ISLAMABAD: The Pak-Arab Oil Refinery (Parco) will begin building Pakistan's biggest oil refinery in Balochistan's Hub area, Petroleum Minister Shahid Khaqan Abbasi confirmed to DawnNews.

The $5 billion Khalifa Coastal Oil Refinery, which will have a production capacity of 250,000 barrels per day, is expected to be completed within five years, Abbasi said.

A petroleum ministry official told DawnNews that Prime Minister Nawaz Sharif would perform the groundbreaking of the project this year.

The project had initially been announced in 2007 and was to be built with financial assistance from the Abu Dhabi-based International Petroleum Investment Company but was scrapped in 2012 due to unavailability of funds.

The federal government and United Arab Emirates (UAE) have 60:40 ownership of Parco, which will fund the project with its current and expected profits, the petroleum minister said.

A 250 MegaWatt power-plant will also be built to assist the refinery's construction.

Due to increasing demand and limited production capacity, the government imports approximately $14bn worth petroleum products. The project is being undertaken to eradicate reliance on imports, Abbasi said.

Parco's current oil refinery in Kot Addu was also developed with the UAE's assistance.