Asian Development Bank (ADB) has signed a memorandum of understanding with Azerbaijan to provide $750m funding for a $1bn investment programme to upgrade and expand the country’s power distribution network.

The project, to be carried out by state-owned Azerishig Open Joint Stock Company, will repair, restore and increase the power distribution lines, substations and customer service lines in the Asian country.

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ADB will provide $750m for the project, with the rest coming from government funds. The bank will provide funds for the project in three separate stages with $250m to be offered in the first stage.

"The project, to be carried out by state-owned Azerishig Open Joint Stock Company, will repair, restore and increase the power distribution lines, substations and customer service lines in the Asian country."

Azerishig Open will also receive capacity building support for better operational and financial performance, ADB said. The initiative also aims at substituting the working electric meters in the country with digital electric meters.

ADB vice-president Wencai Zhang said: "Azerbaijan’s power sector plays a leading role in the country’s economy and the proposed programme will further improve electricity delivery to customers.

"The programme will deliver more reliable power supplies, reduced distribution losses and higher quality customer service."

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ADB has been offering capital support totalling nearly $2.1bn to Azerbaijan since 1999.

In 2014, the bank provided a $160m loan for boosting Azerbaijan’s chief power transmission network, one private sector energy efficiency project and a biomass renewable energy project.

Domestic electricity sales in the country are expected to grow by 3% every year from 2015 to 2020.