Nigerian billionaire Aliko Dangote has offered East African governments a combined 30 per cent stake in his proposed oil refinery in Kenya as plans gather momentum for another major expansion of his refining business beyond Nigeria.
The proposed refinery, to be located in Lamu on Kenya’s coast, is designed to process as much as 700,000 barrels of crude oil per day. Current estimates put the cost of the project at roughly $16 billion to $17 billion, although figures have varied as the plans have developed.
David Ndii, economic adviser to Kenyan President William Ruto, disclosed the proposed ownership arrangement at a capital markets forum in Nairobi. Kenya is expected to take a 10 per cent stake valued at approximately $500 million, while Ethiopia and Rwanda have also expressed interest in participating.
The combined investment being discussed for East African governments is about $1.5 billion, according to Ndii. The arrangement would give governments in the region an ownership interest in a refinery expected to serve several East African markets currently dependent heavily on imported petroleum products.
The figures clarify earlier reports suggesting that Kenya’s proposed 10 per cent stake was worth around half a trillion dollars. Available reports put the value at approximately $500 million, not $500 billion. The refinery itself is expected to cost a fraction of half a trillion dollars.
The Lamu facility would represent a major geographical expansion of Dangote’s petroleum business following the development of the Dangote Petroleum Refinery in Lagos. Dangote has said the Kenyan facility is being conceived as an East African refinery, with a market extending beyond Kenya and potentially reaching countries farther north on the continent.
The location was confirmed in July by Edwin Devakumar, vice president for oil and gas at Dangote Industries Limited, following months of uncertainty over whether the project would be located in Kenya or Tanzania. The company indicated that construction could take around 30 months.
President Ruto has strongly backed the project and has said it could create about 60,000 jobs in Kenya. Lamu’s location and port infrastructure could also strengthen the area’s role in regional energy and transportation networks.
The proposed refinery comes as Dangote moves to raise additional capital for his refining operations. Reuters reported earlier this month that the Nigerian refinery is targeting a $5 billion initial public offering, with some of the financing expected to support expansion and the proposed Kenyan facility.
If completed at the planned scale, the Lamu refinery would give Dangote two enormous refining centres on opposite sides of the continent and could significantly alter petroleum supply patterns in East Africa, where several economies remain reliant on imported refined fuel.
