Dhaka: The state-run Bangladesh Power Development Board (BPDB) and China Huadian Hongkong Company Limited (CHDHK) have signed an agreement to form a joint venture company to set up a coal-based power plant with a capacity of 1,320 megawatts, a senior BPDB official said on Monday.

‘These two firms signed the deal on Sunday to set up the plant at Moheshkhali island in Cox’s Bazar district, 415 kilometres (260 miles) south east from Dhaka,’ said Mohammad Saiful Islam, a director of the BPDB.

The joint venture, equally owned by both the companies, will take four years to start production, the official said.

Another official, who is directly involved with the project, said that as per the initial plan it might cost about $2 billion to implement the project.

Bangladesh plans to provide electricity to all of its more than 160 million citizen by 2021, the year in which it aims to enter the league of middle-income countries.

At present, 20 percent of its people do not have electricity while the country is facing a shortage of between 1,000 and 1,500 megawatt electricity a day which goes up to 2,000 during peak season of summer.

Bangladesh at present produces up to 9,500 of electricity a day with a capacity of 12,000 megawatts, but owing to the shortage of primary fuel the country has not been able to utilise its full capacity.