Dangote favours Mombasa over Tanzania's Tanga for Sh2tr oil refinery

Africa’s richest man, Aliko Dangote, is considering using Mombasa port as the site for his proposed giant new refinery.

In an interview with the Financial Times (FT), the Nigerian billionaire said he is looking at Kenya as the location for a 650,000-barrel-a-day oil refinery he intends to build in East Africa, the newspaper reported on Sunday, citing the interview. 

“I’m leaning more towards Mombasa because Mombasa has a much larger, deeper port,” Dangote said. 

If realised, the plan would mark a significant boost for Kenya, which has long harboured ambitions to process its own crude.  

The development comes after President William Ruto said last month that East African countries were discussing plans for a joint oil refinery at the Tanzanian port of Tanga, modelled on Nigeria’s Dangote operation.  

However, Dangote compared Kenya’s Mombasa to Tanzania’s Tanga port, saying he prefers Kenya over Tanzania. He said the ball is in President Ruto’s court to determine the project plans.  

“Kenyans consume more. It’s a bigger economy.” 

“The ball is in the hands of President Ruto,” he said. “Whatever President Ruto says is what I’ll do.” 

Dangote estimated it would cost $15 billion (Sh1.93 trillion) to $17 billion (Sh2.19 trillion) to build the refinery, the FT report said. 

Kenya, alongside all East African countries, currently imports all its refined petroleum products, mainly from the Middle East, leaving the region vulnerable to supply disruptions and price spikes seen during the US-Israeli war on Iran. 

Tanzanian President Samia Suluhu Hassan recently rattled investors after she said she was not consulted about plans to establish a 650,000-barrels-a-day refinery in her nation, with the plant jointly owned by East African countries and Dangote. 

The proposal had been announced two weeks ago at an infrastructure summit in Nairobi, after talks between Dangote, Ruto and Uganda's President Yoweri Museveni. President Suluhu did not attend the conference. 

“In my private discussions with Ruto, I pressed him: ‘Why did you announce a refinery in Tanga and I know nothing about it?’” Suluhu said in Dar es Salaam during Ruto’s visit to Tanzania on Monday last week. 

Tanzanians would be “lucky” to have the refinery, Ruto responded in his speech to officials, urging his counterpart to support the planned investment. 

“I’ve been told that our announcement about building a refinery in Tanga has offended you a lot. Had I known, I would have announced a refinery in Mombasa instead, because the building of a refinery is a big opportunity,” Ruto said. 

Mombasa port is 130 kilometres (80 miles) from Tanga, a port city in northeastern Tanzania that is close to the Kenyan border. It is the endpoint of a crude pipeline from neighbouring Uganda, which plans to start exporting by the end of the year.  

Museveni pledged last month to supply the refinery with some Ugandan crude. Ruto said Kenya would send some of its own oil to Tanga for refining. 

Kenya is also on track to begin commercial oil production and exports from the South Lokichar Basin in Turkana by the end of this year, with an initial output of 20,000 barrels per day (bpd), rising to 50,000 bpd and eventually targeting 80,000–120,000 bpd.  

The multibillion-dollar project, involving an 825km pipeline to Lamu port, aims to monetise 560 million barrels of crude oil reserves. 

The Ruto government said recently that the first commercial export is expected by December this year, moving beyond a 2019 pilot phase. 

The push for a regional refinery has gained urgency as the war in the Middle East exposes East Africa’s reliance on imported fuel from the Middle East. Some eastern and southern African nations get three-quarters or more of their fuel imports from the region, according to energy consultancy CITAC. 

Dangote had pitched Tanga as an East African version of his 650,000-barrel-a-day refinery in Lagos, which recently reached full capacity and helped Nigeria cut its reliance on imported fuel.

He said the Tanzanian plant could be built within four to five years if governments back it.“We need each other,” Ruto said in his speech. “The sooner we realise that, the sooner we avoid the unnecessary suspicions between our two countries. It’s not helping anybody.” 

The news comes days after Dangote revealed he is considering using Kenya as a base to raise fresh capital from African investors for his sprawling industrial empire, including his giant new refinery, he said in a conversation with the head of the International Finance Corporation (IFC).  

Speaking with IFC Managing Director Makhtar Diop, Dangote outlined plans to create an investment vehicle in Kenya that would allow African savers to pool funds and invest in Dangote Group companies – a move aimed at keeping more of the continent’s private wealth at home rather than flowing into overseas property markets. 

“We are now trying to make all these things happen while we – Kenya – we put up like a vehicle and all the investment would be done there,” Dangote said during the fireside chat, which was recorded for an IFC podcast. 

The Nigerian industrialist stressed that his flagship Dangote Refinery – a 650,000-barrel-per-day plant that has faced years of delays – would eventually be listed, with dividends paid in dollars to African investors.

Alongside working with Nigerian regulators, including the Central Bank, the Securities and Exchange Commission, and the Nigerian Stock Exchange, Dangote said a Kenyan vehicle was being explored as a financial structuring platform to mobilise capital, provide liquidity, and allow investors to enter and exit easily. 

He did not suggest listing on the Nairobi Securities Exchange or moving operations to Kenya. Instead, the country would serve as a conduit for capital aggregation, allowing Africans to buy into Dangote’s assets without facing the currency and cross-border investment hurdles that have long fragmented the continent’s financial markets. 

If realised, the plan by the Nigerian billionaire to use a Kenyan investment vehicle to pool African capital for his refinery and other projects would give a significant boost to Nairobi’s long-held ambitions to become a top-tier financial hub, as Kenya’s capital seeks to model itself alongside global centres such as Dubai and Hong Kong. 

“We are going to list [the refinery]. When we list, we are going to ask Africans to buy shares – and we want to de-risk also their own capital,” Dangote said. “When we are paying dividends, all our dividends will be in dollars… You can choose naira, dollars, or South African rand.” 

Dangote, who started his career trading four trucks of cement daily, has built a conglomerate spanning cement, fertiliser, petrochemicals, and agriculture. He is now pushing into power, LNG, and deep-sea ports.

He said the group’s revenue could reach $100 billion (Sh13 trillion), with earnings before interest, tax, depreciation, and amortisation of $30-35 billion, potentially allowing dividend payouts of $20 billion (Sh2.6 trillion) annually. 

The industrialist, who said he has never taken a dividend from the parent company and has reinvested everything, argued that African-owned assets must be made available to African savers – a critique of the continent’s reliance on foreign investment. 

“For Africa to develop, some of us must take that risk in terms of opening up Africa,” he said. “We will open Africa by demonstrating that we believe in Africa, by investing our money in Africa.” 

Dangote also reiterated frustrations with barriers to intra-African trade, noting he requires 38 visas to travel across the continent. He called for free movement of people, goods, and services, and flagged opportunities in rehabilitating hundreds of disused dams in Nigeria to boost irrigation and reduce conflict. 

IFC’s Diop, whose institution has backed Dangote since a $478 million (Sh62 billion) loan in 2005, pledged continued support. “The industrialisation of Africa requires people to take risks,” Diop said. “You have the full commitment of the World Bank Group.” 

Dangote responded: “We couldn’t have asked for a better time with the World Bank… We will make the lives of Africans better.”