PEORIA, Ill. — A $1.4 billion fertilizer plant that would have provided approximately 165 permanent jobs and up to 2,000 temporary construction jobs in Peoria County will instead be located near Keokuk, Iowa, in Lee County.

Officials with Cairo, Egypt-based Orascom Construction Industries announced this on Sept. 5. Orascom’s decision to locate the plant in Iowa was made despite a special incentive package, including tax breaks, for the company, approved by Illinois state senators on the final day of their 2012 spring session.

“I helped put together the package, but I have to tell you, from looking at what Iowa is offering compared to Illinois, it sort of crystallizes the issue of our business climate in Illinois,” said Illinois state Sen. Darin LaHood (R-Peoria).

“When a private-sector company is looking at whether it’s easier to do business in Iowa, Indiana or the Southern states, Illinois just doesn’t add up when you look at workers’ compensation costs, litigation, taxes and labor costs.”

Various government entities in Iowa combined to offer Orascom more than $130 million in tax incentives and property tax write-offs – the largest single capital investment in the state’s history – to entice the company to do business in the Hawkeye State, Gatehouse Media reported.

“This is another example of why (Illinois’ business climate) needs to be addressed in Springfield,” said LaHood. “The chairman of Caterpillar has talked relentlessly about this – all of the private sector and chambers of commerce have. Unless you change that climate, you are going to continue to lose private-sector jobs to other states.”

According to Dow Jones Newswires, Orascom Chief Executive Nassef Sawiris said the company rejected Illinois’ bid for the plant because of fears that corporate taxes would increase because of Illinois’ $9 billion state budget deficit.

“We were quite concerned, honestly, with Illinois’ budget,” Sawiris said. “We didn’t feel like Illinois was the right place for us ... so we decided to locate on the other side of the (Mississippi) River.”

Jean Payne, president of the Illinois Fertilizer & Chemical Assoc. (IFCA), declined comment on Orascom’s decision. “IFCA did not take a position on this issue,” said Payne in an email.

Orascom had also considered sites in Scott County, Iowa, near Davenport and a location in Texas for the fertilizer plant, according to Gatehouse Media.