Dhaka: Eastern Refinery Ltd (ERL), which supplies around 40 percent of Bangladesh’s fuel needs, said it plans to more than triple its oil-processing capacity with a 3.5 million tonne-a-year unit to help meet rising domestic demand.

The new unit at Patenga refinery in Chittagong will cost $1.7 billion, Nasrul Hamid Khan, Bangladesh’s junior minister for power, energy and mineral resources, said on Tuesday.

The expansion will be mainly financed by ERL, according to a senior official of the ministry.

ERL, a subsidiary of state-run Bangladesh Petroleum Corporation (BPC), signed a deal on Tuesday with Engineers India Ltd, which will provide management consultant services for the expansion project.

The government will decide on the project developer through a tender.

ERL, Bangladesh’s sole refiner, currently processes 1.3 million tonnes of crude oil annually.