Kazakhstan is building a combined heat and power plant (CHP) with a capacity of 11MW.
The European Bank for Reconstruction and Development (EBRD) is providing a loan worth €5.9 million (£4.4m) for the remaining construction work and to connect the facility to the grid.
The EBRD said the plant, located in the city of Atyrau in the west of the country, will generate clean and energy efficient electricity.
Although the country is dependent on coal for electricity production, the Atyrau region is one of only a few areas where domestic gas supply is also available for power generation, it added.
Aida Sitdikova, EBRD Director for Energy and Natural Resources in Russia, Central Asia and the Caucasus said: “The bank’s loan will support a private and independent operator of a highly efficient grid-connected gas-fired power plant and will set a benchmark in terms of efficiency and environmental standards in the region and in support of the government’s efforts to increase energy efficiency levels in the country.”