The Asian Development Bank's board of directors has approved a $500 million loan to develop a modern 800 megawatt power plant in Khulna along with associated connections to natural gas and power transmission facilities.

"In the face of rising demand for energy in a growing economy, the Rupsha power plant will be the first of its kind in Bangladesh, vastly increasing the availability of efficient and cleaner energy," said ADB Energy Specialist Aziz Yusupov in a statement yesterday.

"By providing additional electricity supply to about 300,000 consumers, the plant will stimulate business expansion and create new jobs."

Bangladesh faces a major challenge in providing modern and affordable energy as it suffers from recurring generating capacity shortages in the power sector.

The ADB-financed project design will ensure that the Rupsha plant uses the latest combined cycle technology, which offers the highest efficiency to convert gas to electricity. It will also use the most advanced water treatment processes to purify and recycle liquid waste at the end of the industrial process, leaving zero discharge.

To supply gas to the Rupsha power plant, the project will construct gas distribution pipelines of 12 kilometres. The project will also finance construction of a 230-kilovolt switchyard at the power plant and 29km of high capacity transmission lines to transfer electricity from Rupsha to the grid.

To ensure adequate institutional capacity, the project will conduct overall institutional strengthening of the executing agency, the North-West Power Generation Company Ltd.

The total cost of the project is $1.14 billion, with the Islamic Development Bank contributing $300 million in co-financing and Bangladesh $338.5 million on top of the ADB's support. 

The project is due to be completed by the end of June 2022.

Grant financing of $1.5 million will also be provided from the ADB's Japan Fund for Poverty Reduction, said the statement.