Lamu refinery eyes Africa's 86 million tonnes fuel import gap

The plan to set up a refinery in Lamu will have a ripple effect on the supply of petroleum products on the continent, owing to new revelations by a report that demand for refined fuels is expected to grow by 56 per cent by 2040.

The State of Africa’s Infrastructure Report by the Africa Finance Corporation (AFC) notes that by 2040, the continent will be facing an annual shortage of 86 million tonnes of petroleum products.

This shortage, it says, will require three Dangote-size refineries to meet the demand, referencing the facility commissioned in 2024 by billionaire Aliko Dangote in Lekki, Nigeria.

Yet, as it stands, East Africa is the only region on the continent without a functioning refinery, which the report states has exposed economies to price shocks.

“The escalation of the conflict in the Middle East in 2026 has once again exposed the vulnerability of import-dependent regions, particularly in East Africa, where there are no large-scale refining hubs,” the report says.

“With a population exceeding 400 million and no functioning refinery base, the region remains fully exposed to disruptions in global supply routes and pricing shocks, underscoring the strategic case for establishing a refining hub anchored in regional demand.”

The report says the commissioning of the Dangote Refinery in Nigeria marks a turning point for West Africa and the Atlantic coast in general, demonstrating that large-scale, world-class refining capacity can be built and operated on the continent.

A replica of the same refinery is set to be put up in Lamu at Sh2.2 trillion (17 billion), also through Dangote, as the billionaire announced early this month. This project will take 36 months.

While the one set up in Lekki, Nigeria, has a capacity of 650,000 barrels per day, the one in Kenya is expected to process 700,000 in the same period.

“The commissioning of the Dangote Refinery from 2024 onwards, with a total capacity of 650,000 barrels per day, is beginning to shift this dynamic. As domestic refining ramps up, fuel imports are declining, and the petroleum trade balance is moving toward self-sufficiency,” the report says.

For contrast, in 2025, the report notes, Africa imported an average of 650,000 barrels per day of refined products through the troubled Strait of Hormuz. It states that the Strait accounted for nearly 70 per cent of Africa’s jet fuel and kerosene imports, and around 25 per cent of its diesel and gasoil imports, placing the continent among the most exposed regions globally.

"Structural constraints, including limited domestic refining capacity in East Africa, low strategic fuel reserves, high price sensitivity, and limited supplier diversification, mean that disruptions along this corridor are not absorbed but amplified, transmitting rapidly into higher costs, supply shortages, and broader macroeconomic stress," the report states.

Amidst the expected new refinery, AFC warns of the drawbacks associated with the underutilisation of these facilities, as already witnessed by the old ones on the continent, some of which are now obsolete.

The multilateral lender says ageing refineries on the continent require up to Sh2.08 trillion (16 billion) in brownfield investments to bring them back to life.

“While the continent has sufficient nameplate capacity to meet a large share of its fuel demand, actual throughput remains significantly below potential due to operational inefficiencies, ageing infrastructure or facility closures (Nigeria, Libya, Sudan, South Africa), the report says. “Prior AFC analysis showed that imports accounted for 55 per cent of demand in 2023, despite the theoretical ability to reduce this to near 10 per cent with full utilisation of existing assets.”

The result of this, the report adds, is that a structural dependence will continue to deepen. AFC points out that imports of petroleum products have risen from negligible levels in the 1980s to over 74 million tonnes today, reflecting both rising demand and declining effective refining output.

“Even when accounting for all committed capacity additions, the continent is projected to face an import gap of approximately 86 million tonnes per year by 2040. Closing this gap with domestic output would require close to three additional Dangote-sized refineries,” the report says.