Dangote plans to fund new Kenya refinery through IPO, bonds
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The project's cost increased over the years due to factors such as relocation of the site, engineering challenges, the depreciation of the naira, disruptions caused by the COVID-19 pandemic, and rising global inflation.
Dangote Group has announced plans to finance the construction of a new 700,000 barrels-per-day oil refinery in Kenya using a mix of company funds, bond sales, and money from a planned Initial Public Offering (IPO).
The refinery will be built on Lamu Island along Kenya’s coast and is expected to become the largest refinery in East Africa. The project aims to improve energy security in the region by reducing reliance on imported refined petroleum products.
According to Reuters, the refinery is expected to take about three years to complete. It will supply fuel and other refined petroleum products to Kenya and neighboring countries. The project is also part of Dangote Group’s strategy to expand its refining operations across Africa following the launch of its 650,000 barrels-per-day refinery in Lagos.
The Vice President of Oil and Gas at Dangote Industries, Edwin Devakumar, said preliminary work on the project has already started. He revealed that the site has been selected, soil testing is ongoing, and design and engineering work are underway.
Devakumar explained that the refinery will be financed through internally generated revenue, bond issuances, and funds expected from the company’s planned IPO. However, he did not disclose the exact cost of the project.
He noted that the investment would be similar in scale to the Dangote Refinery in Lagos, which eventually cost more than $20 billion before beginning commercial operations in 2024.
The project’s cost increased over the years due to factors such as relocation of the site, engineering challenges, the depreciation of the naira, disruptions caused by the COVID-19 pandemic, and rising global inflation.
The Kenya refinery will be Dangote Group’s biggest refining investment outside Nigeria and reflects the company’s ambition to become a major supplier of refined petroleum products across Africa.
Dangote Group had earlier considered building a refinery in Tanga, Tanzania, but later chose Kenya after evaluating factors such as infrastructure, logistics, and market opportunities.
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