Africa’s richest man launches Kenya oil refinery despite land protests

Nigerian billionaire Aliko Dangote and Kenya’s President William Ruto have broken ground on a $16bn (£12bn) oil refinery in Lamu, on Kenya’s northern coast.

Upon completion, the refinery is expected to process 700,000 barrels of crude oil a day, making it East Africa’s largest industrial project by capacity.

Ahead of the launch, some local residents took to the streets to demand more compensation for land used for the refinery.

Speaking to the BBC, Dangote, Africa’s richest man, dismissed the protests as games played by local marketers and international players, insisting the refinery would go ahead and would be ready by 2030 as planned.

The ground-breaking was also attended by the leaders of Uganda, Ethiopia, Togo and Benin.

Dangote has offered regional governments a combined 30% stake in the refinery, according to Reuters news agency.

“This is Africa coming together to build Africa. Today we are not simply breaking ground for a refinery, we’re breaking ground for a new chapter in Africa’s industrial journey to a brighter future,” Dangote said as he launched the project.

“Lekki [his Nigerian refinery] proved that it can be done, Lamu must prove that it can be repeated.”

President Ruto made a similar point, saying: “It is a declaration that Africa has entered a new age in which we will increasingly finance, build, process and add value here at home.”

The refinery is set to become the only one in East Africa and is Kenya’s largest infrastructure project since independence, surpassing the $5.1bn (£3.9bn) Standard Gauge Railway.

In his interview with the BBC’s Focus on Africa programme, Dangote disputed the compensation claims and said the company took only the portion of land it needed from what the government made available.

“To come and say some people are demonstrating, demonstrating about what? Have you ever seen people demonstrating against themselves in terms of development?” he asked, indicating he was not fazed by the protests.

Walid Ali, the co-founder of the Save Lamu campaign group, told the BBC that they are concerned about the environmental impact the project could have on the local community.

“We are asking for the findings from the environmental impact assessment so that we can see what mitigation measures are being proposed,” Ali said.

“This is not the first project where we have seen environmental concerns being overlooked,” he added.

A group of 133 Lamu residents has approached Kenya’s High Court in a bid to stop the construction work.

As a result, activities such as excavation and construction on the disputed land are restricted until the next court hearing on 14 October.

At the height of construction, Dangote said the refinery would create 60,000 jobs, with the benefits extending beyond those employed directly by the project.

“Are we going to bring robots? Of course, the people will benefit,” he said.

Critics have questioned the decision to build the refinery in Kenya, which is not an oil-producing country. Others have suggested Tanzania or Uganda, both of which are moving towards oil exports through the East African Crude Oil Pipeline.

But Kenya’s Energy and Petroleum Minister Opiyo Wandayi told the BBC that the refinery’s location did not mean it would rely on oil from the region.

“Refineries get crude oil from the market. And the market is open,” he said.

Dangote made a similar point, citing Singapore as an example.

“Singapore doesn’t produce a single drop of oil, yet they have a lot of refineries,” Dangote said.

The refinery will also include a 1,000-megawatt power plant.

Dangote sees reliable electricity as a critical constraint on industrialisation across Africa, particularly in mineral-rich countries that still export raw materials rather than processing them locally.

He has about $50bn (£38bn) worth of projects in the pipeline, including plans to develop 10,000 megawatts of power generation capacity across Africa by 2030, with the potential to double that depending on demand.

In Lamu, the new power plant is designed to support Dangote’s operations as well as other industries expected to set up in the area.

“The power is there and what you do is what we call plug and play,” he said.

Kenya has relatively high fuel prices, raising expectations that greater refining capacity could eventually help bring down pump prices. However, the price of crude oil, the main raw material for fuel, set by international markets, remains a major factor in what consumers pay at the pump.

The Lamu refinery is Dangote’s largest proposed investment outside Nigeria. His refinery in Nigeria also has a processing capacity of 700,000 barrels a day.

Dangote plans to double that capacity after floating 4.1 million ordinary shares to raise up to $2.1bn earlier this month.