For months, East Africa’s biggest industrial prize appeared to be heading to Tanzania. Then Aliko Dangote changed the map.
The Nigerian billionaire has settled on Lamu, Kenya, rather than Tanzania, for a planned 700,000-barrel-a-day refinery that could cost about Sh2.2 trillion ($15bn-$17bn). On September 30, President William Ruto is expected to preside over the groundbreaking, turning a fiercely watched regional investment contest into a construction project.
The choice of Kenya is not simply a victory for Nairobi over Dar es Salaam. It reflects the economics of moving hundreds of thousands of barrels of crude and refined petroleum products through a region whose infrastructure, markets and energy needs are increasingly interconnected.
Dangote has pointed to Kenya’s larger economy and fuel consumption, while Lamu offers a deep-water maritime location and a direct connection to the Lamu Port-South Sudan-Ethiopia Transport corridor, or LAPSSET. The port can accommodate very large crude carriers, giving the refinery access to international crude supplies and an export route for surplus products.
Tanzania had its own advantages, particularly its position around the East African Crude Oil Pipeline, which links Uganda’s oil fields to Tanga. That made Tanga a natural candidate for a regional refinery and explains why the proposed project had earlier been associated with Tanzania.
Dangote’s final decision therefore places greater emphasis on the downstream market and logistics platform than simply proximity to crude.
What a Lamu refinery could change for Kenya
That distinction matters because the refinery’s planned output is enormous. At 700,000 barrels a day, it would exceed current refined-fuel demand in East Africa, leaving substantial capacity for exports beyond Kenya. Potential markets include Uganda, Tanzania, Rwanda, South Sudan, Burundi and the Democratic Republic of Congo.
The project could also transform Lamu’s economic geography.
The government expects the wider development to generate more than 60,000 direct and indirect jobs, although that is a projection covering the refinery and its surrounding industrial ecosystem rather than 60,000 permanent refinery employees. Local officials expect the project to anchor storage, logistics, manufacturing, petrochemicals and power generation around the port.
For Kenya, the prize is also about reversing a long-standing dependence on imported refined fuel. The country spent about Sh511.5 billion on petroleum-product imports in 2025, making fuel one of its largest import bills.
The contrast with Changamwe is striking.
Kenya’s old refinery at Mombasa was shut down in 2013 after decades of operation. Its collapse removed a significant industrial activity from the Coast and left the country dependent on imported refined products. The proposed Lamu facility would be vastly larger, designed not merely to supply Kenya but to make the country a regional refining and distribution centre.
The crude and financing questions still to answer
Yet Dangote’s bet carries a fundamental risk: where will the crude come from?
Kenya’s own production will initially be nowhere near enough to feed a 700,000-barrel-a-day plant. The refinery will therefore depend on a combination of imported crude and supplies from East African producers, making long-term feedstock agreements and transport infrastructure central to its commercial viability.
Financing is another test. Dangote Industries has indicated a mixture of internal funds, bond financing and capital-market funding, while the Africa Finance Corporation is involved in discussions around financing. Kenya has also been offered a 10 per cent stake reportedly valued at about Sh65 billion, as part of a wider proposal for East African governments to hold up to 30 per cent.
The September 30 ceremony will therefore mark more than the start of another construction project.
It will mark the moment Dangote’s decision to choose Kenya over Tanzania moves from a regional investment contest into one of Africa’s most ambitious energy bets, with Lamu at its centre.
