Dangote to sell 30% shareholding of new refinery to East African countries – Report

Aliko Dangote, Africa's richest individual, is reportedly offering a 30 percent shareholding in his proposed 700,000-barrel-per-day (bpd) refinery to East African countries, according to a report by Bloomberg cited by Premium Times Nigeria. The refinery, set to be constructed in Kenya's southeastern coastal town of Lamu, marks a strategic shift for Dangote, who has faced persistent challenges in completing a similarly sized refinery in Nigeria. Kenya is expected to hold a 10 percent stake in the project, valued at approximately $500 billion, based on estimates from David Ndii, a senior economic advisor to President William Ruto. Ndii stated during a capital market conference in Nairobi that the total value of the regional investment would amount to roughly $1.5 billion. He expressed confidence in securing commitments from participating nations, noting that if some countries fail to commit to purchasing refined petroleum products, Kenya would provide support. Ethiopia and Rwanda have reportedly shown interest in joining the initiative. This move represents a pivot for Dangote, who has encountered substantial obstacles in Nigeria. His Lagos-based refinery, originally slated for completion in 2016, faced delays due to logistical issues, infrastructure limitations, and disruptions caused by the global pandemic. These setbacks have led him to seek opportunities in more business-conducive environments such as Kenya and other East African nations. Dangote has previously alleged that international oil companies and regulatory bodies were involved in undermining his efforts to establish a self-sufficient refining operation in Nigeria. He accused the Nigerian Midstream and Downstream Petroleum Regulatory Authority of issuing licenses to competitors importing "dirty fuel," suggesting a coordinated effort to hinder his progress. This contention led to the resignation of Farouk Ahmed, then CEO of the authority, and Mele Kyari, former managing director of the National Petroleum Company Limited, who was accused of operating an illicit fuel blending facility near Malta. Despite these challenges, Dangote remains committed to expanding his refining capabilities. The Kenyan refinery, anticipated to cost between $15 billion and $17 billion, is expected to begin construction soon. If realized, this project would enable Dangote to double his refining capacity to 1.4 million bpd within the next three years. The Lagos refinery's processing capacity has already been increased to 700,000 bpd from its initial target of 650,000 bpd. Prior to the planned $5 billion initial public offering of the Nigerian refinery in October, a private equity placement raised $2.5 billion, valuing the refinery at $40 billion. This fundraising effort attracted interest from both African and international institutional investors, achieving a valuation that was 3.7 times higher than the initial estimate. The success of this funding round underscores the continued confidence in Dangote's ventures despite the hurdles faced in Nigeria. As the groundwork for the Kenyan refinery progresses, attention turns to how this new venture will impact regional energy dynamics and Dangote's broader strategy in Africa. The upcoming developments could influence not only the local economies of Kenya and neighboring countries but also the trajectory of Dangote's expansive business interests across the continent.