DHAKA - Asian Infrastructure Investment Bank (AIIB) president Jin Liqun has approved a loan of $120 million for a project that will upgrade and expand the power transmission system in Bangladesh's southeastern Chattogram region, home to more than 4 million people.

The Bangladesh Power System Upgrade and Expansion Project is the first AIIB financing approved under the bank's Accountability Framework, the Beijing-based lender said in a statement received here Sunday.

This framework, which came into effect on Jan 1, delegates authority to the president to approve those projects that meet the predetermined criteria agreed with the board.

"This vital investment marks the first project approved under AIIB's Accountability Framework, which clearly demarcate the roles and responsibilities of the Board of Directors and the president in respect of financing operations of the bank," Jin was quoted as saying in the statement.

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

The project will also improve voltage stability and reduce voltage fluctuations and the need to spread the demand for electrical power, allowing more residences and businesses to connect to the regional grid, said the statement.

The Bangladesh Power System Upgrade and Expansion Project is one of four energy projects in Bangladesh that have received funding from AIIB.

All four projects are aligned with the Bangladeshi government's target to achieve affordable electricity for all by 2021, the AIIB said, adding this approach will enhance distribution capacity, increase the number of rural and urban electricity consumers, improve efficiency in gas production, expand gas transmission pipeline capacity and increase power generation capabilities in Bangladesh.

"Ensuring a more stable source of electricity in Bangladesh's second largest economic center will encourage more businesses to invest in the region, creating jobs and other economic benefits," said AIIB vice president and chief investment officer D.J. Pandian.

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