URUMQI - An energy-saving reconstruction project targeting 160 buildings in Urumqi, capital of Xinjiang Uygur autonomous region, will be carried out this June, local authorities said Monday.

The project, covering an area of more than one million square meters, will retrofit the structures, heating systems, ventilation systems and electrical systems of public buildings such as schools and hospitals.

The 696-million-yuan project (about 107 million U.S. dollars) was approved last week by the National Development and Reform Commission.

About 40 percent of funding will come from the European Investment Bank. The bank sees the project as a way to promote development in the underdeveloped region, according to Feng Mei from the local development and reform commission.

"Less developed regions like Xinjiang will benefit from the loans because the loan repayment period is 20 years, with an annual interest rate of 1 percent," Feng told Xinhua.

The rest of the funds will be provided by the government of Xinjiang Uygur autonomous region. The project is expected to be completed in 2019.