Emmanuel Addeh in Abuja
The Dangote Group has offered East African countries a combined 30 per cent equity stake in its planned refinery in Kenya, with Kenya, Ethiopia and Rwanda expressing interest in participating in the multibillion-dollar project.
The offer, first reported by Bloomberg, was disclosed by Kenyan President William Ruto’s Economic Adviser, David Ndii, at a capital markets forum in Nairobi late Thursday.
Ndii said Kenya could take a 10 per cent stake valued at about $500 million, putting the potential combined investment by countries in the region at approximately $1.5 billion.
“The total for the region is about $1.5 billion. I don’t actually see a challenge in doing that, and if some of them are not off-taking we will backstop,” he said.
The proposed refinery is expected to be a replica of the 700,000 barrels per day Dangote Petroleum Refinery in Lagos and is being promoted by Africa’s richest man, Aliko Dangote, as part of a major expansion of his energy and industrial interests across Africa.
According to Ndii, Dangote expects the refinery itself to cost as much as $16 billion, while the petrochemical complex and associated port infrastructure could require about $20 billion in investment.
He disclosed that groundbreaking for the project was expected in September, adding that the facility would receive about 600,000 barrels of crude oil daily from oil fields in Uganda and Kenya.
The Kenyan government’s proposed 10 per cent participation would therefore require an investment of approximately $500 million, while Ethiopia and Rwanda have also indicated interest in taking stakes in the project.
Ndii said Uganda had yet to decide whether to invest in the Kenyan refinery, partly because it already had plans to develop its own refining capacity.
Uganda is considering a 60,000 barrels per day refinery in partnership with Alpha MBM Investments of the United Arab Emirates. The country has also agreed to invest with Tanzania and Vitol Bahrain in an oil hub on the Tanzanian coast.
The proposed Kenyan refinery is expected to have an economic impact beyond refining petroleum products, with Ndii projecting that the project could inject about $4 billion into the Kenyan economy annually.
He said the refinery and several other major industrial projects in the pipeline could collectively contribute as much as 10 per cent of Kenya’s gross domestic product.
The project represents another major expansion of Dangote’s energy ambitions following the completion of his 650,000 barrels per day refinery in Nigeria, which has emerged as a major source of refined petroleum products for the domestic and regional markets.
The proposed Kenyan facility is also expected to deepen regional integration in the East African petroleum market by linking crude production in Kenya and Uganda with a large-scale refining and distribution hub.