For decades, East Africa has depended heavily on imported refined petroleum products to power its economies. Petrol, diesel, aviation fuel and other petroleum products consumed across Kenya, Uganda, Rwanda, South Sudan and parts of the Democratic Republic of Congo largely arrive from refineries in the Middle East and India. More recently, Nigeria’s Dangote Refinery has also entered some of these markets.
That long-established trade pattern could now face its biggest disruption in years. Dangote Industries has selected Kenya’s coastal county of Lamu as the location for a proposed 700,000-barrel-per-day refinery that would become East Africa’s largest refining facility if completed. The project is expected to cost about $17 billion (KSh2.2 trillion) and will reportedly be financed through a mix of internal cash flows, bond issuances and proceeds from a planned public offering.
The proposal is significant not only because of its size but because it represents Dangote’s ambition to replicate beyond Nigeria what it has achieved at home. After years of delays and cost overruns, the Lagos refinery has emerged as one of Africa’s most important downstream energy assets. Kenya now appears to be the company’s next strategic target.
Yet this is about more than one industrial project. If built, the refinery could reshape fuel trade across East Africa, alter investment flows, strengthen Kenya’s influence in regional energy markets and create new competitive pressures for existing suppliers. The key question is simple: who wins and who loses when one refinery becomes capable of supplying a large share of an entire region’s fuel demand?
Why East Africa remains one of Africa’s biggest fuel import markets
Dangote’s interest in Kenya reflects an opportunity that has been developing for years. East Africa is among Africa’s fastest-growing regions, driven by rising populations, urbanisation and industrial expansion. As cities grow and businesses expand, demand for petrol, diesel, jet fuel and other refined products continues to rise.
Refining capacity, however, has not kept pace. Kenya’s old refinery in Mombasa ceased refining operations years ago. Uganda’s refinery project has experienced repeated delays, while other proposed facilities across the region have struggled to move beyond the planning stage. The result is a widening gap between demand and local refining capacity.
Kenya has become the centre of the region’s fuel import system. Through the Port of Mombasa, the country supplies not only its domestic market but also serves as a gateway for Uganda, Rwanda, South Sudan and parts of eastern Congo.
The scale of that demand continues to grow. Kenya’s annual imports of diesel, petrol and dual-purpose kerosene increased from 8.78 billion litres in 2022 to 9.09 billion litres in 2023. The figure rose further to 9.53 billion litres in 2024 before crossing the 10-billion-litre mark in 2025 at 10.41 billion litres. The steady rise underscores both growing fuel consumption within Kenya and the country’s expanding role as a supply hub for neighbouring markets.
The region’s dependence on imported fuels carries significant risks. East African economies remain exposed to disruptions in global shipping routes, geopolitical tensions and volatile oil prices. Supply shocks originating thousands of kilometres away can quickly translate into higher fuel costs for businesses and consumers.
This dependence also creates a compelling commercial case for local refining. Rather than exporting crude and importing refined products, governments across Africa increasingly want to capture more value within the continent. For Dangote, East Africa presents an opportunity to enter a market where demand is growing rapidly and local refining capacity remains limited.
The biggest winners from Dangote’s Kenya refinery
If completed, the proposed refinery could trigger economic effects far beyond Kenya’s energy sector. Large refining projects rarely benefit only their owners. They often create ripple effects across industries, supply chains and national economies. In East Africa’s case, the project could generate new investment opportunities, strengthen energy security and reshape regional trade flows. While the full impact would depend on execution and market conditions, several groups appear well positioned to benefit if the refinery moves from proposal to reality.
1. Kenya
No country stands to benefit more directly from the proposed refinery than Kenya. Beyond the refinery itself, the project could help transform Lamu into one of East Africa’s most important industrial centres. Large refineries typically attract supporting industries, including storage facilities, logistics companies, engineering services and petrochemical businesses. These activities could create thousands of jobs during construction and operation while generating new tax revenues and attracting additional foreign investment.
The refinery could also strengthen Kenya’s strategic position within East Africa’s energy market. For decades, the country has served as a major fuel import gateway through the Port of Mombasa. A large refining facility would allow Kenya to move beyond importing and distributing fuel to becoming a major processing and supply hub. That shift could increase its economic influence within the region while supporting broader industrial development.
Samuel Kariuki, a Nairobi-based energy expert, told Businessfront that the refinery’s significance extends beyond fuel production and could reshape investment patterns across East Africa.
“Large refining projects tend to create economic benefits far beyond the energy sector itself. They attract supporting industries, strengthen transport and logistics networks and encourage additional private investment. If the project is successfully delivered, Kenya could consolidate its position as one of East Africa’s most important industrial and energy hubs,” Kariuki said.
2. Regional fuel consumers
Consumers across East Africa could also emerge as major beneficiaries. The region remains heavily dependent on imported petroleum products from the Middle East and Asia, leaving fuel markets vulnerable to freight costs, shipping disruptions and geopolitical tensions. A refinery located within East Africa would shorten supply chains and improve supply reliability.
Although lower fuel prices are not guaranteed, increased refining capacity could create a more competitive market and reduce some of the costs associated with transporting products from overseas suppliers. More stable fuel supplies would benefit households, businesses and governments alike.
3. Businesses that rely heavily on fuel
Manufacturers, airlines, logistics companies, transport operators and agricultural producers all have one thing in common: fuel is a significant operating expense. Any improvement in fuel availability or supply stability could help these sectors manage costs more effectively and reduce their exposure to international supply disruptions.
For businesses operating on tight margins, even modest improvements in fuel logistics can have meaningful economic benefits. A stronger regional supply network could therefore improve competitiveness across multiple sectors of the economy.
4. East African economies
The wider regional economy could gain through stronger energy security and reduced dependence on imported refined products. Many East African countries spend billions of dollars annually importing fuel. A regional refining hub could help keep more of that value within Africa while supporting cross-border trade.
The African Development Bank has repeatedly argued that improving access to affordable and reliable energy is critical for industrialisation. By increasing refining capacity closer to end-users, the project could help support economic growth while reducing vulnerability to external supply shocks.
5. Regional infrastructure and trade corridors
The refinery could also provide a major boost to infrastructure projects that have struggled to realise their full potential. The clearest example is Kenya’s Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) Corridor, which was designed to serve as a major trade gateway linking East African markets.
A refinery processing 700,000 barrels per day would generate significant cargo volumes and create demand for pipelines, storage facilities, transport services and other supporting infrastructure. That could attract additional investment into the corridor and strengthen regional trade links, helping transform Lamu into a more important commercial and logistics hub.
Who stands to lose from the refinery
While the proposed refinery could create significant economic opportunities across East Africa, not every stakeholder stands to benefit from the project. Major shifts in energy markets often create new winners while placing pressure on existing players whose business models were built around the old system. If Dangote succeeds in establishing one of Africa’s largest refining centres in Kenya, some companies, investors and even governments may find themselves facing a more competitive landscape than they anticipated.
1. Fuel importers and petroleum traders
The most immediate pressure is likely to fall on businesses that currently profit from East Africa’s dependence on imported fuel. For years, petroleum traders, importers and storage operators have played a central role in supplying refined products to markets across Kenya, Uganda, Rwanda, South Sudan and eastern Congo. Their business models rely on sourcing fuel from overseas refineries and distributing it through regional supply networks.
A large refinery located within East Africa could gradually reduce the volume of imported products entering the region. While imports would not disappear entirely, increased local refining capacity could squeeze margins for traders and intensify competition within the downstream sector. Companies that fail to adapt may find it increasingly difficult to maintain the advantages they once enjoyed.
2. Gulf and Indian refiners
Refineries in the Middle East and India could also face growing competition if the project proceeds. Today, a significant share of East Africa’s petrol, diesel and aviation fuel comes from large refining hubs in countries such as Saudi Arabia, the United Arab Emirates, Kuwait and India. These suppliers have benefited from established trade routes, large-scale operations and East Africa’s limited refining capacity.
A refinery capable of processing 700,000 barrels per day would offer regional buyers a much closer source of supply. Although East Africa will likely continue importing certain petroleum products, some demand that currently supports overseas refiners could gradually shift towards local production. The result may be increased competition for market share in a region that has traditionally depended on imported fuels.
3. Tanzania
Tanzania may view Kenya’s success in attracting the refinery as a strategic setback. Reports suggest that other East African countries, including Tanzania, were considered before Dangote selected Lamu as the preferred location. Securing a project of this scale would have significantly strengthened Tanzania’s ambitions of becoming one of the region’s leading energy and logistics hubs.
The country remains an important player in East Africa’s energy sector, particularly through its natural gas resources and its role in the East African Crude Oil Pipeline (EACOP). However, a refinery of this size would give Kenya an additional advantage in the competition for energy-related investment, potentially strengthening Nairobi’s position at Dar es Salaam’s expense.
4. Uganda’s refinery ambitions
Uganda could face a different challenge. For more than a decade, the country has pursued plans to build its own refinery to process crude oil from the Albertine Graben. The project has experienced repeated delays linked to financing, investor participation and commercial negotiations, but Kampala continues to view domestic refining as an important part of its long-term energy strategy.
The emergence of a massive refinery in neighbouring Kenya could raise difficult questions about the commercial viability of multiple large refining projects within the same region. Investors may begin to assess whether East Africa requires several major refineries or whether a dominant regional facility could meet much of the market’s demand more efficiently. While Uganda’s plans are unlikely to disappear, the competitive landscape could become more complicated.
5. Competing regional energy hubs
The refinery could also create broader competitive pressures for countries seeking to position themselves as East Africa’s primary energy centre. Across the region, governments are investing heavily in ports, pipelines, industrial zones and logistics infrastructure designed to attract trade and investment. Energy infrastructure often plays a crucial role in determining which cities and countries emerge as regional commercial hubs.
If Lamu becomes home to East Africa’s largest refinery, Kenya could strengthen its influence over fuel supply chains and regional trade flows. That does not necessarily mean neighbouring countries become outright losers, but it could shift the balance of economic influence in ways that make it harder for rival hubs to attract similar strategic investments.
Ultimately, the refinery’s biggest impact may be competitive rather than destructive. Most of the players facing pressure will not disappear overnight. Instead, they may be forced to adapt to a market that looks very different from the one they have known for decades. Those that adjust successfully could still find opportunities within the new energy landscape. Those that fail to evolve may discover that the region’s centre of gravity is gradually moving elsewhere.
Can Dangote repeat in Kenya what he achieved in Nigeria?
The biggest question surrounding the project is whether Dangote can successfully replicate in Kenya what it eventually achieved in Nigeria. The Lagos-based Dangote Petroleum Refinery recently ramped up crude processing to 700,000 barrels per day, surpassing its nameplate capacity of 650,000 barrels per day. Dangote has also announced plans to expand capacity to 1.4 million barrels per day within the next 30 months, a move that could make the facility one of the largest refineries in the world.
Beyond its scale, the refinery has helped reposition Nigeria within Africa’s downstream petroleum market. A country that spent decades importing large volumes of refined fuel despite being one of the continent’s biggest crude oil producers now possesses a refinery capable of supplying domestic demand and exporting products to markets across Africa. That transformation is the benchmark against which the proposed Kenyan project will inevitably be judged.
The achievement, however, did not come easily. The Lagos refinery is now regarded as one of Africa’s most ambitious industrial projects, but its development was marked by repeated delays, escalating costs and significant financing challenges. By the time production began, the project had reportedly cost around $20 billion.
Those experiences offer important lessons for Kenya. Although company executives believe the refinery could be completed within three years, large energy projects rarely progress without obstacles. Environmental approvals, engineering challenges, land issues and supply chain disruptions can all affect timelines and budgets.
Financing will be another crucial test. Dangote has indicated that the Kenyan project will be funded through a combination of internal resources, bonds and future equity offerings. That approach reflects confidence in the company’s financial position, but raising billions of dollars for a refinery remains challenging in an era when many investors are becoming more selective about fossil-fuel-related projects.
Crude supply presents another important consideration. Kenya is not a major oil producer, meaning the refinery will need dependable access to imported crude or supply agreements with producers elsewhere in Africa. Maintaining consistent feedstock supplies will be essential if the refinery is to operate efficiently.
Market demand is equally important. A facility capable of processing 700,000 barrels per day would add substantial capacity to the regional market. Long-term success will depend on whether fuel demand across East Africa grows quickly enough to absorb those volumes and whether the refinery can compete effectively with overseas suppliers.
Kelvin Amadi, an energy policy analyst, told Businessfront that while Dangote’s Nigerian refinery has demonstrated the commercial potential of large-scale refining in Africa, replicating that success elsewhere will require more than capital.
“Nigeria’s Dangote Refinery has shown that local refining can reduce import dependence and create new export opportunities. However, every market has its own realities. In Kenya, success will depend on access to crude supply, supporting infrastructure, and the ability to serve regional demand competitively over the long term,” Amadi said.
For now, the refinery remains a proposal rather than a completed asset. However, the fact that Dangote is considering another mega-project so soon after bringing the Lagos refinery into operation suggests growing confidence in Africa’s downstream petroleum market.
How one refinery could reshape East Africa’s energy future
Dangote’s proposed refinery is ultimately about more than fuel production. It is about which country emerges as East Africa’s dominant energy and trade hub in the coming decades. Across the world, major energy infrastructure projects often create economic advantages that extend far beyond the sector itself. Ports attract shipping activity. Refineries attract industries. Transport corridors attract investment. Together, they shape trade routes, influence investment decisions and determine where economic activity is concentrated.
That is what makes Lamu such a strategic choice. Over the past decade, Kenya has invested heavily in the LAPSSET Corridor to connect Kenya with neighbouring markets. While progress has been slower than originally anticipated, a refinery processing 700,000 barrels per day could provide the anchor investment needed to unlock the corridor’s wider economic potential. Increased fuel movements would support port activity, encourage investment in storage facilities and strengthen the case for additional infrastructure linking Kenya to regional markets.
The project also places Kenya at the centre of a growing competition for regional energy leadership. Tanzania has positioned itself as a major energy player through the East African Crude Oil Pipeline (EACOP). Uganda, meanwhile, is preparing to become a significant crude producer. A large refinery in Kenya would add another layer to this regional contest by giving Nairobi a strategic asset capable of supplying refined petroleum products across multiple countries.
Beyond the competition, the refinery reflects a broader shift in how African governments are thinking about industrial development. Success, however, is far from guaranteed. Financing must still be secured, regulatory approvals obtained and construction risks managed. The refinery will also need sufficient regional demand to justify its scale. As the experience of the Lagos refinery demonstrated, mega-projects rarely move from announcement to operation without significant challenges.
Yet even at this early stage, the proposal is already reshaping discussions about East Africa’s economic future. The biggest story may not be that Aliko Dangote wants to build another refinery. It may be that East Africa’s fuel market is approaching a turning point. If the project proceeds as planned, the refinery could become more than an industrial asset. It could become a symbol of shifting economic influence in East Africa and a key factor in determining the region’s future winners and losers.
