New Delhi, Oct 4 (IANS): Come Saturday, electricity will commence flowing from India to Bangladesh through a new transmission line that will be South Asia’s first high voltage direct current (HVDC) cross-border interconnection.

Describing this as a key step in regional power sharing and cooperation, the Asian Development Bank Friday said: "The transmission line, which was financed partly with a $112 million Asian Development Bank (ADB) loan, will link India's eastern electrical grid to Bangladesh's western grid."

Testing of the sub-station installations began in September.

"This ground-breaking link will help provide urgently needed power to Bangladesh. More importantly, it is a key milestone for South Asia as it looks to set up a regional energy market to make the best use of its diverse and unevenly distributed energy resources," Juan Miranda, director general of ADB's South Asia Department, said in a statement.

India's state-run NTPC will supply the power to the Bangladesh Power Development Board (BPDB), with the power supplied to be increased in phases -- 250 MW in November and a further 250 MW increase by the end of the year.

The government-to-government contract allows Bangladesh to buy power from India at a lower rate than that of their domestic plants. The cross-border trading arrangement will also allow the two countries to trade electricity based on variations in their seasonal and weekly demand.

"Expanding supply will help businesses and improve the delivery of essential services like education and healthcare. Buying electricity from India will also help gas-reliant Bangladesh diversify its energy sources and the link will later allow it to tap into energy resources from other parts of the region," the ADB said.

More cross-border energy links, expected to promote greater trade and cooperation within the region, are currently being considered in South Asia, including on Bangladesh's eastern borders.