Construction of billionaire Aliko Dangote’s proposed oil refinery in Lamu is expected to be financed mainly through debt, with lenders set to provide about 70 per cent of the Sh2 trillion project cost.
According to Business Daily, approximately Sh1.45 trillion will be raised through debt, while the remaining 30 per cent, equivalent to about Sh621 billion, will come from shareholders, including Dangote.
The financing plan comes as the project moves closer to construction, with Dangote recently announcing that groundbreaking for the refinery will take place in October 2026.
“By October this year, we will be groundbreaking. Once we break the ground, we will begin the construction,” Dangote said.
The project cost has been revised downwards to about Sh2 trillion, from an earlier estimate of Sh2.2 trillion.
The planned refinery, to be constructed on Lamu Island, is expected to have a processing capacity of 700,000 barrels of crude oil per day.
If completed at the planned capacity, the facility would become the largest refinery in East Africa and the second-largest on the African continent after Dangote’s refinery in Lagos, Nigeria.
Dangote announced plans in April to expand his refining business into East Africa, with the proposed Lamu facility expected to be modelled on his Nigerian refinery.
The project is expected to play a major role in meeting Kenya’s demand for refined petroleum products while serving neighbouring markets.
The refinery is projected to supply products such as petrol, diesel and aviation fuel to Kenya as well as Uganda, Tanzania, South Sudan and the Democratic Republic of Congo.
The investment could reduce the region’s dependence on imported refined petroleum products, which currently account for a significant share of petroleum supplies in East Africa.
The planned facility is also expected to benefit from Lamu’s strategic location along the Indian Ocean and its potential links to the wider Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) Corridor.
For Kenya, the project could strengthen Lamu’s position as a regional energy and logistics hub while creating opportunities for local contractors, suppliers, transport companies and other businesses during construction and after the refinery becomes operational.
The debt-heavy financing structure means lenders will play a significant role in funding the development, while the shareholders will provide the remaining capital required to complete the project.
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