Aliko Dangote hands Engineers India $450 million to build his $16 billion Kenya refinery

Nigerian billionaire Aliko Dangote has hired the engineers who delivered his Lagos refinery to run his next one, awarding Engineers India Ltd. a contract worth more than $450 million to manage construction of a $16 billion refinery and petrochemical plant on Kenya’s coast.

The Indian state-owned consultancy disclosed the deal in a filing on the Mumbai stock exchange on Tuesday, eight days before the planned Sept. 30 groundbreaking at Lamu. It will act as project management consultant and oversee engineering, procurement and construction for the 700,000-barrel-a-day plant.

“Believing in EIL’s engineering and project management excellence, the Dangote Group has once again joined hands with EIL for this prestigious Kenya project,” Dangote said in a statement cited in the filing.

The fee is for management, not construction. Dangote has said the plant itself will cost about $16 billion and take roughly three years to build, a timeline his own group put at five years in July. The refinery is meant to supply Kenya and its landlocked neighbors, cut East Africa’s dependence on imported fuel and export to international markets.

The relationship with EIL goes back to 2013, when the firm won a $139 million engineering contract, then its largest ever, for what became the Lekki complex. It served as technical consultant through the build, and now oversees the expansion from 650,000 to 1.4 million barrels a day due by 2029. Lekki already runs above its nameplate at 700,000 barrels, and Dangote plans to nearly triple its polypropylene output to 2.4 million tons a year.

Lamu is the East African leg of a network Dangote sketched out over the past week. He has said the group will start a Djibouti-to-Ethiopia pipeline within days, and plans a Lamu-to-Ethiopia line as part of nearly 4,000 kilometres of pipelines feeding landlocked markets, alongside a $3.5 billion line across southern Africa.

The politics are moving too. In August, Dangote offered East African governments a combined 30% stake in the refinery. Kenya is reported to be considering 10%, with Ethiopia and Rwanda also interested. President William Ruto flew to New York on Sept. 20 to court investors for the project on the sidelines of the U.N. General Assembly.

The hard question is crude. Kenya produces no commercial oil, and pipeline routes from Uganda and South Sudan remain unresolved, so the plant will depend on imported feedstock through Lamu’s deep-water port until regional supply is settled. Financing is the other: Dangote is funding Lamu while pushing Lekki to 1.4 million barrels and running a N2.15 trillion ($1.6 billion) refinery IPO in Lagos.

The Lagos-to-Lamu handoff gives EIL a role across both of Dangote’s largest projects at once. It gives Dangote a team that has already built one of these, in a place where nobody else has. (Billionaires Africa)