A new report says Iran and Russia have launched a project to construct a thermal power plant in southern part of the Islamic Republic.

According to the Russian website, Sputnik the project was launched in the southern city of Bandar Abbas during a ceremony attended by Russian Energy Minister Alexander Novak.

The construction of the 1.4 gigawatts power plant is set to be completed in the next five years. Reports say, the cost of the project is estimated at $1.12 bn. It is set to be financed mainly by the Russian side.

The two sides signed a deal to go ahead with the project back in August 2016. Based on the agreement, the Russian side is obliged to provide Iran with a loan to cover 85 percent of the cost of the project.

The remaining part will be provided by the Iranian side.

Reports say the Russian side is also set to enhance the efficiency of Ramin power plant in Khuzestan Province to 50-55 percent from the current 36 percent.