The firm said it secured finance for the 10-million-pound ($19 million) project but refused to disclose details.

"We are pleased to announce that funding is now in place to build this plant and that we are on schedule to open during Q2 2006," Greenergy chairman Andrew Owens said in a statement.

"At a time when supply constraints are leading to high oil prices, and there is increasing government focus on effective and immediate reductions in carbon dioxide emissions, low carbon, renewable biodiesel offers a vital part of the solution," he added.

British supermarket giant Tesco, a 25 percent stakeholder in the project, agreed last year to make biodiesel made with rapeseed available at more than 20 of its forecourts in the southeast of England after a successful two-month pilot.

The multi-feedstock plant will process a variety of vegetable oils, including waste oils left over from cooking.

"This new plant will help the growth of the biofuels market in the UK," Tesco spokesman Daniel Quinn said.

Greenergy said it is in talks with commodity trading giant Louis Dreyfus and Grainfarmers, Britain's largest farmer-owned arable business, about securing rapeseed for the facility, which is to be located at the port of Immingham on the Humber Estuary.

Demand for rapeseed oil to make biodiesel grew sharply last year in Europe as production capacity rose sharply thanks to EU measures aimed at reducing the bloc's dependence on fossil fuel imports and cut greenhouse gas emissions.

However, progress in some countries like Britain has been slow, with many in the industry complaining that government support, in particular on tax breaks, were poor.

UK government officials estimate that little more than 5,000 tonnes of biodiesel was produced last year, though this figure is set to rise this year as new capacity comes on stream.