ADB will provide $750m for the project in three stages with $250m to be allocated as part of the first stage. The Azerbaijan government will provide the remaining $250m.
The funds will be used to rehabilitate and expand the power distribution lines, substations, and customer service lines.
Work also includes the replacement of the existing electric meter devices with digital electric meters.
State-owned Azerishig Open Joint Stock Company will undertake the program. It will secure capacity building support for operational and financial performance.
ADB vice president Wencai Zhang said "Azerbaijan’s power sector plays a leading role in the country’s economy and the proposed program will further improve electricity delivery to customers.
"The program will deliver more reliable power supplies, reduced distribution losses, and higher quality customer service."
ADB has allocated loans worth about $2.1bn to Azerbaijan since 1999. The bank’s support for power enhancements includes a $160m loan for strengthening the country’s main electricity transmission network.
The bank has also provided loan for a private sector energy efficiency project and a biomass renewable energy facility.
Domestic electricity sales in Azerbaijan are expected to increase 3% annually between now and 2020.
