India’s Accord Group and Oman’s Ministry of Oil and Gas have signed a $3.85 billion deal to build an oil refinery in Sri Lanka, the biggest single pledge of foreign direct investment ever made in the country, said a Reuters report.

China’s separate $1.4 billion financing of facilities on reclaimed land near the nation’s main Colombo port is currently the island’s biggest single foreign direct investment.

The deal represents a challenge to China, which had until recently been on track to be the dominant foreign investor on the island, and a possible coup for New Delhi, stated the report.

As per the deal, the Chennai-based Accord Group will control 70 per cent of the joint venture, while the Oman’s Ministry of Oil and Gas will have the rest of the stake.

India has been concerned in the past few years about China muscling into Sri Lanka and other countries in the region where India is the traditional power.

China Merchants Port Holdings, China Harbour Engineering Corp and other Chinese companies are the major investors in the port and industrial zone, according to the Reuters report.

Work on the 200,000 barrel-per-day refinery will begin next week and is due for completion in early 2024, it added.