In order to improve financial cooperation in the water and energy sectors, Pakistan and Denmark have inked an intergovernmental framework agreement.
According to authorities, Muhammad Humair Karim, secretary of the Ministry of Economic Affairs, and Lis Rosenholm, ambassador of Denmark, signed an agreement approving loans in the fields of renewable energy, energy efficiency, water supply, and waste-water treatment without charging interest.
Sardar Ayaz Sadiq, the minister for economic affairs, and Lis Rosenholm also had a thorough conversation there. He expressed his opinion that Pakistan and Denmark have friendly relations and have the potential to become allies.
Currently, negotiations are underway for wastewater treatment projects in Lahore and Faisalabad that will fall within the purview of this framework agreement.
Additionally, this arrangement would promote the transfer of knowledge from Denmark to Pakistan and provides the Danida Sustainable Infrastructure Finance (DSIF) facility the ability to grant interest-free but revolving loans up to but not limited to €100 million.
A 35% concessional element would be added to the interest-free loans following the signing of this agreement to cover the loan’s interest, the export premium, the bank margin, and an upfront grant if these costs do not total 35% of the contract value.
In spite of the fact that Pakistan and Denmark have been successful development cooperation partners since 1969, and that there hasn’t been any active, on-budget financial support from Denmark since 2017, it should be noted that this framework agreement represents a breakthrough in the bilateral and economic relations between the two nations.
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