Asian Infrastructure Investment Bank (AIIB) has approved a $120m loan to support a power transmission system expansion and upgrade project in the Chittagong region of Bangladesh.

The framework enables the AIIB president to approve projects that meet the predetermined criteria agreed with the Board.

AIIB president Jin Liqun said: “This vital investment marks the first project approved under AIIB’s Accountability Framework, which clearly demarcates the roles and responsibilities of the Board of Directors and the President in respect of financing operations of the Bank.

“Through the Accountability Framework, we sought to establish a new model of governance for AIIB with an effective, strategic Board of Directors that directs and oversees the work of an efficient, accountable management, together creating a Bank able to serve its clients’ needs effectively and efficiently.”

The project will see the construction and upgrade of more than 46km of double-circuit transmission lines and associated substations and line bays.

Additionally, the upgrade project is expected to improve voltage stability as well as minimise voltage fluctuations and the need to spread the demand for electrical power. The upgrade of the transmission system will enable more residences and businesses to connect to the regional grid.

The Bangladesh Power System Upgrade and Expansion Project is one of four projects that have secured financing from the AIIB. All projects are in line with the Bangladeshi government’s objective to provide affordable electricity for all by 2021.

AIIB vice-president and chief investment officer D. Jagatheesa Pandian said: “Ensuring a more stable source of electricity in Bangladesh’s second largest economic centre will encourage more businesses to invest in the region, creating jobs and other economic benefits.

“Addressing the power shortages will also remove the risk local businesses face when having to rely on an unstable power supply.”