PREVIEW
The 700,000 b/d project is the largest in Kenya's history and central to Ruto's plan to cut fuel import costs
The commercial stakes for Nigerian magnate Aliko Dangote and the political bet by Kenya’s President William Ruto are critical in what would be the east African country’s biggest and costliest project. The two men are banking on their ability to overcome legal and regulatory hurdles still facing the US$16 billion Lamu oil refinery project.
They will also have to manage local protests against the environmental impact of the refinery, after breaking ground at the site on 30 September. A dispute over a parcel of land at the site is subject to a court hearing on 14 October.
The project is vital to Ruto’s chances of re-election next August and his plans to transform the Kenyan economy. Aside from creating 60,000 direct jobs as well as potential jobs in supply stream businesses such as chemicals and fertilisers, the Lamu refinery would reduce Kenya’s reliance on expensive fuel imports, says Ruto (AC Vol 67 No 9, Ruto stakes his presidency on a $39bn investment blitz). That, in turn, could mean lower petrol prices, one of the main cost of living pressure points facing middle class Kenyans.
He is also banking on revenues from the refinery powering a newly created sovereign wealth fund.
For Dangote the refinery is at the heart of his expansion plans for East Africa (AC Vol 67 No 18, Dangote’s refinery goes public, and so does his ambition). He is also hoping that it will encourage Kenyan investors to buy shares in his Nigerian refinery, though Kenya’s Capital Markets Authority warned investors on 21 September that the refinery share offer is regulated only in Nigeria and has not been submitted for approval by Nairobi.
Dangote has said the Kenyan refinery could be financed through internal cash flow, bonds and an initial public offering, though the latter is probably several years away. He has also offered a 30% combined equity stake to East African countries and promised to list the East African refinery on the Nairobi stock exchange.
That explains why, despite being passed over in favour of Lamu to host the refinery, Uganda’s President Yoweri Museveni was at the ground-breaking event, along with Ethiopia’s Prime Minister Abiy Ahmed in whose country Dangote’s cement and fertiliser operations are set to dramatically expand (Dispatches 1/9/25, Dangote to build $2.5 billion Ethiopian fertiliser plant).
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