ABIDJAN -- Construction will begin on a 275-megawatt hydro power station in Cote d'Ivoire by year-end supported by a $556 million low-interest loan from China's Export-Import Bank, a top energy ministry official said.

Cote d'Ivoire's government is pushing plans to increase the country's production capacity by 150 mW per year over the next decade, part of efforts to renew long-neglected infrastructure following years of political turmoil.

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"We'll have Chinese financing for 85 percent of the 330 billion CFA francs ($654.26 million) through Exim Bank, and the Ivorian share will be the remaining 15 percent," Sabati Cisse, energy director for the ministry of mines and energy, told Reuters in an interview.

The two parties have agreed to a 2 percent interest rate and a nine-year grace period for the 20-year loan, Cisse said.

"Everything is in place. The financing has been acquired. The last signatures, those for the loan agreement, will be done in the first half of November at the latest," he said.

Authorities first announced plans to build the Soubre hydro-electric station late last year. Work on the project is expected to last 5 years.

Unlike many countries in sub-Saharan Africa, Cote d'Ivoire has reliable power supply and exports electricity to Ghana, Burkina Faso, Benin, Togo and Mali.

It has plans to add Liberia, Guinea and Sierra Leone to its grid.

The country's six hydroelectric stations and three thermal stations have a total production capacity of 1,390 mW.

But weather has made hydro-electric output unreliable and consumption is rising, up 3.5 percent to reach 4,010 gigawatt hours in 2010.

Investment in the sector was hobbled during a 10-year political crisis that divided the world's top cocoa grower into a rebel-held north and government-controlled south. A brief war ended the impasse and reunited the country last year.

The government has promised to spend $500 million to renew the sector and is seeking additional financing.

Plans include construction of a 330 mW thermal power station near the commercial capital, Abidjan.