LAMU, Kenya — Africa’s richest man, Aliko Dangote, says construction of a proposed $16 billion (about KSh2.1 trillion) oil refinery in Lamu, Kenya, will begin by October 2026, signalling a major step forward for a project expected to reshape East Africa’s fuel market.
Dangote said preparations for the refinery had advanced significantly and that a groundbreaking ceremony would take place no later than October.
“By October this year, we will be groundbreaking. Once we break the ground, we will begin the construction,” Dangote told the BBC.
The announcement comes weeks after Dangote Industries confirmed Lamu as the location of its planned East African refinery, ending months of uncertainty over whether the facility would be built in Kenya or Tanzania.
The company has already begun soil testing and engineering and design work at the selected site. The proposed facility is expected to have a processing capacity of 700,000 barrels of crude oil per day, which would make it the largest refinery in East Africa by nameplate capacity.
Dangote also disclosed that the estimated cost of the project had been revised downwards.
The billionaire said the initial estimate of $17 billion had been reduced to about $16 billion, equivalent to roughly KSh2.1 trillion at current exchange rates.
“We first thought it was going to cost $17 billion, but it will cost less than that, about $16 billion,” Dangote said.
He attributed the reduction partly to lessons learned from the construction of his flagship refinery in Lagos, Nigeria, saying experience from that project would allow the Kenyan facility to be completed more efficiently and with lower financing costs.
“It will cost less because this one will be faster, so in terms of financing cost it will be less, and then we are wiser as a company than when we built the one in Nigeria,” he said.
Recent reporting had placed the Kenyan refinery’s earlier projected cost at about $17 billion, or approximately KSh2.2 trillion.
The planned refinery will be designed to process up to 700,000 barrels of crude oil every day.
That capacity would put the Lamu facility among Africa’s largest planned refineries and make it significantly larger than Kenya’s former refinery at Mombasa, which ceased crude-refining operations in 2013.
Dangote said the facility would not be built solely to meet Kenya’s fuel requirements but would serve markets across East Africa.
“The refinery will not only be for Kenya but East Africa as a whole, so it can serve a lot of countries, including Egypt,” he said.
The company has previously indicated that the refinery is intended to supply Kenya and neighbouring markets, with its strategic location on the Kenyan coast providing access to regional markets.
The project could therefore position Lamu as an important petroleum-processing and distribution centre, complementing the port infrastructure being developed along Kenya’s northern coast.
Dangote said the project would be financed through a combination of equity and debt.
Under the proposed structure, Dangote Industries would provide 30 per cent of the financing through equity, while the remaining 70 per cent would be raised through debt.
The financing model is expected to be supported by Dangote’s wider expansion of its energy business.
The announcement comes as the Nigerian billionaire prepares to raise substantial capital for his existing Dangote refinery in Lagos. Reuters reported this week that the Nigerian refinery is planning an initial public offering that could raise about $5 billion, with part of Dangote’s wider expansion strategy focused on increasing refining capacity and supporting the planned Kenyan facility.
The decision to locate the refinery in Lamu followed months of speculation over whether Dangote would establish the facility in Kenya or Tanzania.
Tanga in Tanzania had initially been considered, while Mombasa was also examined as a potential Kenyan location.
Dangote Industries ultimately settled on Lamu, with company officials citing commercial, technical and logistical considerations.
The selected location is expected to benefit from Kenya’s developing northern transport and energy infrastructure and the country’s access to regional fuel markets.
The project is also expected to complement Kenya’s plans to develop its petroleum sector as the country prepares for commercial crude oil production from the South Lokichar Basin in Turkana.
If delivered as planned, the refinery would represent one of the largest private-sector industrial investments ever proposed in Kenya.
The project is expected to generate demand for construction, engineering, logistics, manufacturing and other supporting services during development, while creating additional employment once operations begin.
More importantly, supporters argue that domestic refining could reduce East Africa’s dependence on imported refined petroleum products and strengthen regional fuel security.
The refinery’s planned capacity is also large enough to make it a regional rather than purely Kenyan project.
That distinction is important because East African countries currently rely heavily on imported petroleum products, making the region vulnerable to international oil prices, shipping costs, foreign-exchange pressures and disruptions in global supply chains.
A large refinery on the Kenyan coast could give the region an additional source of refined fuel while creating opportunities for Kenya to become a major petroleum-processing and distribution hub.
Dangote said construction would begin once the groundbreaking takes place in October.
Also Read: Dangote confirms Lamu for East Africa’s biggest oil refinery
The company has previously indicated that the facility could be built in roughly 30 months, although other estimates have placed the construction period at between three and five years depending on the project’s scope and implementation.
The latest announcement therefore represents a significant shift from planning and engineering work towards actual construction.
For Kenya, the next major milestones will be the completion of preparatory studies, financing arrangements, regulatory approvals and the start of physical construction.
If the October target is achieved, the Lamu refinery would move from being one of East Africa’s most ambitious proposed energy projects to one of the continent’s largest active industrial developments.
Its eventual impact, however, will depend not only on how quickly the facility is constructed but also on the infrastructure, crude supply, financing and regional distribution networks needed to support a refinery of its scale.
