Two UAE petroleum firms have won Sri Lankan government approval to build the island's second refinery with an investment of 1.2 billion dollars, a senior minister said.
Trans Asia Gas International LLC and Star Petro Energy LLC of the UAE plan to build a 100,000 barrels-per-day refinery in the southern town of Hambantota, minister Anura Priyadarshana Yapa told reporters.
The project has been approved by the Board of Investment, the investment promotion agency that grants investors tax and other concessions.
Yapa has previously said the planned refinery's entire output will be shipped to overseas markets.
The refinery project will provide employment to about 700 people in the area, one of Sri Lanka's most neglected districts where unemployment and poverty are high.
It is the home electorate of Sri Lanka's president Mahinda Rajapakse.
The government has also started work with Chinese funds to build a new port in Hambantota, to exploit its location close to the main shipping lane across the Indian Ocean.
The new refinery investment comes at a time when Sri Lanka is offering petroleum firms the chance to bid for oil exploration blocks in offshore areas.
The island's sole refinery owned by state-run Ceylon Petroleum Corp at Sapugaskanda, north of Colombo, has a capacity of only 50,000 barrels per day.
The government is also seeking foreign investment to upgrade this refinery and raise its capacity.
Lanka IOC, a unit of Fortune 500 Indian Oil Corporation that commands a third of the local retail fuel market, has also proposed an oil refinery in northeastern Trincomalee.
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