Dangote’s decision to anchor his second mega-refinery on Kenya’s northern coast came only after a monthslong, three-way contest with Uganda and Tanzania that exposed how differently the three East African neighbors compete for the same investor, according to people familiar with the discussions.
For much of the past months, three East African major countries, Kenya, Uganda and Tanzania, ran parallel campaigns to land what would become the region’s largest single industrial investment: a $17 billion, 700,000-barrel-a-day refinery from Africa’s richest man. By early July, the answer was Lamu, an island off Kenya’s northern coast, where Dangote Industries says soil testing and engineering design are already under way.
The decision followed a public tilt toward Tanga, on Tanzania’s coast, discussed as recently as April when Dangote appeared alongside Kenyan President William Ruto and Ugandan President Yoweri Museveni to unveil the regional refinery concept. It also followed private consideration of Mombasa and, before that, according to people close to the process, an early preference within parts of Dangote’s leadership for locating the project in Uganda altogether, tied to proximity to crude reserves in the Lake Albert basin.
None of the three governments has publicly detailed why it did not win the project outright. But according to sources with knowledge of the deliberations, the calculus inside Dangote Industries turned on regulatory friction, financing depth, land politics and, in Tanzania’s case, timing.
Dangote Industries did not respond to a request for comment.
Uganda, the initial choice
According to people familiar with the matter, Uganda’s pitch had an obvious logic. Of the three nations, Uganda is the only oil-producing nation. Commercial production from the Lake Albert fields, expected to reach roughly 230,000 barrels a day, is due to begin flowing this year through the newly built East African Crude Oil Pipeline to the Tanzanian coast.
A refinery close to the source, the thinking inside parts of Dangote’s team reportedly went, would simplify feedstock logistics for at least part of the plant’s capacity.
However, that preference did not survive contact with Uganda’s regulatory and land environment, according to people familiar with the talks, who described a process the conglomerate judged harder to navigate than Kenya’s.
Uganda is also landlocked, meaning any refinery built there would still require a long pipeline run to a coastal export point — precisely the kind of infrastructure dependency Dangote’s Lagos experience had taught the company to avoid where possible.
There was a second, more delicate reason: Uganda already has its own burgeoning refinery in motion. The 60,000-barrel-a-day Hoima facility, planned for more than a decade, has struggled for years to get off the ground.
Yoweri K. Museveni during the former visit to the State House in Kampala; credit: Facebook
Some stakeholders close to the process feared that a Dangote-scale entrant — more than ten times Hoima’s planned capacity — could draw crude, financing and regional demand away from the smaller domestic project before it ever produced a barrel.
“Dangote’s proposed refinery could rival and swallow Uganda’s state-owned refinery,” one person familiar with the discussions said, describing sentiment among some officials weighing the project’s scale against Hoima’s.
Museveni has continued to insist publicly that Hoima remains on course regardless of what is built on the coast, framing it as a separate strategic asset tied to domestic value-addition rather than a competitor to a regional export-scale plant.
Kenya, a not-so-perfect settlement
On its part, Kenya’s win was not a clean one. Dangote’s early preference, according to people familiar with the site selection, was Mombasa.
Mombasa is Kenya’s main port city, with existing petroleum storage infrastructure inherited from the shuttered Kenya Petroleum Refineries plant and proximity to the country’s largest fuel-consuming market.
But Mombasa carried its own complications.
Land ownership disputes and contested access to port-adjacent infrastructure raised the risk, in the company’s assessment, of legal challenges that could delay or derail construction years into the project.
Lamu, further north and anchored by a newer deep-water port built as part of the LAPSSET transport corridor, offered fewer entangled claims, according to the same people.
This means trading some of Mombasa’s logistical convenience for cleaner title and fewer competing interests.
Kenya’s broader appeal went beyond geography.
Compared with Uganda and Tanzania, Kenya has a deeper and more liquid banking sector, with lenders such as Absa Bank Kenya among the institutions capable of underwriting a portion of a multibillion-dollar project — a factor that mattered to a company financing the bulk of the plant through internal cash flow, bond sales and a planned initial public offering, rather than external debt alone.
Dangote Industries vice president for oil and gas, Edwin Devakumar, has said Kenya “was the choice from the beginning,” attributing the final call to commercial, technical and logistical assessments rather than any single factor.
Kenya has since pledged 21.5 billion shillings ($167 million) in seed capital toward the project, and Ruto has said regional governments would be invited to take stakes. Dangote has also made clear that his commitment to the refinery is conditional: the company has said it will not proceed without government guarantees against the dumping of cheap, subsidized fuel imports once the plant is running, a protection Nigeria was slow to extend to the Lagos refinery.
The late bird of Tanzania
Of the three, Tanzania’s position shifted the most abruptly. As recently as mid-May, Tanzanian President, Samia Suluhu Hassan, met Dangote in Dar es Salaam amid what regional outlets described as an intensifying contest between Tanga and Mombasa.
But Tanzania entered the formal lobbying later than its neighbors, according to people familiar with the timeline, distracted in part by the country’s own post-election political recalibration.
By the time Dangote and Hassan sat down, several of the commercial and technical judgments that would ultimately favour Kenya had already hardened.
“Perhaps if Tanzania had joined the conversation early enough, the conversation might have been different,” one person familiar with the matter said.
Dangote met Hassan again in the weeks after the Lamu decision was made, according to the company, to explain the outcome and to invite Tanzania to participate in the Kenyan project regardless.
Tanzanian officials have not publicly objected to the outcome; the pipeline linking Uganda’s oilfields to Tanga remains a Tanzanian and Ugandan asset independent of where the refinery itself is built, and Dar es Salaam has signaled it still expects to benefit as a regional partner in a project it regards as staying within East Africa.
How Dangote will fund the refinery
Dangote Industries has said the Lamu plant will be financed primarily through internal cash generation, the sale of bonds, and proceeds from a planned initial public offering of Dangote shares that Devakumar has said could be announced as early as October. That mirrors, in broad terms, the financing approach used for the company’s Lagos refinery, though that project’s final cost — more than $20 billion, against an original 2013 estimate of roughly $9 billion — illustrates the risk of cost overruns tied to currency swings, engineering changes and global inflation.
Construction at Lamu is expected to take about three years once it formally begins, according to the company, though no groundbreaking date has been set; the current phase is described as preparatory, with soil investigations and design work under way.
The project has already drawn interest from outside investors looking to take part in the financing ahead of the planned IPO.
The refinery’s role in ending import dependence in East Africa
East Africa currently has no operational refining capacity of scale, despite an estimated 4.7 billion barrels of crude reserves concentrated in Uganda, Kenya, South Sudan and the Democratic Republic of Congo, according to African Union figures.
Kenya alone imported roughly 40 million barrels of petroleum products last year, sourced largely from the Gulf — exposure that was underscored when Iran briefly threatened to close the Strait of Hormuz, through which about a fifth of the world’s oil and gas shipments pass.
A completed Lamu refinery is intended to supply Kenya, Uganda, Tanzania, South Sudan and other neighboring markets, replacing seaborne imports with regionally refined fuel much as Dangote’s Lagos plant has done for Nigeria, which became a net petrol exporter after the facility reached full capacity.
Whether Lamu meets that timeline — or repeats the cost and schedule slippage that defined Lagos — will not be clear for years.
For now, the project stands as the clearest test yet of whether private African capital can out-organize the diplomacy of three governments competing for the same investment.
