The Asian Development Bank (ADB) has agreed to provide $200m funding for a 718MW combined-cycle gas-fired power plant to improve access to energy in Bangladesh.

The funding will be provided to Reliance Bangladesh LNG and Power (RBLPL) to construct and operate the power plant.

The project, which will be built on the banks of the Meghna River, southeast of Dhaka, will increase country’s energy generation capacity by 4% and will reduce the need for electricity imports, as well as the use of environmentally harmful and expensive fuels like coal and oil.

ADB Infrastructure Finance South Asia, Central Asia, and West Asia director Shantanu Chakraborty said: “This highly energy efficient project will help address a widening gap between the demand and supply of electricity in Bangladesh, which is critical for continued industrial and economic growth.

“ADB has been instrumental in mobilizing crucial commercial financing, incorporating best practices in environmental and social standards, and establishing precedents for future financings of similar large scale projects in Bangladesh by boosting investor and lender confidence.”

The Japan Bank for International Cooperation and four other commercial banks will co-finance the power plant project

The bank said that the power plant will also address the issue of energy shortages and drive further private sector investments in Bangladesh’s power sector.

The funding includes a $100m loan from the ADB while the remaining $100m will be provided by Leading Asia’s Private Infrastructure Fund (LEAP), which is administered by ADB.

Additionally, the Japan Bank for International Cooperation and four other commercial banks will co-finance the project.

Nippon Export and Investment Insurance will provide insurance to the commercial banks.

Furthermore, the ADB has been associated with the power plant project as a leading anchor lender since the initial stages of its development.

In June this year, the bank has agreed to give a $200m concessional loan to help upgrade power supply and transmission systems in Nepal.