Dangote Offers East African Countries 30% Stake in Planned $17 billion Refinery

Aliko Dangote has offered East African countries a combined 30% equity stake in his proposed oil refinery in Kenya, potentially giving regional investors access to about $1.5 billion worth of the planned project.

Aliko Dangote has offered East African countries a combined 30% equity stake in his proposed oil refinery in Kenya, potentially giving regional investors access to about $1.5 billion worth of the planned project.

David Ndii, Kenyan President William Ruto’s economic adviser, disclosed this on Thursday at a capital markets forum in Nairobi, where he said Kenya would take a 10% stake while Ethiopia and Rwanda had also expressed interest.

Dangote’s planned refinery is expected to be developed in Lamu, a coastal town in southeastern Kenya, after the project was initially proposed for Tanga in Tanzania.

The billionaire industrialist said the decision to move the proposed location to Kenya was based on commercial and technical considerations.

What they are saying

Ndii said Kenya’s proposed 10% participation would be worth approximately $500 million, while Ethiopia and Rwanda have also indicated interest in taking stakes in the refinery.

He said the combined regional participation could amount to about $1.5 billion, with Dangote prepared to support the project if some participating countries are unable to commit as crude off-takers.

• “The total for the region is about $1.5 billion,” he said. “I don’t actually see a challenge in doing that, and if some of them are not off-taking we will backstop.”

The proposed regional participation would give East African countries a direct equity interest in a major energy infrastructure project while potentially securing access to refined petroleum products for participating markets.

The United Nations geoscheme for Africa defines Eastern Africa as comprising 18 sovereign countries, alongside two French overseas territories, meaning the proposed 30% allocation could potentially involve a broader regional investor base beyond Kenya, Ethiopia and Rwanda.

Get up to speed

The refinery project was initially planned for Tanzania, where Dangote had proposed building a new facility in Tanga that would replicate his 700,000-barrel-per-day refinery in Lagos.

• Dangote announced the Tanzania plan during a panel session at the Africa Finance Corporation summit in Nairobi, where he appeared alongside Kenyan President William Ruto and Ugandan President Yoweri Museveni.
• The project was subsequently shifted from Tanga to Lamu, Kenya, with Dangote citing commercial and technical considerations for the change in location.

In early July, a spokesperson for Dangote Industries Limited said the proposed refinery and associated infrastructure on Kenya’s coast could cost about $17 billion and take approximately five years to complete.

The planned project would therefore represent a major expansion of Dangote’s refining footprint beyond Nigeria and into East Africa.

What you should know

The proposed refinery has already attracted interest from investors in the region.

• In July, Tanzanian billionaire Mohammed Dewji expressed interest in investing $100 million in Dangote’s planned Kenyan refinery, as the Nigerian industrialist seeks to expand his energy business across East Africa.
• Back home in Nigeria, Dangote is also pushing to take his refining business to the capital market as part of plans to expand its capacity and unlock additional funding.

The Dangote Petroleum Refinery currently has a 700,000-barrel-per-day capacity, and the group has been pursuing plans to increase this to 1.4 million barrels per day.

• The planned Nigerian listing is already attracting significant investor commitments. On August 18, Nairametrics reported that Dangote Petroleum Refinery & Petrochemicals FZE had secured a $400 million underwriting commitment ahead of its proposed IPO.
• The company has subsequently secured a broader $1 billion underwriting programme, comprising a completed and funded $600 million private placement and a further $400 million underwriting commitment for the planned IPO, subject to regulatory and market conditions.

The developments underline Dangote’s broader strategy of using capital markets and regional investment to finance the expansion of his refining business, while positioning his facilities as major suppliers of petroleum products across African markets.