Africa’s richest man, Aliko Dangote, has announced that the upcoming oil refinery in Lamu, Kenya, will be completed at a lower cost and within a shorter timeframe than initially projected. Drawing on the expertise gained from constructing his flagship Lagos refinery in Nigeria, Dangote revealed the Lamu project will cost between $15.5 billion and $16 billion, down from the original $17 billion estimate.
Speaking in a recent interview, Dangote explained that the reduced budget is due to a faster construction schedule, lower financing expenses, and improved institutional knowledge. The refinery is expected to be operational in less than four years.
Key Features of the Lamu Refinery
- Location: Northern coast of Kenya, near the deep-water port linked to the LAPSSET corridor
- Capacity: 700,000 barrels of crude oil per day, making it the largest in East Africa and second largest in Africa after Lagos
- Projected groundbreaking: October 2026
Financing and Stakeholders
The project will be funded through a 30:70 equity-to-debt ratio, with lenders providing about $11.2 billion and shareholders contributing roughly $4.8 billion. The Kenyan government plans to acquire a stake via the National Infrastructure Fund, although the exact shareholding is yet to be disclosed.
Regional Impact and Economic Significance
The refinery aims to serve the broader East and Northern African region, including Uganda, Tanzania, Ethiopia, South Sudan, Rwanda, Burundi, and the Democratic Republic of the Congo. Currently, East Africa depends heavily on petroleum imports from the Middle East, exposing the region to supply risks and price fluctuations.
President William Ruto has endorsed the project, highlighting its potential to create approximately 60,000 jobs for Kenyan youth.
Additionally, the Dangote Group is preparing a $5 billion initial public offering for its petroleum refinery and petrochemicals unit on the Nigerian Exchange, with Kenyan investors expected to contribute up to $500 million.
