Debt financing: Dangote to borrow KSh 1.4 trillion to build Lamu Oil Refinery

This story has significance for readers across Kenya and beyond.

- Nigerian billionaire Aliko Dangote announced plans to borrow about KSh 1.45 trillion (USD 11.2 billion) to finance a proposed oil refinery at Lamu

- Dangote priced the Lamu project at KSh 2.07 trillion (USD 16 billion), with construction set to begin by October and completion targeted in four years

- Dangote warned the refinery cannot survive without government protection against cheap fuel imports from Russia and India

TUKO.co.ke journalist Japhet Ruto has over eight years of experience in financial, business, and technology reporting, offering insights into Kenyan and global economic trends.

Nigerian billionaire Aliko Dangote has announced plans to borrow approximately KSh 1.4 trillion (USD 11.2 billion) to finance a proposed oil refinery in Lamu, warning that the plant will need government protection from cheap imported fuel to remain commercially viable.

Dangote outlined a financing structure of 70% debt and 30% equity for the project, which he now estimates will cost KSh 2.07 trillion (USD 16 billion), revised downward from an earlier figure of KSh 2.2 trillion (USD 17 billion) after his team determined the refinery could be completed within four years. Construction is expected to commence by October.

How much will Lamu facility process?

The proposed Lamu facility is designed to process 700,000 barrels of crude oil per day, surpassing the 650,000-barrel capacity of Dangote's Lagos refinery and positioning it as the largest such plant in East Africa.

Dangote said the facility would supply fuel across eastern and northern Africa, including Egypt.

Crude feedstock would be sourced from Uganda's oil fields via the East African Crude Oil Pipeline, supplemented by future output from Kenya's Turkana oil deposits and imported crude arriving through the Port of Lamu.

What is Dangote's request to Kenya?

Dangote stated that President William Ruto's administration would need to provide land and help mobilise regional financing.

He also wants Kenya to shield the plant against what he described as the dumping of cheap petroleum products from Russia and India.

"No refinery in the world can survive without that protection," Dangote said, as reported by Billionaires Africa.

Will Kenya invest?

President Ruto has indicated that Kenya will invest in the project through the National Infrastructure Fund, though he has not specified the size of the government's stake.

Dangote's net worth stands at USD 30.1 billion (KSh 3.89 trillion), according to Forbes, built across cement, sugar, fertiliser and oil refining businesses.

The announcement comes as he prepares to list his Nigerian refinery on the stock exchange.

Source: TUKO.co.ke

Reporting originally appeared via TUKO. Read the full source for additional context.