Kenya is set to break ground for the much anticipated Sh2.2 trillion East Africa oil refinery in Lamu by Nigerian billionaire Aliko Dangote on September 30.
On Wednesday, Deputy President Kithure Kindiki chaired a high-level inter-ministerial and inter-agency meeting to prepare for the ceremony, describing the project as a “one-in-a-generation investment”.
The Government expects the wider development to create more than 60,000 jobs, about half of them skilled, while anchoring a new petrochemical and industrial complex on the Coast.
The refinery is designed to process 700,000 barrels of crude oil a day, making it the largest refinery in East Africa and one of Africa’s biggest.
Dangote expects the plant to be completed by around 2030.
Kindiki said that the strategic prize for Kenya is not simply replacing imported petrol and diesel.
“It is shifting the country from being predominantly a fuel importer to becoming a regional processing and distribution hub.”
Kenya spent about Sh511.5 billion on petroleum products last year, making fuel the country’s largest import bill.
A domestic refinery of this scale could retain a substantial share of that value within the economy while reducing exposure to disruptions in international shipping routes and global crude and refined-product prices.
The plant is also being designed around Lamu’s emerging role as the gateway to the Lamu Port-South Sudan-Ethiopia Transport (Lapsset) corridor.
Its proximity to a deep-water port provides an avenue for importing crude, exporting refined products and developing storage, logistics, petrochemicals and manufacturing around the facility.
Even so, the project faces a fundamental feedstock test, with the country currently lacking commercial-scale crude production.
Government advisers have estimated that East African producers could eventually provide more than 600,000 barrels per day, including roughly 350,000 barrels from South Sudan, 250,000 from Uganda and 120,000 from Kenya.
Currently, Uganda’s crude moves towards Tanzania, while South Sudan’s exports depend on infrastructure through Sudan.
Kenya’s Lokichar production and a potential crude pipeline to Lamu are also yet to reach commercial scale.
Energy and Petroleum expert Tom Majale says that the compounding factors leave the refinery potentially dependent on seaborne crude imports, at least during its early years.
He adds that financing is another major consideration.
Dangote Industries has said the project will be financed through a combination of internal cash, bonds and proceeds from an initial public offering.
“However, it has not disclosed a final financing package, while the latest estimated cost is around $15–16 billion (Sh1.9-2.1trillion).”
Even so, Dangote is depending on a regional ownership structure to finance the project.
The wealthiest man in Africa has offered East African countries a combined 30 per cent stake, with Kenya reportedly offered 10 per cent valued at about $500 million (Sh64.7 billion).
Rwanda and Ethiopia are among countries considering participation.
Speaking during a recently concluded Africa Mindset Forum in Kigali, Rwandan President Paul Kagame signalled interest, saying Kigali would “be happy to be part of this investment”.
He declined to give more information, saying that discussions are still at preliminary stage.
Ugandan President Yoweri Museveni has similarly backed the refinery as a vehicle for regional industrialisation, value addition and energy security.
President William Ruto has framed the investment more broadly as an economic transformation project, saying it will reduce costly dependence on imported fuel.
The refinery is now being linked to an even bigger energy proposition: a 1,000MW LNG-fired power plant.
Kenya is negotiating with Dangote to expand the initially envisaged 500MW captive plant to 1,000MW.
The additional electricity is intended for the refinery, petrochemical complex and Lamu Special Economic Zone, with surplus power potentially sold to Kenya Power.
Economic adviser David Ndii has said the government expects such gas-fired power could be contracted at about 4–5 US cents per kWh.
The proposal is still at the negotiating table.
If successful, it will be significant in a power market where consumers have long carried the cost of expensive thermal generation and legacy PPAs.
EPRA data shows that Kenya’s 2024/25 electricity tariffs were also exposed to substantial pass-through costs.
The fuel-energy charge, for example, reached Sh4.14 per kWh in April 2025, while foreign-exchange adjustments added further costs.
The LNG will potentially provide relatively stable, dispatchable baseload power, complementing intermittent wind and solar generation.
“It will also expose the weakness of Kenya’s old IPP model, where Kenya Power purchases electricity under long-term PPAs approved by EPRA, with consumers ultimately bearing generation, capacity, fuel and foreign-exchange-related costs,” Majale said.
Parliament has already raised concerns over some IPP costs, including a case where an IPP was reported to charge as much as Sh83 per kWh.
