Nigerian billionaire Aliko Dangote has proposed selling 500 megawatts of electricity to the Kenyan government from a 1,000MW power plant to be built alongside his planned refinery in Lamu. Dangote made the offer on September 25 during President William Ruto's tour of the Dangote Petroleum Refinery in Lekki, Lagos. He stated that the Lamu facility would produce 1,000 megawatts, with 500 megawatts available for sale to the Kenyan government.
The proposed power plant is part of Dangote's Lamu refinery project, which is expected to be East Africa's largest and the continent's second-largest refinery after the Lagos plant. The project carries an estimated cost of between KSh 2.07 trillion and KSh 2.2 trillion and is projected to generate around 60,000 jobs. The refinery is designed to process 700,000 barrels of crude oil per day and supply fuel to Kenya, Uganda, South Sudan, Rwanda, Burundi, and the Democratic Republic of Congo.
Kenya Power is at the centre of negotiations over a power purchase agreement with Dangote. The 500MW reserved for the refinery's own operations and the adjacent Lamu Special Economic Zone would leave the remaining half available for injection into Kenya's national grid. This would provide much-needed baseload power, addressing a structural weakness in Kenya's power supply, which heavily depends on hydropower and has invested significantly in wind and solar capacity.
The power plant was originally conceived as a 500MW captive facility serving refinery operations only. However, Kenya subsequently pressed Dangote Industries to double the installed capacity to 1,000MW. The expanded plant is expected to run on liquefied natural gas sourced from Tanzania, potentially opening a new commercial channel for Tanzanian gas exports and reviving the long-stalled Kenya-Tanzania gas pipeline agreement reached in 2021.
Dangote positioned the broader Lamu investment as a catalyst for industrial growth across the region. He stated that the refinery would be an economic gateway, and once operational, it would attract many investors to Kenya. President Ruto confirmed that land for the development has already been secured and said his government is in discussions over taking a 10% stake in the project, worth approximately KSh 64.7 billion.
Despite the public announcement, several critical matters remain unresolved, including the commercial terms of the power purchase agreement, the final choice of fuel source, gas supply logistics, financing arrangements, and environmental approvals. Construction of the power plant cannot proceed until those agreements are concluded. Ruto confirmed a September 30 launch date for the Dangote Oil Refinery.
The planned Lamu refinery is expected to surpass its Nigerian counterpart and create 60,000 jobs upon completion. The project could also drive the growth of fertiliser, chemical, and packaging industries across the region. Key agreements still pending include pricing, gas supply, and financing terms.
Key points
- Dangote offers 500MW of electricity to Kenya from a 1,000MW power plant linked to his Lamu refinery project.
- The Lamu refinery project is expected to create 60,000 jobs and drive industrial growth across the region.
- Several critical matters, including commercial terms and environmental approvals, remain unresolved.
