Dangote: Lamu refinery will beat Uganda’s project

KAMPALA/NAIROBI. Nigerian businessman Aliko Dangote has said his planned refinery in Kenya’s Lamu will be completed faster than Uganda’s long-delayed refinery in Hoima, renewing questions about the pace of Uganda’s petroleum infrastructure projects.

Speaking at an investors’ meeting at the Nairobi Securities Exchange yesterday, Mr Dangote said his group was moving ahead with the 700,000-barrel-per-day Lamu refinery and warned African governments against relying on investors who make investment commitments without delivering projects.

“By the time we are done with Lamu, it will be the fastest refinery to be built,” Mr Dangote said, according to reports from the meeting.

He added that by the time the Lamu refinery is completed, he expected little physical progress to have been made on Uganda’s proposed refinery.

Mr Dangote’s remarks come as Kenya prepares for the groundbreaking of the Lamu project, which is scheduled for Wednesday, September 30. The first vessel carrying about 2,930 tonnes of project cargo arrived at Lamu Port last Saturday, signalling the start of physical preparations for the multibillion-dollar project.

The proposed refinery, with a capacity of 700,000 barrels per day, is expected to be the largest refinery in East Africa and will be developed as part of a wider industrial project in the Lamu Special Economic Zone.

Dangote Group has said the refinery could take about three years to construct. Earlier reporting put the targeted completion around 2030 if construction proceeds according to schedule.

The project is expected to serve Kenya and neighbouring markets, including Ethiopia, Somalia, South Sudan, Uganda, Rwanda and Tanzania.

Kenya has been offered a stake in the refinery, while other East African governments have also been invited to participate. Reuters reported yesterday that Dangote’s group plans to retain 70 per cent of the refinery, with regional governments taking the remaining share.

Uganda’s delayed refinery

Uganda’s proposed refinery at Kabaale, Hoima, is designed to process 60,000 barrels of crude oil per day and has been estimated at about $4 billion.

Under the latest arrangement, UAE-based Alpha MBM Investments is to hold a 60 per cent stake, while Uganda, through the Uganda Refinery Holding Company, will hold up to 40 per cent.

Uganda signed an implementation agreement with Alpha MBM in 2025, reviving a project that has gone through several unsuccessful attempts to secure a private-sector partner.

The government initially selected Russia’s RT Global Resources in 2015, but the arrangement collapsed after negotiations stalled. A subsequent effort involving South Korea’s SK Engineering also failed.

In 2018, Uganda selected the Albertine Graben Energy Consortium as its private-sector partner, but the agreement eventually lapsed after the consortium failed to meet key milestones, particularly regarding financing.

The latest project is now at the Front-End Engineering Design stage. Uganda National Oil Company (UNOC) has said the final investment decision will depend on completion of FEED studies, early works, technical milestones, commercial agreements and regulatory approvals.

“FEED studies are progressing on schedule, alongside ongoing preparations for early works activities,” UNOC spokesperson Tony Otoa said earlier this month.

UNOC says its refinery subsidiary holds a participating interest of up to 40 per cent in the proposed refinery on behalf of the government.

A race against time

The emerging rivalry between Lamu and Kabaale comes as East Africa prepares for increased crude oil production from Uganda while continuing to depend heavily on imported petroleum products.

Uganda expects to start commercial oil production in 2027, with crude from the Tilenga and Kingfisher projects expected to be transported through the 1,443-kilometre East African Crude Oil Pipeline (EACOP) to Tanga in Tanzania.

This creates a strategic question for Uganda: whether its crude will be processed locally or whether regional refineries such as Lamu could capture part of the market.

The Lamu project also faces a major challenge of its own—securing crude feedstock.

Kenya does not currently produce enough crude to supply a 700,000-barrel-per-day refinery. Reuters reported earlier this month that the project could therefore depend significantly on seaborne crude imports, with Uganda, South Sudan and Kenya identified as possible sources.

Uganda, however, has been pursuing its own refinery while developing EACOP to export crude through Tanzania.

The competition is therefore not simply about which refinery is completed first. It is also about which project can secure crude, financing, markets and infrastructure at commercially sustainable terms.

Dangote’s warning

Mr Dangote’s comments also revive a broader concern over the difficulty of executing large infrastructure projects in Africa.

He urged governments to be cautious about investors who make large promises without following through.

The warning is particularly significant for Uganda, where the refinery has been under discussion for more than a decade and has passed through several prospective investors.

Uganda’s government has continued to describe Kabaale as a strategic project intended to reduce dependence on imported refined petroleum products and support industrialisation.

The refinery is part of a broader infrastructure plan involving the Kabaale Industrial Park, a refined-products pipeline and storage facilities.

UNOC says the government is also investing in petroleum storage and logistics infrastructure, including the planned Namwabula storage facility in Mpigi and expansion of the Jinja storage terminal.

Lamu faces its own hurdles

Despite Dangote’s confidence, the Lamu project is not without challenges.

More than 100 residents have gone to court challenging what they describe as displacement from ancestral land ahead of construction of the refinery and other infrastructure in the area.

The 133 petitioners allege that homes, crops and other property have been affected without adequate compensation or resettlement.

A Kenyan court has ordered a suspension affecting activities at the disputed site pending a hearing in October. Dangote Group, however, has said the ruling will not stop tomorrow’s groundbreaking ceremony, although it could affect some site activities.

There are also questions over financing and crude supply.

Reuters reported that Dangote is seeking substantial funding for a wider energy investment programme, while the Lamu refinery itself is estimated at between $15 billion and $16 billion.

For Uganda, the developments provide another measure against which the Kabaale project will be judged.

After years of changing investors and delayed deadlines, the challenge is now to turn the latest agreement with Alpha MBM into physical construction and ultimately production.

The two projects could eventually complement each other by supplying different markets, but their emergence is also likely to reshape the East African petroleum-products market.

For Uganda, the stakes are particularly high because the country is moving towards first oil while its domestic refinery remains behind the coastal Lamu project in terms of construction readiness.

The question, therefore, is no longer only whether Uganda will build a refinery, but whether it will do so quickly enough to secure a meaningful position in the regional fuel market as new refining capacity comes on stream.