Nigerian billionaire Aliko Dangote has announced a fresh October deadline to begin construction of a massive 700,000 barrels-per-day (bpd) refinery in Kenya, marking a significant step forward for the long-planned East African project. The Dangote Group President revealed that the company expects to break ground on the refinery by October, paving the way for what is set to become one of Africa's largest refining projects.
Groundbreaking Set for October
Speaking in an interview with the BBC, Dangote expressed confidence that construction would commence shortly after the groundbreaking ceremony. "I think, by October, we will be doing something groundbreaking. Once we break ground, we will start the construction very soon," he said.
The proposed refinery, with an estimated investment of $16 billion, aims to reduce reliance on imported petroleum products and enhance regional energy security. The project's scale is expected to significantly increase refining capacity in East Africa, providing a new source of refined petroleum products for the region.
Completion Timeline and Cost Reduction
Dangote stated that the refinery could be completed in less than four years once construction begins, a timeline he believes will help lower the overall cost of the project. The estimated investment has been revised downward to about $16 billion from the earlier projection of $17 billion.
According to Dangote, the lower cost would partly reflect the company's experience from constructing its 650,000-barrel-per-day refinery in Lagos, Nigeria. He noted that completing the Kenyan project more quickly would also reduce financing expenses and improve the efficiency of the investment.
"It will cost less because this one will be faster. In terms of financing costs, it will be less, and also we are wiser as a company than the time we built the refinery in Lagos," Dangote said.
Serving the East African Market
The proposed refinery is expected to serve a market much larger than Kenya, with Dangote describing it as an East African energy project. He said the refinery would help strengthen fuel supply across the region and reduce dependence on imported petroleum products.
"The refinery in East Africa makes a lot of sense because it is not only for Kenya and that is why we are calling it the East African refinery," he said.
AllAfrica reports that the scale of the planned facility could significantly increase refining capacity in the region if completed as proposed, while providing an additional source of refined petroleum products for East African markets.
Financing Structure: 30% Equity, 70% Debt
Financing remains a critical component of the multibillion-dollar project. Dangote said the company plans to finance the refinery through a combination of equity and debt. Under the proposed structure, about 30% of the investment will come from equity, while the remaining 70% will be funded through borrowing.
Despite the size of the investment, Dangote expressed confidence that the required funds could be raised. "We don't have any problem raising the money," he said.
Push for African Energy Security
Beyond the commercial opportunity, Dangote said the project is aimed at strengthening energy security across Africa. He argued that increased domestic refining capacity would reduce African countries' exposure to disruptions in international fuel markets and lessen their dependence on imported refined petroleum products.
The announcement comes amid broader efforts by the Nigerian government to stabilize fuel supply, including a recent agreement with Dangote Refinery for dollar swap deals. Legit.ng earlier reported that the Federal Government agreed to provide foreign exchange to the Dangote Petroleum Refinery in exchange for naira generated from petrol sales, a move aimed at salvaging the troubled naira-for-crude arrangement.
