Dangote-backed Lamu refinery to begin construction in October

By Abubakar Yunus

Africa’s richest man, Aliko Dangote, has announced that construction of the proposed Lamu oil refinery in Kenya will begin by October 2026.

Dangote also disclosed that the estimated cost of the project had been reduced by about Ksh200 billion, from Ksh2.2tn to approximately Ksh2tn.

The billionaire said the refinery would serve Kenya and other countries across East Africa, with construction expected to take less than four years after the groundbreaking.

Speaking to the BBC, Dangote said preparations for the project had reached an advanced stage.

“The plans for the refinery have gone very far with Kenya because what we are trying to do is to make sure that in most African countries we make them sufficient in their own energy needs,” he said.

He added, “By October this year, we will be groundbreaking. Once we break the ground, we will begin the construction.”

The proposed refinery is expected to have a processing capacity of 700,000 barrels of crude oil per day.

The facility, when completed, would become one of Africa’s largest planned oil-processing plants and a major addition to Kenya’s petroleum infrastructure.

Dangote said the refinery would not be restricted to the Kenyan market, but would supply petroleum products to several countries across the region.

“The refinery will not only be for Kenya but East Africa as a whole, so it can serve a lot of countries, including Egypt,” he said.

The businessman explained that the projected cost had been revised downwards following lessons learnt from the construction of his company’s refinery in Nigeria.

“We first thought it was going to cost $17bn, but it will cost less than that, about $16bn,” Dangote said.

He said the lower cost was partly due to the experience gained from the Nigerian project and the expected shorter construction period.

“It will cost less because this one will be faster, so in terms of financing cost it will be less, and then we are wiser as a company than when we built the one in Nigeria,” he added.

Dangote disclosed that the project would be financed through a combination of equity and debt.

According to him, the company plans to provide 30 per cent of the financing through equity, while the remaining 70 per cent would be raised through debt.

The refinery is expected to rank among the largest private-sector investments in Kenya.

It is also projected to create thousands of jobs in construction, engineering, logistics, manufacturing, energy and other supporting sectors.