Dangote to begin construction of $16bn refinery in Kenya

Nigerian billionaire Aliko Dangote and Kenyan President William Ruto will break ground on Wednesday to begin construction of a $16bn (R262.4bn) oil refinery aimed at meeting growing demand for petroleum products across East Africa. Dangote wants to replicate his group’s 700,000 barrel per day (bpd) Nigerian refinery as countries including Kenya and Uganda look to start producing crude oil. The Kenyan plant is slated to be completed in 2030, with the aim of lowering the region’s fuel costs and saving hard currency used to import refined products. “When you look at East Africa, not only East Africa, most of the 54 countries in Africa, they import petroleum products,” Dangote told reporters in Nairobi on Tuesday. “What we are trying to do is to make sure we become self-sufficient in whatever we consume.” Dangote has offered regional governments a combined 30% stake in the refinery. Demand for petroleum products in the region is estimated at 20-million to 30-million metric tonnes, said David Ndii, chief economic adviser to Ruto. Meeting the demand would require refining capacity of more than 1-million barrels per day, according to a financier involved in African refineries. The region has been hit hard by surging fuel prices resulting from the US-Israeli war against Iran, sparking deadly protests in nations such as Kenya over rising pump prices. Testing the Nigerian model For all the positivity surrounding the project, it is by no means certain it can replicate the Nigerian model, which turned the West African nation from a major fuel importer into a growing exporter. Though officials have said the facility at Kenya’s second deep-water seaport of Lamu is also expected to spur industries such as petrochemicals and bitumen production and create more than 50,000 jobs, doubts remain over local crude oil supplies and the region’s less developed energy infrastructure. The project has also faced criticism from environmental campaigners and conservationists, who fear it could affect the nearby Lamu Old Town, a World Heritage site that hosts fragile marine ecosystems. Kenya’s high court ordered the preservation of parts of the project site pending a hearing in a case brought by local residents, which could affect work on the refinery. Dangote attributed the opposition to traders and businesses whose profit models would be threatened by the refinery. Reuters