Experts have raised fresh concerns over the proposed Ksh2.59 trillion ($20 billion) Dangote oil refinery in Lamu, questioning whether the project can secure enough crude oil, financing, and supporting infrastructure to operate successfully.

🇰🇪 Breaking It Down

The concerns come weeks before billionaire Aliko Dangote is expected to break ground on the refinery, which is planned for completion by 2030 and is expected to have a processing capacity of 700,000 barrels of crude oil per day.

Dangote confirmed that the groundbreaking ceremony will take place on September 30, saying, “We are launching it on September 30.”

The project is expected to serve markets across East Africa, with Kenya's President William Ruto backing the refinery as a major investment that could reduce the country's reliance on imported petroleum products.

📌 What You Need to Know

However, analysts have warned that the refinery faces a major challenge in securing sufficient crude oil because Kenya currently has no commercial-scale crude production, according to Reuters .

President Ruto's economic adviser David Ndii has previously estimated that East Africa could provide more than 600,000 barrels of crude oil per day, with South Sudan supplying about 350,000 barrels, Uganda 250,000 barrels and Kenya 120,000 barrels.

Oil and gas lawyer Maximillian Ezeude, however, warned that accessing crude from the region would not be straightforward because Uganda's oil is expected to flow to Tanzania through the East African Crude Oil Pipeline, while South Sudan's exports currently pass through Sudan.

“That leaves the coastal facility dependent on a volatile international seaborne market,” Ezeude told Reuters .

At the same time, experts cite financing as another challenge, with Dangote Group planning to fund the refinery through internal cash flows, bonds and an initial public offering, while seeking equity participation from East African countries.

Petroleum economist Kaase Gbakon warned that raising the required capital could prove difficult, noting that Dangote Group is seeking about $40 billion for announced energy projects between 2025 and 2030, including the Lamu refinery.

📰 Source: Kenyans.co.ke