The World Bank has approved a $140 million interest-free loan to upgrade an existing power plant in Myanmar, the bank said.

The project, at the Thaton station in the southern state of Mon, will replace aging gas turbines with new units which will produce 250 percent more electricity with the same amount of gas while reducing noise and carbon dioxide emissions.

Only 22 percent of Myanmar's population had access to electricity in 2011, the U.S. Energy Information Administration said. The Southeastern Asian country, formerly known as Burma, relies on hydropower for nearly 70 percent of its electricity generation.

"A more reliable electricity supply will create jobs and improve lives," Kanthan Shankar, the World Bank's country manager for Myanmar, said in a release about the project Tuesday.

More than a quarter of Myanmar's population lives below the poverty line.

Noting the World Bank is one of the first foreign investors into the energy sector in Myanmar, Shankar told The Wall Street Journal that the bank's "stringent environmental and social safeguards make it a model that can be followed."

International sanctions on Myanmar have been eased since general elections in 2010 after decades of military rule. U.S. President Barack Obama signed an executive order in July 2012 authorizing U.S. investments in Myanmar, with certain limitations for Myanmar's Defense Ministry and for sanctioned entities and individuals.

Yet foreign firms have been reluctant to invest in the country's energy sector as a result of rocky experiences of Chinese companies that have invested billions in oil, gas, hydropower, and other energy projects, the Journal noted. It cited China's $3.6 billion Myitsone Dam project in Kachin state that was suspended by Myanmar's government two years ago over environmental concerns.

Still, the World Bank hopes that its investment in Myanmar could spark further energy investment in the country.

"From the investors' side, there is a wait and see attitude, but having this first operation in Mon state could create the necessary comfort they need to invest," Shankar, said, adding that there is still a "huge need" for foreign investment in the energy sector.

Speaking at an energy conference in Houston in May, U.S. Deputy Assistant Secretary for Energy and Business Affairs Robert Cekuta said American companies looking at Myanmar's need to invest wisely.

"We have paired our actions to ease sanctions with putting in place reporting requirements for U.S. companies that encourage responsible investing, including with regard to promoting transparency and respect for human and labor rights, as well as supporting sound environmental practices, and land use," Cekuta said.