An investment worth $121 million (£77.44m) will be used to improve electricity access in Uganda.
The government will use the loan to expand power use in rural areas.
Only 14% of Ugandans nationwide and 7% in rural areas have access to a reliable energy source, according to the African Development Bank (AfDB).
The project includes the construction of around 1,147km of medium voltage and 808 km of low voltage distribution networks.
It is expected to provide enough electricity to more than 58,000 households, 5,000 business centres and around 1,400 public institutions in rural areas.
The fund comes from AfDB and Sustainable Energy for All (SE4All).
Alex Rugamba, AfDB Director of Energy, Environment and Climate Change Department said: “This project financed in partnership with the EU will advance implementation of the government-led, sector-wide approach and ongoing harmonisation process in Uganda’s energy sector to drive economic development and improve livelihoods of rural Ugandans.”