Turkish-French joint venture Oyak Renault will produce engines for hybrid vehicles in northwestern Turkey's Bursa, Technology and Industry Minister Mustafa Varank announced Thursday.

As part of the project, the carmaker will lay the foundation for a new factory in Bursa on Oct. 19, the minister revealed.

"The project, with a fixed investment of more than 100 million euros, will help cut [Turkey's] current account gap by $2.3 billion a year," Varank said in a statement.

"For the first time aluminum engines will be made in Turkey," he added.

Varank recently met Antoine Aoun, the general manager of Oyak Renault Turkey, in capital Ankara. They discussed the company's investment plans in Turkey.

The minister said that the factory will be the keystone of the production facility for the next-generation hybrid vehicles as spurred by government incentives.

In April, President Recep Tayyip Erdoğan announced incentives worth TL 135 billion ($21.83 billion) to support 23 projects by 19 selected firms. The incentives aim to encourage more investment in the country, as well as support firms in sectors including health care, defense, automobiles, mining and metals. Varank said Turkey will be the only manufacturer in Europe of the company's next-generation engine. Aoun said Oyak Renault will continue its investments in Turkey. "Renault Group believes in Turkey, and is making investment plans," he added.

In March, Renault announced plans to move the production of its Clio models from France to its Oyak Renault plant in Bursa.