Kenya, Ethiopia and Rwanda have expressed interest in joining the multibillion-dollar refinery project after the Dangote Group offered East African countries a combined 30% stake in its proposed refinery in Kenya.
Kenyan President William Ruto’s economic adviser, David Ndii, disclosed the offer at a capital markets meeting in Nairobi on Thursday, according to Bloomberg.
Ndii said Kenya could acquire a 10% stake valued at about $500 million, potentially bringing the three countries’ combined investment to 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.
Africa’s richest man, Aliko Dangote, is pursuing the refinery as part of a broader expansion of his energy and industrial investments across Africa. The facility is expected to replicate the 700,000-barrel-per-day Dangote Petroleum Refinery in Lagos.
According to Ndii, Dangote estimates that the refinery could cost up to $16 billion, while the accompanying petrochemical complex and port infrastructure could require an additional $20 billion.
He said the project could break ground in September, with the refinery expected to process about 600,000 barrels of crude oil daily supplied from oil fields in Kenya and Uganda.
Ethiopia and Rwanda have also expressed interest in investing in the project, while the Kenyan government’s suggested 10% contribution would necessitate an investment of almost $500 million.
Uganda considering 60,000 barrels per day
Ndii said Uganda had not yet decided whether to invest in the Kenyan refinery because it already planned to develop its own refining capacity.
Uganda is considering a 60,000-barrel-per-day refinery in partnership with UAE-based Alpha MBM Investments. The country has also committed to an oil hub on Tanzania’s coast with Vitol Bahrain and Tanzania.
The proposed Kenyan refinery could also deliver significant economic benefits beyond petroleum refining. Ndii estimated that the facility could contribute about $4 billion annually to Kenya’s economy.
He added that the refinery and several other major industrial projects under development could collectively contribute as much as 10% of Kenya’s GDP.
This project marks another major expansion of Dangote’s energy ambitions, coming on the heels of his 650,000-barrel-per-day Nigerian refinery, which has become a vital supplier of refined petroleum products across domestic and regional markets.
Additionally, the proposed Kenyan facility is expected to enhance regional integration within the East African petroleum market by linking crude production in Kenya and Uganda with a massive refining and distribution hub.
Backstory…
Meanwhile, the offer from Dangote Group comes few weeks after Tanzania’s wealthiest businessman, Mohammed Dewji, expressed readiness to invest $100 million in Aliko Dangote’s proposed $17 billion East Africa refinery, highlighting growing investor confidence in the project.
In an interview, Dewji stated that while he prefers Tanzania as the host country, he will happily participate even if Dangote builds the refinery in neighboring Kenya.
Dangote, Africa’s wealthiest man, recently disclosed plans to build another massive refinery on the continent’s east coast to duplicate the success of his 700,000 barrels-per-day facility in Lagos.
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