Dangote to sell 30% stake of new refinery to East African nations

Dangote Group, led by Africa’s richest man Aliko Dangote, is offering a 30 per cent stake in its planned 700,000 barrel-per-day refinery to countries in East Africa. This new crude-processing plant will be built in Lamu, a coastal town in Kenya, according to a report from Bloomberg on Friday.

Kenya will take a 10 per cent stake, which is valued at about half a trillion dollars. David Ndii, a top economic adviser to President Ruto, shared this information with Bloomberg. He said, "The total for the region is about $1.5 billion. I don’t actually see a challenge in doing that, and if some of them are not off-taking we will backstop." This statement came during a capital market conference in Nairobi on Thursday.

Ethiopia and Rwanda have also shown interest in participating in this deal.

Mr Dangote is looking at Kenya and other East African markets to grow his business empire. This comes after he faced many challenges in Nigeria while trying to complete a similar refinery. The Nigerian refinery, located near Lagos, was expected to be finished in 2016. But it took eight years to complete due to delays in logistics, infrastructure issues, and COVID-19 lockdowns.

Dangote has built his wealth in industries like cement and sugar. He has accused international oil companies of trying to sabotage efforts to get his Nigerian refinery running smoothly. He claimed the Nigerian Midstream and Downstream Petroleum Regulatory Authority gave new licenses to some companies to import "dirty fuel." He sees this as part of a larger plan to stop Nigeria from depending on fuel imports.

During the crisis, Farouk Ahmed, who was the CEO of the regulatory body, resigned. Mele Kyari, the former managing director of NNPC Limited, was also removed after Dangote accused him of secretly running a fuel blending plant in Malta.

“I knew there would be a fight. But I didn’t know that the mafia in oil, they are stronger than the mafia in drugs,” he said at an investment conference in June 2024.

A private placement raised $2.5 billion before the Nigerian refinery's planned $5 billion initial public offer in October. This valued the refinery at $40 billion. The private equity raise was 3.7 times oversubscribed, attracting interest from both African investors and those from outside the continent.

The Kenyan refinery's construction is expected to start next month. This development puts Dangote on track to double his refining capacity to 1.4 million barrels per day in the next three years. The processing capacity at the Lagos refinery has already increased to 700,000 barrels per day from the original 650,000 barrels per day.

The cost of the new refinery in Kenya is expected to be between $15 billion and $17 billion.