Aliko Dangote, key business tycoon and Africa’s richest man plans to source finance for his proposed $17 billion Kenya refinery through cash flow, bonds, and a planned initial public offering (IPO), according to several sources monitored by Business A.M.
The massive 700,000-bpd proposed refinery in Kenya set to become the second largest on the continent, offers new details about one of Africa’s most ambitious energy projects in history.
According to Bloomberg report, the cost of the refinery is estimated at $17 billion to be sited on Kenya’s Lamu Island. It is coming off as East Africa’s largest refinery.
Reuters said site selection, soil testing, and design work were already underway, in what marks Dangote Industries’ biggest refining investment outside Nigeria, reinforcing Kenya as East Africa’s a strategic energy hub.
Edwin Devakumar, vice president for oil and gas at Dangote Industries Limited was quoted by Reuters that the refinery will be built on Lamu Island, Kenya, and that the site has already been selected, soil testing was underway, while design and engineering work have started.
“The site has been selected, soil tests are underway, and design and engineering work have commenced. Kenya was the choice from the beginning,” Devakumar said.
Kenya’s president William Ruto is already applauding his government for doubling foreign investment in his country’s economy, with a nominal GDP of approximately $136 billion, making it 7th largest economy in Africa.
Once completed, the planned 700,000-barrel-per-day refinery will be considered as Africa’s second-largest refinery by nameplate capacity, especially as Dangote’s flagship refinery in Lagos plans to expand its capacity to 1.4 million bpd. It reinforces Dangote’s drive to expand fuel-processing capacity beyond Nigeria.
To wit, the Dangote refining powerhouse in Lagos has since its coming on stream in 2024, transformed Nigeria into a growing exporter of refined petroleum products across Africa and globally, notwithstanding the country’s four moribund state refineries.
Bloomberg reported that the Kenya refinery’s cost of $17 billion makes it one of the biggest private industrial investments ever proposed in East Africa.
Financing of the mega refining plant is expected to come from a combination of internally generated cash, bonds and proceeds from the planned IPO of the Dangote Petroleum Refinery (DPR).
Reports said that since Dangote announced the proposed bourse listing of his DPR, it has attracted substantial investor interests, although no official offer has yet been launched. Also, the Nigerian Securities and Exchange Commission (SEC) recently explained that it has not received any IPO application from Dangote; neither has it approved an IPO.
Why does Dangote prefer Kenya over Mozambique or Tanzania for his next mega refinery project? Reports said the company cited infrastructure, logistics and market considerations for its change of choice, having previously considered Tanzania’s port city of Tanga.
Additionally, report said Aliko Dangote, during his recent East Africa visit, personally pledged to presidents Ruto of Kenya and Yoweri Museveni of Uganda that he would build a replica of his flagship Lagos refinery along Kenya’s coast.
Development finance experts are describing the upcoming Kenyan project as Dangote Industries Limited’s biggest refining investment outside Nigeria. Though Devakumar, Dangote Industries Limited’s vice president in charge of oil and gas did not disclose an official budget for the refinery, but said the project would be comparable in scale to the company’s magnificent Lagos refinery, finance experts highlight the size of what would become Dangote Group’s biggest refining investment outside Nigeria.
The new refining powerhouse for all of East Africa region is expected to take between three and five years to complete, and will supply refined petroleum products to Kenya and the neighbouring countries, and will largely reduce East Africa’s reliance on imported fuels.
By far, the 700,000-bpd plant will cement Kenya’s emerging position as a strategic refining hub for East Africa, it will eminently expand Dangote’s footprint in Africa’s energy infrastructure.
