A meeting of the Executive Committee of the National Economic Council (ECNEC) on Tuesday gave green light to the Tk 29.68 billion project that covers the manufacture and launch of the satellite and two ground stations.
The government says that it will reduce reliance on foreign satellites for cable channels and will improve telecom services to the remote areas, collect meteorological data for disaster warnings and map natural resources.
This will save Tk 1.1 billion every year, according to the government.
Including the satellite project, total six projects worth Tk 42.96 billion were approved in the ECNEC's meeting, presided over by Prime Minister Sheikh Hasina, on Tuesday.
Of the total Tk 29.68 billion cost of the satellite project, the government will provide a little over Tk 13.15 billion.
Over Tk 16.52 billion will come as 'project aid' through 'bidders financing'.
Bangladesh's first satellite on earth's orbit will have 40 transponders to provide telecommunications and broadcast services.
US-based Space Partnership International (SPI) has already started designing the satellite and will also help launch it under a contract signed with the government.
The two ground stations that will control the satellite will be built at Gazipur's Joydebpur and Rangamati's Betbunia on the land owned by Bangladesh Telecommunications Company Limited (BTCL).
The government hopes the satellite, named after the Father of the Nation Bangabandhu Sheikh Mujibur Rahman, will be sent to space by June 2017.
Meanwhile, after the meeting, Planning Minister AHM Mustafa Kamal told reporters that all six projects, approved on Tuesday, were new.
Of the total cost of these projects, Tk 23.63 billion will come as project aid while the government will provide the rest.
The government aims to complete one of the projects, 'Procurement of 120 Broad Gauge passenger carriage for Bangladesh Railway' with Tk 9.76 billion, by June 2017.
The Tk 2.07 billion 'Institute of Livestock Science and Technology' project was also approved at the ECNEC meeting. Five such institutes will be set up in Netrakona, Gopalganj, Khulna, Brahmanbaria and Gaibandha districts by 2019 under this project.
The meeting approved another Tk 420.4 million project, 'Pre-payment metering for Khulna City (1st phase)'. The project is scheduled to be implemented by June 2016.