Yemen signed an agreement in December 2002 with the Hadramout Refinery Company, the countrys only private refining company, to construct a 50,000-bbl/d (rising to 100,000-bbl/d) capacity at Al Mukalla. The facility is scheduled to be completed by 2006. Another refinery is planned for Ras Isa.with a capacity of 60,000 bbl/d and completion by 2007. Refinery output would be targeted for domestic use rather than export, despite the fact that according to the MOMR, domestic growth in demand for Oil products, especially subsidized diesel fuel, has been sluggish over the past several years. The slow demand growth is mainly attributed to high import tariffs on fuels and to the smuggling of cheap (subsidized) Yemeni oil products across borders, where fuel prices are higher (leading to domestic shortages).