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WASHINGTON (Reuters) - The World Bank's board on Tuesday approved a $140 million interest-free loan to fund a more efficient power plant in Myanmar, as the bank seeks to support reforms in the Southeast Asian country.
The World Bank has stepped up its engagement with Myanmar, which is rich in resources but underdeveloped after decades of isolation under military rule. The quasi-civilian government that came to power in 2011 re-engaged with lenders and has started implementing political and economic reforms.
Myanmar overcame a major hurdle to getting help from international financial institutions in January, when it cleared about $420 million in debt arrears accumulated under the military.
The gas turbine plant in the eastern Mon State - about a four-hour drive from the capital Yangon - will provide 106 mega-watts of electricity, covering half of the peak demand in the state and 5 percent in the country, the World Bank said.
The old plant on the same site uses technology that is close to 40 years old, and only produces 40 megawatts of power. A third of Myanmar's 3500 megawatts of power generation comes from gas-fired plants, most of which are also decades-old.
The old plants are emblematic of the huge energy needs in the country. Only 29 percent of households have access to electricity, one of the lowest levels in the world.
Chronic power outages sparked protests in Yangon last year and prompted the government to announce emergency measures to boost electricity supplies.
"Myanmar's transition has tremendous potential to reduce poverty. A more reliable electricity supply will create jobs and improve lives," Kanthan Shankar, the World Bank's country manager for Myanmar, said in a statement.
The poverty-fighting World Bank specifically wanted to fund a plant in a more rural area, said Axel van Trotsenburg, the bank's vice president for East Asia and the Pacific. While much of the country's energy needs are in Yangon, most of Myanmar's poor people live in the countryside.
He said the power plant project was prepared in nine months, compared to the 18 to 20 months most projects take, underscoring Myanmar's commitment to reforms.
As part of a strategic reorganization, the World Bank has put a priority on approving projects more quickly, while still maintaining social and environmental safeguards.
(Reporting by Anna Yukhananov; Editing by David Storey)