Dangote offers 30% stake in new $16 billion refinery to East African nations

Africa’s richest man and Dangote Group President Aliko Dangote has offered East African countries a combined 30% equity stake in his proposed $16 billion oil refinery in Kenya, potentially giving regional investors access to about $1.5 billion of the project.

David Ndii, Kenyan President William Ruto’s economic adviser, disclosed the offer Thursday at a capital markets forum in Nairobi. He said Kenya is considering a 10% stake, while Ethiopia and Rwanda have also expressed interest in participating.

Kenya weighs $500 million refinery stake 

Ndii said Kenya’s proposed 10% investment would be worth about $500 million. If Ethiopia and Rwanda join the project, regional participation could rise to roughly $1.5 billion.

“The total for the region is about $1.5 billion,” Ndii said. “I don’t actually see a challenge in doing that, and if some of them are not off-taking we will backstop.”

The proposed ownership structure could give East African governments and investors a direct interest in a major refining project while helping secure supplies of gasoline, diesel, aviation fuel and other petroleum products for regional markets.

Dangote initially proposed building the refinery in Tanga, Tanzania, before shifting the project to Lamu on Kenya’s coast. The Nigerian billionaire has said the change was driven by commercial and technical considerations.

A spokesperson for Dangote Industries Limited said in July that the refinery and related infrastructure could cost about $17 billion and take around five years to complete. The latest estimate, however, puts the project cost at $15.5 billion to $16 billion, below the initial $17 billion projection.

The project would expand Dangote’s refining operations beyond Nigeria as the industrialist seeks to build a larger presence in Africa’s energy market.

Kenya refinery draws interest from investors

The refinery has already drawn interest from private investors. Tanzanian billionaire Mohammed Dewji said in July that he was considering investing $100 million in the planned Kenyan project.

The proposed refinery also comes as Dangote works to raise more capital for his Nigerian refining business.

The Dangote Petroleum Refinery, commissioned in May 2023 and which began production in 2024, has a capacity of 700,000 barrels a day. Dangote Group has also discussed plans to increase capacity to 1.4 million barrels a day.

The Lagos-based refinery has increased production of gasoline, diesel, aviation fuel and naphtha, reducing the company’s reliance on imported feedstock and expanding its role in supplying African markets.

Dangote taps capital markets for growth

Dangote is also preparing the refinery business for a possible listing in Nigeria. Dangote Petroleum Refinery & Petrochemicals FZE had secured a $400 million underwriting commitment ahead of a proposed initial public offering.

The company has since secured a broader $1 billion underwriting program, including a completed and funded $600 million private placement and another $400 million underwriting commitment for the proposed IPO, subject to regulatory and market conditions.

The Kenyan refinery plan adds another layer to Dangote’s push to use regional investment and capital markets to finance the expansion of his refining business while serving growing demand for petroleum products across. (Shore Africa)