The Asian Development Bank (ADB) will grant a loan of $150 million to the northwestern Chinese city of Lanzhou to help it improve urban transport system, the ADB's China office said Tuesday in a statement.

The loan is to help the provincial capital of Gansu to set up a rapid bus transit system that will reduce transport time and costs and cut emissions of greenhouse gases, it said.

The rapid bus transit system will link a planned new city center to the original hub, and provide a fast and clean mass transport service.

ADB's China office said it was the ADB's first project to support an urban mass transport service.

It was also the first ADB transport project to support preparation of an application for certification under the Clean Development Mechanism of the Kyoto Protocol, which will provide revenue that can help offset some of the costs of running the transit system.

The ADB's loan has a term of 25 years, including a grace period of 5 years, with the interest rate determined in accordance with ADB's LIBOR-based lending facility, according to the ADB China office.

The ADB's loan accounted for around 31 percent of the total project cost of $480.3 million, with Bank of China financing $240.3 million and Lanzhou city government providing $90 million.

The project is expected to be completed by the end of December 2014.