Dangote Group has offered East African nations a combined 30 percent equity stake in its planned refinery in Lamu, Kenya, with Kenya, Ethiopia, and Rwanda expressing interest in participating, according to statements attributed to Kenyan President William Ruto's Economic Adviser, David Ndii, at a capital markets forum in Nairobi.
Ndii said Kenya could take a 10 percent stake valued at about $500 million, putting the potential combined investment by countries in the region at approximately $1.5 billion.
"The total for the region is about $1.5 billion. I don't actually see a challenge in doing that, and if some of them are not off-taking we will backstop," he said.
The proposed refinery is expected to be a replica of the 700,000-barrels-per-day Dangote Petroleum Refinery in Lagos and is being promoted by Africa's richest man, Aliko Dangote, as part of a major expansion of his energy and industrial interests across Africa.
According to Ndii, Dangote expects the refinery itself to cost as much as $16 billion, while the petrochemical complex and associated port infrastructure could require about $20 billion in investment. He disclosed that groundbreaking for the project was expected in September, adding that the facility would receive about 600,000 barrels of crude oil daily from oil fields in Uganda and Kenya.
Ethiopia's potential investment is reported to be under consideration and not yet confirmed, according to stockmarket.et. The report from ethionegari.com says Ethiopia has increasingly sought to invest in major infrastructure and strategic projects in neighboring countries through state-owned investment entities and companies.
Regional and Global Context
Ethiopia's interest in the Lamu refinery comes alongside other regional infrastructure investments. According to ethionegari.com, Ethiopia holds a 19 percent stake in Berbera Port in Somaliland and has also expanded its investments and partnerships in sectors including banking, telecommunications, and real estate in South Sudan.
Ethiopian Airlines has established partnerships and equity arrangements with airlines in several African countries, including Zambia, Malawi, Chad, Guinea Airways, and Lome-based Asky Airways in West Africa, the same source adds. Ethio Telecom has also entered into agreements with telecommunications companies and governments in countries including Cameroon, Djibouti, and South Sudan.
Dangote has existing business interests in Ethiopia, having invested in the country's cement industry and developing major industrial projects, including a refinery and fertilizer facility in the Somali Region, ethionegari.com reports.
Project Costs and Timeline
Refinery construction costs are estimated at between $16 billion and $17 billion, with the wider project, including port and infrastructure, potentially reaching a total of around $20 billion, according to stockmarket.et. The refinery is planned to process crude oil from Kenya and Uganda and supply refined petroleum products to markets across East Africa, the same source says.
The proposed refinery is expected to have a processing capacity of up to 700,000 barrels of crude oil per day, matching the capacity of Dangote's Nigerian facility.
Kenya's planned 10 percent participation would require an investment of approximately $500 million, while Ethiopia and Rwanda have also indicated interest in taking stakes in the project.
Ndii said Uganda had yet to decide whether to invest in the Kenyan refinery, partly because it already had plans to develop its own refining capacity. Uganda is considering a 60,000-barrels-per-day refinery in partnership with Alpha MBM Investments of the United Arab Emirates. The country has also agreed to invest with Tanzania and Vitol Bahrain in an oil hub on the Tanzanian coast.
Dangote's Growing Ethiopian Portfolio
For Ethiopia, the potential investment would add to its growing economic cooperation with Dangote Group, which is already developing a $2.5 billion fertilizer complex in the Somali Region, with the broader project later projected to exceed $4 billion, according to stockmarket.et. The fertilizer project is also linked to a separate 25-year natural gas supply agreement valued at approximately $4.2 billion, with gas expected to be sourced from Ethiopia's Calub gas field.
The Lamu refinery would represent Dangote Group's major expansion of its refining operations into East Africa, following the company's 650,000-barrel-per-day refinery in Nigeria.
The offer was first reported by Bloomberg, and Arise News reported that Ndii said the project could inject about $4 billion into the Kenyan economy annually. The same outlet noted that the refinery and several other major industrial projects could collectively contribute as much as 10 percent of Kenya's GDP.