The UK government has secured £226m to build new drainage and water treatment systems for the Iraqi city of Hillah south of Baghdad.

Under the deal arranged by the government’s export credit agency, UK Export Finance (UKEF), Standard Chartered Bank offers a guarantee for £113m and the UK Treasury will make a direct loan of £113m.

UKEF said the deal was “transformational” for a district that cannot currently treat its wastewater.

With a pipe network of some 350km, the systems will process up to 20 million cubic metres of water a year, bringing clean water to some 25,000 households and improved sanitation to many more.

UKEF said the deal would lead to around £100m worth of UK export contracts, as the project will get equipment and services from the UK.

UK joint venture GCITJ Babel Limited will carry out the work under contract to the Babil governorate.

The drainage and water treatment systems will reduce the risk of diseases from poor sanitation and flooding from stormwater and the nearby Euphrates River.

The project will also upgrade existing treatment systems so that they can create biogas and phosphorous by-products for local agriculture.