Nigerian billionaire Aliko Dangote and Kenya's President William Ruto are set to break ground on a $16bn oil refinery in Lamu, on Kenya's northern coast. The refinery is expected to process 700,000 barrels of crude oil a day, making it East Africa's largest industrial project by capacity. The project has garnered significant attention, with some local residents expressing concerns about compensation for land used for the refinery.
Ahead of the launch, some local residents took to the streets to demand more compensation for land used for the refinery. Dangote dismissed the protests as games played by local marketers and international players, insisting the refinery would go ahead and would be ready by 2030 as planned. He disputed the compensation claims, saying the company took only the portion of land it needed from what the government made available.
The Lamu refinery is Kenya's largest infrastructure project since independence, surpassing the $5.1bn Standard Gauge Railway. East Africa does not currently have any oil refineries. Dangote, who is Africa's richest man, said the refinery would create 60,000 jobs at the height of construction, with the benefits extending beyond those employed directly by the project.
Critics have questioned the decision to build the refinery in Kenya, which is not an oil-producing country. Others have suggested Tanzania or Uganda, both of which are moving towards oil exports through the East African Crude Oil Pipeline. However, Kenya's Energy and Petroleum Minister Opiyo Wandayi said the refinery's location did not mean it would rely on oil from the region.
Dangote cited Singapore as an example of a country that does not produce oil but has a lot of refineries. He emphasized that refineries get crude oil from the market, and the market is open. The refinery will also include a 1,000-megawatt power plant, which Dangote sees as a critical component in supporting industrialisation across Africa.
Dangote has about $50bn worth of projects in the pipeline, including plans to develop 10,000 megawatts of power generation capacity across Africa by 2030. The new power plant in Lamu is designed to support Dangote's operations as well as other industries expected to set up in the area. He described the power plant as a "plug and play" facility.
Kenya has relatively high fuel prices, raising expectations that greater refining capacity could eventually help bring down pump prices. However, the price of crude oil, the main raw material for fuel, set by international markets, remains a major factor in what consumers pay at the pump. Construction of the refinery is due to begin on 1 November, marking Dangote's largest proposed investment outside Nigeria.
Key points
- The refinery is expected to process 700,000 barrels of crude oil a day.
- The project has sparked local protests over compensation for land used for the refinery.
- The refinery is Kenya's largest infrastructure project since independence.
