full-fledged EIA after the feasibility
study); ix) Budget and financing; x) Financial analysis, which would include the life-cycle cost-
ing approach of the proposed technologies and be based on NPV values calculated for each
technology and shall include investment costs, operation costs and rehabilitation costs to cap-
ture positive impact of technologies that recover energy and reduces operating costs; xi) Eco-
nomic analysis; xii) Plan of implementation, which include a project action plan, detailing the
steps to be taken to deliver the full project, including milestones; xiii) Assumptions and risks
analysis, and xiv) Recommendations on the content of Design Build, Operate and Transfer
Contract, along with 5 years O&M.

Budget
The budget for the WWTP solution(s) to Faisalabad is EUR 100 million (DKK 750 million).
The subsidy element, financed by the Danish ODA budget, is budgeted at DKK 262.5 million,
while Technical Assistance (TA) to the Tender, Monitoring & Verification during implementa-
tion, at the end of construction period and after end of Defects Liability Period, Evaluation and
Completion Report after 5 years, plus a 20% margin, is budgeted at DKK 63 million.
The proposal having won the tender of the feasibility study is close to DKK 6.5 million, which
will be financed by the DBF Project Development Facility.

Brief outline of processes after the feasibility study

The following lists the key next expected steps of the project preparation, approval, construc-
tion, and operation.
 Appraisal of project and elaboration of project document
 Presentation of the project to IFU Investment Committee
 Presentation of project to Council for Development Policy
 Tender for Technical Assistance by a consultant to assist WASA with elaboration of the
Tender Documents (DBF responsible for this tender)
 Tender for an Engineer to supervise the project implementation
8
  Tender process of the Design, Build, Operate and Transfer of the waste water treatment
plant launched by WASA Faisalabad
 Loan Agreement
 Implementation
 Monitoring by DBF contracted consultant
 Evaluation and completion report after 5 years.

Environmental, social, and human rights sustainability issues

Faisalabad WASA will perform an Environmental Impact Assessment (EIA). Aspects of EIA
are already an integrated part of the feasibility study process, but the full-fledged EIA will be
made after the feasibility study.
If deemed necessary, a gap analysis/action plan will be elaborated to ensure compliance with
IFC performance standards and the UN Guiding Principles on Business and Human Rights.
During and/or after the feasibility study, DBF will consult with relevant NGOs and civil socie-
ty organisations to help ensure that all relevant sustainability issues are addressed.
During construction, the supplier/contractor is obliged to comply with DBF Rules for Pro-
curement that include references to international best practice, such as IFC Performance
Standards, UN Global Compact, and with the UN Guiding Principles for Business and Human
Rights.

Potential risks
The feasibility study will identify and assess potential risks to the project. This will include risks
related to the institutional human resource, financial and organisational capacity, technology,
corruption, as well as risk in relation to human rights, to livelihoods of possibly affected com-
munities and the environment.
Both during the feasibility study and during implementation of the project, unforeseen and un-
wanted risks might occur. An overview of the risks along with risk mitigation responses is in-
cluded in the attached Preliminary Risk Management Matrix.
Risks that could affect the project include natural disasters exacerbated by climate change, polit-
ical unrest, a worsening of the human rights situation and terror. These could lead to situations,
where the project would not be feasible or had to be stopped during construction. However,
these risks are not directly related to the project, and in general, they are hard to mitigate.

9
Annexes:

Risk Assessment

Process Action Plan

10
Preliminary Risk Management Matrix – Faisalabad WWTP, Pakistan
Contextual risks
Risk factor Likeli- Impact Risk response
hood
Natural disasters Unlikely Major Except that the
in Faisalabad due construction of the
to e.g. climate WWTP should be of
change or earth such quality that it can
quake resist minor earthquakes
and flooding, no
prevention of such
natural disasters is
possible.
Terror against Likely Major The Danish Embassy
Western targets closely monitors the
situation of terror and its
targets. In case the
present situation
changes and Westerners
will again be a target of
terror, the Project Team
in Faisalabad will be
warned beforehand, as
Islamabad is the most
probable place to first
experience this type of
terror attacks.
Political unrest Likely Minor The Danish Embassy
closely monitors the
situation, and is in
continued dialogue with
the Provincial
Government of Punjab.
Abuse of human Very Signific- The Danish Embassy
rights to an extent unlikely ant together with other
where the Danish diplomatic missions in
Embassy would Pakistan are monitoring
have to withdraw the situation on Human
from Pakistan. Rights.
Background of
assessment
From 1935 till today, 4
earthquakes have
occurred in Pakistan, but
none in Punjab
Province. Excessive
rains have been avoided
so far in the Province of
Punjab.
Since 2014, terror
attacks are targeted
towards local
institutions, like the
police and the military.
So far, such attacks have
not targeted Westerners.
Some political unrest in
Islamabad might
happen, but so far,
Faisalabad has not been
exposed to major
political unrest.
Such a situation would
not occur from one day
to the other.
Appropriate solutions to
the project – depending
on where it is in its stage
of implementation -
would be drawn up in
due time.
1
Programmatic risks
Risk factor Likeli- Impact Risk response Background of
hood assessment
Danish Unlikely Signific- The Danish Embassy in DBF has asked major
contractors ant Islamabad is constantly Danish WWT
unwilling to bid on working to give Danish contractors before the
projects in companies a realistic decision was taken to
Pakistan. picture of living and work in Pakistan. They
working conditions in all responded positively.
Pakistan.

The farmers will Likely Minor The FS will propose This issue has been
continue to take (if they solutions how to either raised by DBF with both
polluted water can) lead the polluted WASA Faisalabad and
from the open wastewater in pipes or the Secretary of Punjab
channels for perhaps cover the open Provincial Government.
irrigation of their channels from the drains All agree that a
fields and food to the WWT plant, and technically and
production. thus avoid that farmers financially feasible
use this water for solution has to be found.
irrigation.
Awareness campaigns
among the farmers will
further be carried out by
the Provincial
Government.

Institutional risks
Risk factor Likeli- Impact Risk response Background of
hood assessment
Denmark is Unlikely Major Strong monitoring The contractor is paid
associated with a procedures will be in directly by a Danish
major corruption place. If corruption is Bank. Danish companies
scandal in the uncovered, funding will bring their reputation at
DBF support. be suspended during risk by getting involved
investigation, and in bribes. Hence
further controls will be corruption is unlikely to
introduced. occur, but if it does,
implementation may be
affected.
Punjab Provincial Very Major The Danish Embassy The Punjab Drinking
government will unlikely and DBF are in close Water Supply Policy
not continue to dialogue with Punjab dates from 2017 and
prioritize Provincial Government clearly states that
wastewater on the Water and treatment of wastewater
treatment. Sanitation situation. is imperative to ensure
water resources for
drinking water to the
population. Meetings

2
 with the Secretary of
Punjab Provincial
Government assured
DBF of the high priority
of this issue.

WASA Faisalabad Very Major With the close Meetings with both
does not have the unlikely collaboration between Managing Director of
capacity and does WASA Faisalabad and WASA Faisalabad, as
not set aside both the Danish well as Secretary of
resources needed Embassy, DBF, as well Punjab Provincial
for the as other donors in the Government confirm
management of sector (AFD, JICA), the the willingness to
the project. focus on capacity in allocate the necessary
terms of management resources in terms of
and resources is high. staff and financial
resources.

The Unlikely Minor The Danish Embassy is DBF has stressed

Environmental in dialogue with the towards both EPA and
Protection Agency Textile Industry on the the Punjab Provincial
(EPA) does not importance of their Government that the
follow-up on reputation in countries present situation must
factories’ to which they want to change. The existing
pollution. export their products. environmental law has
Pollution is a factor, to be enforced by EPA
which counts negatively and industries have to
in e.g. Denmark. invest in pre-treatment
equipment before
leading the wastewater
into the sewerage
system.
The Secretary of Punjab
Government is in
agreement with this.

3
Process Action Plan (PAP) for Faisalabad Wastewater Treatment Plant Project,
Pakistan – Danida Business Finance (DBF) involvement– Revised as of 23rd
November 2017
Action Responsible organisation Timeline

Elaboration of Terms of Reference (ToR) for DBF July 2017 - done

the Feasibility Study (FS)

Comments from WASA Faisalabad WASA, Faisalabad August 2017 – well received.

Tender for the FS carried out by DBF among DBF Done

International Consulting Companies having a
Framework Agreement with DBF.

Submission of documentation for Programme VBE November / December 2017

Committee and follow-up on
recommendations and outcomes

Evaluation of proposals and contract DBF Evaluation done. Contract

signature with winning company. signature with winning company
will follow after Programme
Committee meeting

Environmental Impact Assessment Study WASA WASA indicates after FS.

Start of FS in Faisalabad Consulting company having Mid-January 2018, as company

won the Tender for the FS. needs approx. 1 month to
mobilize after contract signature.

FS draft report Consulting company and Mid-July 2018 (depending on

WASA start of FS), plus time for WASA
and DBF to decide on technology
choice.
Period of comments from WASA and DBF to WASA, DBF August 2018
FS

Final FS Consulting Company Mid-September 2018

Preparation of PC-I with assistance of WASA/DBF’s Consultant October-December 2018

Technical Advisor (DBF’s Consultant), its
submission to Govt. of Punjab and Federal
Govt. / ECNEC, for approval.
(A separate activity)
Appraisal of project. October-November 2018 and
Elaboration of documents for presentation to DBF & VBE January 2019.
Danida’s Council for Development Policy.
Presentation to Danida’s Council for February 2019
DBF & VBE
Development Policy and Approval of funding
 Action Responsible organisation Timeline

by Minister. This funding covers Technical

Assistance to WASA, all costs in connection
with the Loan including the Export Credit
Premium, all interests during both the
construction period and the pay-back period),
a subsidy grant element (which together with
the loan itself covers the amount of the
commercial contract), plus a budget margin.
Simultaneously with the Presentation and TA and WASA. WASA is March–May 2019
Approval process, DBF carries out a Tender responsible for the Tender (both activities).
for Technical Assistance (TA) to WASA for among Danish contractors, 2-months for the Tender of the
elaboration of Tender Documents for the including the evaluation of WWTP itself.
infrastructure project (WWTP in Faisalabad). bids. However, the TA is
observer and gives advice to
Start of collaboration between TA and WASA WASA. DBF has to give No
concerning Tender Documents, Tender Objection to the Evaluation
Procedure, etc. Report. The TA will assist
during the contract
negotiations with winning
Contractor. DBF will give No
Objection to the signed
contract.
Loan Agreement to be drafted and negotiated Danske Bank, DBF, EAD May 2019
between EAD and Danske Bank. This can be Islamabad (both activities)
started as soon as we know the contract 1-month
price. All other relevant documents to be
signed “Exporter’s Declaration”, “Buyer’s
Declaration”, “Borrower’s Declaration”, etc.
Loan Agreement signed
EAD pays Management Fee to Danske Bank EAD June 2019
Contractor sends Guarantees for Performance Contractor
and down payment. Danske Bank
Danske Bank declares the Loan effective.

The Contractor sends his invoice for down Contractor and WASA July 2019
payment to WASA for approval and submittal
to Danske Bank for payment.

Work starts when the contractor has received Contractor August 2019
his down payment.
Depending on choice of technology and Contractor, Supervising August 2022
whether 1 or 2 WWT plants shall be engineer and Monitoring
constructed, the construction time can be 2½ Consultant from DBF
to 3 years. It might be possible to do it faster,
as no sewerage connections are foreseen.
However, if pipes have to be laid for transfer
of the polluted water from the drains to the
WWT Plant, it might be up to 3 years.
This is a best estimate at this time.