Representatives of the Power Grid Corporation of India Ltd (PGCIL), and Bangladesh Power Development Board (BPDB) signed the deal at a ceremony in Sonargaon Hotel in Dhaka in presence of the Bangladesh finance minister, energy adviser to Bangladesh prime minister, and other officials of both countries.

The agreement keeps the provision for Bangladesh to export power to India in the future, and the transmission system will have the capacity to exchange 500 MW of power soon after the system is launched.

"This is a small step for Bangladesh and India, but a giant leap for regional cooperation," said Bangladesh Prime Minister's Energy Adviser Dr Tawfiq-e-Elahi Chowdhury.

The agreement is the result of a memorandum of understanding signed on January 3 this year during Bangladesh Prime Minister Sheikh Hasina's visit to Delhi.

Bangladesh Finance Minister AMA Muhith termed the signing as "a dream of regional cooperation coming true", and lauded the fast pace of reaching the agreement. "I hope the pace will continue in implementing the project," he added.

BPDB Chairman Alamgir Kabir noted it was the first step, and in future more interconnections might be built with Nepal, Bhutan, and Myanmar to ensure greater energy security.