Business and Trade

East African Nations Eye Stakes in Dangote’s Planned $17 Billion Lamu Oil Refinery

3 weeks ago EDITOR

Nairobi — Nigerian industrialist Aliko Dangote has offered East African countries a combined 30 percent equity stake in his planned mega oil refinery in Lamu, Kenya, with Kenya, Ethiopia and Rwanda already expressing interest, according to Kenyan officials.

David Ndii, economic adviser to President William Ruto, disclosed the offer at a capital markets forum in Nairobi on Thursday. Kenya is expected to take a 10 percent stake valued at approximately $500 million, while the total potential investment from regional governments could reach about $1.5 billion.

“The total for the region is about $1.5 billion,” Ndii said, adding that Dangote was prepared to backstop the project if some participating countries could not fully commit as crude off-takers. Ethiopia and Rwanda have indicated interest in participating, he noted, though specific allocation details for those countries were not immediately confirmed.

The proposed facility, to be located on Kenya’s Lamu coast, is designed with a processing capacity of up to 700,000 barrels per day. This would make it the largest refinery in East Africa and the second-largest on the continent after Dangote’s existing 650,000-bpd plant in Lagos, Nigeria. The project is estimated to cost between $16 billion and $17 billion for the refinery itself, with associated petrochemical complex and port infrastructure potentially pushing the total investment toward $20 billion.

Dangote relocated the project from an earlier proposed site in Tanga, Tanzania, to Lamu, citing commercial and technical considerations, including Lamu’s deep natural harbour capable of handling large crude tankers. Construction is expected to begin in late 2026—possibly as early as September or October—and take three to five years to complete. Preliminary surveys, soil testing and engineering design work are already under way.

The refinery is intended to supply refined petroleum products to Kenya and neighbouring markets, including Uganda, Rwanda, South Sudan, Burundi, Ethiopia and the Democratic Republic of Congo. East Africa currently relies heavily on imported fuels, with regional demand estimated at around 450,000 barrels per day. The plant’s surplus capacity could support exports to other African markets and help reduce the region’s vulnerability to global supply disruptions and price volatility.

Dangote Group plans to finance the project with roughly 70 percent debt and 30 percent equity, drawing on internal cash flows, bond issuances and a potential initial public offering. Kenya has prioritised the initiative, establishing a government committee under Deputy President Kithure Kindiki to oversee implementation and committing seed capital.

The equity offer is seen as a way to give regional governments a direct stake in a major energy infrastructure project, enhance energy security and foster greater economic integration across East Africa. Final investment decisions and detailed equity agreements remain pending.