Dangote Picks Kenya’s Lamu for a $17 Billion Refinery
KENYA · ENERGY
Key Facts
—The decision: Aliko Dangote has selected Lamu, on Kenya’s northern coast, as the site of his planned East African refinery. Soil tests and engineering work are already under way.
—The scale: Up to $17 billion and 700,000 barrels a day — on par with his Lagos plant, the world’s largest single-train refinery.
—The market: The refinery is to supply Kenya, Uganda, Tanzania, South Sudan and neighbouring countries. The region imports nearly all its refined fuel.
—The financing: Internal cash flow, bonds and a planned share listing, according to the group.
—The timeline: Construction is expected to take about three years once it begins.
—The twist: The project had earlier been discussed for Tanga in Tanzania before landing in Kenya.
The Dangote Kenya refinery has a home. Lamu, on the country’s northern coast, will host a 700,000-barrel-a-day plant costing up to $17 billion. It is the Nigerian billionaire’s second continent-scale bet in weeks.
Where the Dangote Kenya refinery will rise
Edwin Devakumar, oil and gas vice-president at Dangote Industries, confirmed the site on Tuesday. He told Bloomberg the plant will cost as much as $17 billion.
Soil tests are under way at Lamu. Design and engineering work has begun.
At 700,000 barrels a day, the plant would rank beside the group’s Lagos refinery, which runs 650,000 barrels. Together the two would give Dangote refining scale no private African group has ever held.
The choice ends months of guessing across East African capitals. Several had courted the project.
For Nairobi it is rare, clear economic good news in a bruising year.
Why Lamu
Lamu is best known abroad for its centuries-old Swahili old town, a UNESCO site. But the county also anchors LAPSSET, Kenya’s long-planned transport corridor.
Its new deep-water port was built to serve Ethiopia, South Sudan and the wider region. LAPSSET’s backers have waited years for an anchor tenant of this scale.
A refinery would give the corridor’s port and roads the cargo their business cases have always lacked. That plumbing is exactly what a mega-refinery needs.
East Africa has imported nearly all its refined fuel for more than a decade. That is since Kenya’s ageing Mombasa refinery stopped running crude.
The import bill is one of Kenya’s biggest drains on foreign currency. Every global price spike feeds straight into the shilling and local prices.
Refining at home would keep a chunk of that value onshore. Kenyan outlets put the investment at about 2.2 trillion shillings.
That would rank among the largest private investments ever announced in the country.
From Tanga to Lamu
The project’s route to Kenya had a subplot. Dangote had earlier discussed a site at Tanga on Tanzania’s northern coast.
The plan moved after talks in Dar es Salaam failed to align, according to regional reports.
Devakumar offered a smoother version: Kenya was the choice from the start. Either way, the decision hands President William Ruto’s government a headline investment just as it courts foreign capital hard.
Tanzania has hardly been abandoned. Dangote presented plans for a port, a power plant and a fertiliser complex there to President Samia Suluhu Hassan’s government in late June, as The Rio Times has reported.
How he plans to pay for it
The group plans to fund the plant from its own cash, bonds and a planned share listing, per Billionaires.Africa’s account of the announcement. Construction is expected to take about three years once ground is broken.
The Lagos plant supplies the cash engine. It has turned Nigeria into a net fuel exporter and in June overtook the United States as Europe’s top jet fuel supplier, The Rio Times has reported.
The planned share sale is itself a landmark in waiting. The group has floated a pan-African listing of the Lagos refinery worth up to $5 billion.
It would be the largest offering in African market history.
Why it matters
A second Dangote mega-refinery would redraw the fuel map of a whole region. Seaborne imports from the Gulf and India would give way to African-refined fuel.
It is the sharpest example yet of African private money building continent-scale plant. It is also a test of execution.
The Lagos refinery took over a decade and billions more than first planned. Lamu’s heritage setting and security history will add scrutiny — themes central to the contest for African markets The Rio Times tracks in its Africa: The New Scramble pillar.
Announcements are not steel in the ground. Kenya has watched corridor projects stall before.
The three-year build estimate will test even the builder of Lagos.
More: Tanzania news in English, every day from The Rio Times.
Frequently Asked Questions
Where will Dangote build his Kenya refinery?
At Lamu, on Kenya’s northern coast, where soil tests and engineering work have begun. The site anchors the LAPSSET corridor and its new deep-water port.
How big is the planned Dangote Kenya refinery?
It is planned at 700,000 barrels a day and up to $17 billion in cost. That is on par with his 650,000-barrel Lagos refinery, the world’s largest single-train plant.
How will the refinery be financed?
Dangote Industries says it will use its own cash, bonds and a planned share listing. Construction is expected to take about three years.
Which markets will the Lamu refinery serve?
Kenya, Uganda, Tanzania, South Sudan and neighbouring countries. East Africa currently imports virtually all of its refined petroleum products.
Connected Coverage
The refinery race has been building: The Rio Times reported in June that East Africa was weighing a Dangote-style refinery, while his Lagos plant overtook the US as Europe’s top jet fuel supplier. Kenya, meanwhile, handed China a $2.9 billion airport expansion as it courts mega-projects.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error
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