The Asian Infrastructure Investment Bank (AIIB) has agreed to provide a loan of up to $60m for the development of Bhola Independent Power Producer (IPP), a greenfield 220MW combined-cycle power plant located in Bhola island in the Barisal district of Bangladesh, India.

The Bhola IPP project is said to be the first project that AIIB has financed together with the Islamic Development Bank and Infrastructure Development Company.

The project will be developed by ShapoorjiPallonji Infrastructure Capital company through NutanBidyut (Bangladesh), which is a special-purpose vehicle created to develop the project.

By providing financial support, AIIB intends to help improve Bangladesh’s power generation capacity and address shortages.

“Bangladesh’s acute power shortages are impacting its economic growth and its effort to reduce poverty.”

Upon completion, the project is expected to increase generation capacity by nearly 1,300GW hours annually.

AIIB vice-president and chief investment officer DJ Pandian said: “Bangladesh’s acute power shortages are impacting its economic growth and its effort to reduce poverty.

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“This investment will help Bangladesh increase its power supply to support industries that are vital to growth, and will help reduce the number of individuals who currently live without electricity.”

The Government of Bangladesh is developing a total of three energy projects to provide affordable electricity to its people by 2021. Through these, the government intends to improve distribution capacity and increase the number of rural and urban electricity consumers.

The government is also planning to improve efficiency in gas production, expand gas transmission pipeline capacity and increase power generation capabilities in the country.