Dangote Group to fund proposed Kenya refinery with cash, bonds and an IPO

Dangote Group has said it plans to finance a proposed 700,000-barrel-per-day oil refinery in Kenya through internal cash flow, bonds and an initial public offering, a senior company executive told ‌Reuters.

The refinery, East Africa’s largest refining project, is expected to take up to three years to build and would supply refined petroleum products to Kenya and neighbouring countries, helping to reduce East Africa’s dependence on imported fuels.

It would also fulfil Dangote’s ambition to expand fuel-processing capacity across Africa following the start-up of its 650,000-barrel-per-day refinery in Lagos.

“The site has been selected, soil tests are under way, and design and engineering work has commenced. Kenya was the choice from the beginning,” Edwin Devakumar, Dangote Industries’ vice president for oil and gas, told Reuters.

The refinery, which would be built on the island of Lamu, off the coast of Kenya, would mark Dangote Group’s biggest refining investment outside Nigeria.

Devakumar said the refinery would be financed ‌through a mix of internally generated cash, bonds and proceeds from a planned initial public offering.

He did not disclose the project’s exact cost, but said it would be comparable to that of the Lagos refinery.

Built by Aliko Dangote, ranked as Africa’s richest man by Forbes, the Lagos refinery had cost more than $20 billion by the time it began operating in 2024.

The initial estimate had been about $9 billion in 2013, but the cost was driven up by a site relocation, engineering challenges, currency weakness, the COVID-19 pandemic and global inflation.

Dangote has for months expressed interest in building a major refinery in East Africa. The company previously considered Tanzania’s port city of Tanga before switching to Kenya, citing infrastructure, logistics and market considerations.