Dangote to Fund Kenya’s Mega Refinery Project Through Cash, Bonds and Planned IPO

Dangote Group has revealed plans to finance its proposed 700,000 barrels-per-day (bpd) oil refinery in Kenya through a combination of internally generated funds, bond issuances and proceeds from a planned Initial Public Offering (IPO), as the conglomerate pushes ahead with its expansion across Africa’s energy sector.

The proposed refinery, which will be located on Lamu Island off Kenya’s coast, is expected to become East Africa’s largest refining facility and marks Dangote Group’s biggest refining investment outside Nigeria.

The Vice President of Oil and Gas at Dangote Industries, Edwin Devakumar, said preliminary activities on the project have already commenced.

“The site has been selected, soil tests are under way, and design and engineering work has commenced. Kenya was the choice from the beginning,” Devakumar said.

According to him, the company plans to fund the refinery through a mix of internally generated cash, bond financing and funds expected from a future public listing.

Although he did not disclose the exact cost of the project, Devakumar said the refinery would be comparable in scale and investment value to the Lagos-based Dangote Refinery, which cost more than $20 billion before it commenced operations in 2024.

The proposed facility is expected to take up to three years to complete and will supply refined petroleum products to Kenya and neighbouring countries across East Africa. The project is expected to help reduce the region’s dependence on imported fuels while strengthening energy security and industrial development.

The investment forms part of Dangote Group’s broader strategy to expand refining capacity across the continent following the successful launch of its 650,000bpd refinery in Lagos, currently Africa’s largest single-train refinery.

The company had previously explored the possibility of building a refinery in Tanzania’s port city of Tanga. Still, it later shifted its focus to Kenya after assessing infrastructure availability, logistics efficiency and market opportunities.

The decision to combine internally generated funds with debt financing and a future IPO signals Dangote’s intention to diversify funding sources for what is likely to be one of Africa’s most expensive industrial projects.

The Lagos refinery, developed by Dangote Group, saw costs rise from an initial estimate of around $9 billion to more than $20 billion due to project redesigns, engineering complexities, currency depreciation, supply-chain disruptions during the COVID-19 pandemic and global inflationary pressures.

By leveraging cash flow, bonds and public-market funding, the company may be looking to avoid placing excessive pressure on its balance sheet while ensuring sufficient capital for the project’s execution.