The World Bank has approved $59 million (£45.8) in funding to help modernise Bangladesh’s power sector.
It aims to help meet rising national demand for electricity by improving the reliability and efficiency of the entire power system.
By modernising the way electricity is generated, managed and transmitted, the country will be able to avoid power outages, reduce load-shedding and significantly cut the cost of making power.
Businesses in Bangladesh face power outages for an average of 840 hours per year, which causes output losses equivalent to 3% of GDP.
While almost all urban areas have electricity, only 70% of rural households have access.
The project will also lower greenhouse gas emissions by reducing the use of carbon intensive fuels used in electricity generation, help construct a 40km transmission line and remove grid bottlenecks between important areas.
Qimiao Fan, World Bank Country Director for Bangladesh, Bhutan and Nepal, said: “The project will help address bottlenecks and modernise the overall power system.
“This will reduce outages, save fuel in power generation and help bring affordable and reliable electricity to households and businesses.”
Bangladesh has signed a finance agreement worth $35 million (£27.4m) to reduce air pollution in Dhaka City.