Two Japanese companies have been shortlisted to build the largest coal-fired power plant in Bangladesh to ease the electricity shortage, a top official said yesterday.

Abul Quasem, managing director of Coal Power Generation Company Bangladesh Ltd, said Sumitomo Corp and Marubeni Corp showed interest to build the plant in Matarbari in the Bay of Bengal, and one of them will get the job.

The design and bid documents are currently being prepared, with the state-run company expected to reach a deal at the end of 2015, he said.

The Matarbari plant will have an installed capacity of 1,200 megawatts, with two units producing 600 megawatts each. It will use imported coal to meet the rapidly rising power demand.

Quasem said the company will borrow $3.7 billion from the Japan International Cooperation Agency at an annual interest rate of 0.1 percent over 30 years, with an initial ten-year grace period. The rest of the money will be financed by the government.

This is the biggest project in the power sector in terms of both investment and power generation capacity, in Bangladesh's history, he said.

The construction of the two units of the plant is scheduled to start in January 2017, with operations set for 2023.

Once the project is operational, Coal Power Generation Company would go for two more units in the same area with the same power generation capacity.

Bangladesh is looking for outside help to meet its growing demand for power. The country now generates, on average, 7,500MW of electricity, which caters to two-thirds of the population. The government plans to generate 24,000MW by 2021, and the country's power capacity growth is currently about 10 percent a year.

The country is increasingly moving toward other modes of electricity generation as domestic reserves of natural gas, which now accounts for about 75 percent of power generation, are fast depleting.