Aliko Dangote, Africa’s richest man, has confirmed that construction of the Lamu oil refinery in Kenya is expected to begin by October. He described it as a major step forward for one of the continent’s largest planned energy projects.
Speaking to the BBC, Dangote said preparations for the refinery have reached an advanced stage. Groundbreaking is scheduled for no later than October this year. He explained that construction will start immediately once the ground is broken.
The Lamu oil refinery is designed to process 700,000 barrels of crude oil per day. That capacity would place it among the largest refining facilities on the African continent. Dangote said the project would not serve Kenya alone. He said it would supply refined petroleum products across East Africa. It could also reach markets as far as Egypt.
Cost estimates for the Lamu oil refinery have been revised downward. Dangote said the project was initially projected to cost about $17 billion. That figure has since dropped to roughly $16 billion, equivalent to about Ksh 2 trillion. He attributed the reduction to lessons drawn from building the Dangote Petroleum Refinery in Nigeria. He added that the Kenyan project would move faster and attract lower financing costs as a result.
Dangote Group plans to fund the Lamu oil refinery through a mix of equity and debt. Thirty per cent of the financing will come from equity. The remaining seventy per cent will be raised through debt, according to Dangote.
Kenya has not had a functioning refinery since Kenya Petroleum Refineries Limited shut its Mombasa plant in 2013, as reported by OilPrice.com. That has left the country and much of East Africa reliant on imported fuel. East Africa currently imports all of its refined petroleum products. This is despite the region holding an estimated 4.7 billion barrels of crude oil reserves, OilPrice.com reports, citing the African Energy Commission.
The Lamu oil refinery is expected to close that gap. Its planned output of 700,000 barrels a day exceeds East Africa’s existing fuel demand. Regional demand stands at about 450,000 barrels daily, according to OilPrice.com. That leaves room to export surplus fuel to other African markets.
Lamu’s deep water port was central to Dangote’s choice of site. The natural harbour can accommodate large Post Panamax crude tankers carrying up to two million barrels. These vessels are too big to dock at Mombasa, as OilPrice.com notes. That access allows for direct long haul crude imports alongside export capacity for surplus fuel.
The project has moved through several proposed locations before settling on Lamu. East African leaders initially considered Tanga in Tanzania. Dangote later favoured Mombasa because of its port infrastructure and access to Kenya’s larger domestic market, okdiario.com reports. The company eventually chose Lamu, citing infrastructure and logistics advantages, according to the same report.
The Lamu oil refinery is also expected to complement the Lamu Port South Sudan Ethiopia Transport Corridor, widely known as LAPSSET, according to Mjengo Hub. Officials say the refinery will be modelled on Dangote’s Lagos facility. It is projected to become East Africa’s largest once complete.
Kenya’s government has indicated it will contribute limited seed capital through public funds, as Mjengo Hub reports. The bulk of financing is expected to come from Dangote Group’s own resources, bond issuances and a planned initial public offering.
The refinery is projected to generate around 60,000 jobs, according to Tuko.co.ke. These span construction, engineering, logistics, manufacturing and energy related sectors. Dangote said the broader aim behind the Lamu oil refinery is energy self sufficiency. African countries, he said, should build local refining capacity rather than depend on imported fuel.
Construction is expected to take between three and four years once groundbreaking begins. Company officials point to completion timelines ranging from about 30 months up to five years, as Mjengo Hub reports. The pace will depend on financing and regulatory approvals.
The project has drawn scrutiny from environmental groups. Their concerns focus on the refinery’s potential impact on Lamu’s UNESCO listed ecosystem, OilPrice.com reports. Questions also remain about carbon emissions and the risk of stranded assets as global energy markets shift toward renewables.
Should the Lamu oil refinery proceed as planned, it would rank among the largest private sector investments in Kenya’s history. It would also mark a significant shift in East Africa’s energy landscape. It would end a reliance on imported fuel that has persisted for more than a decade.
