Dangote Group plans to finance a proposed 700,000-barrel-per-day oil refinery in Kenya through a combination of internally generated funds, bond sales and proceeds from an initial public offering (IPO), as it expands its refining footprint across Africa.
The refinery, expected to become East Africa’s largest refining project, would take about three years to complete and supply refined petroleum products to Kenya and neighbouring countries, reducing the region’s reliance on imported fuel.
The project also forms part of Dangote Group’s strategy to expand fuel-processing capacity across the continent following the successful start-up of its 650,000-barrel-per-day refinery in Lagos.
“The site has been selected, soil tests are under way, and design and engineering work has commenced. Kenya was the choice from the beginning,” Edwin Devakumar, Dangote Industries’ Vice President for Oil and Gas, told Reuters on Tuesday.
The refinery will be built on Lamu Island off Kenya’s coast and will represent Dangote Group’s biggest refining investment outside Nigeria.
Devakumar said the project would be financed through a mix of internal cash flow, bond sales and funds expected to be raised through a planned IPO. Although he did not disclose the project’s cost, he said it would be comparable to that of the Lagos refinery.
The Lagos refinery, built by Africa’s richest man, Aliko Dangote, cost more than $20 billion by the time it commenced operations in 2024.
Originally estimated at about $9 billion in 2013, the project’s cost rose significantly following a site relocation, engineering challenges, currency depreciation, the COVID-19 pandemic and rising global inflation.
Dangote has for months expressed interest in establishing a major refining facility in East Africa. The company had initially considered Tanzania’s port city of Tanga before settling on Kenya, citing infrastructure, logistics and market considerations.