Ruto: Sh2.2 trillion Lamu refinery marks new age of African industrialisation

President William Ruto has described the groundbreaking of the Dangote East Africa Oil Refinery in Lamu as a “generational undertaking”, saying the Sh2.2 trillion project represents a shift towards Africa processing its own resources and retaining more of their economic value.

Speaking during the groundbreaking ceremony in Lamu on Wednesday, Ruto said the $16 billion petrochemical complex would have capacity to process up to 700,000 barrels of crude oil a day and serve Kenya, the wider East African region and international markets. Reuters separately confirms the $16 billion investment and 700,000-barrel-a-day planned capacity.

“This is bigger than a refinery. It is an investment in energy security, industrialisation and regional integration,” Ruto said.

The President said the project would also include up to 1,000 megawatts of power generation, some of which is expected to serve areas beyond the refinery.

He framed the investment as part of a broader push to change Africa's longstanding role as an exporter of raw materials and importer of finished products.

Ruto said Africa has both the resources and the market to support greater domestic processing, but continues to lose much of the value created between extraction and consumption.

“Crude oil leaves, refined products return. Cotton leaves, garments return. Cocoa leaves, chocolate returns,” he said.

He argued that the continent must increasingly manufacture what it consumes and add value to what it produces rather than allowing jobs, skills and industrial opportunities to be created elsewhere.

The President said Kenya's petroleum import bill illustrates the scale of that challenge, putting the country's spending on imported petroleum products last year at Sh530 billion.

He acknowledged, however, that establishing a refinery would not automatically eliminate that cost.

“A refinery will not make that bill disappear overnight. Crude must still be bought. Fuel must still be produced and delivered at competitive price,” Ruto said.

He said the import bill nevertheless demonstrated the case for Kenya and its neighbours to develop regional refining capacity.

Ruto reveals how Dangote refinery talks began

Ruto also gave an account of how the Lamu project developed from initial discussions about fertiliser supplies.

He said he sent a Kenyan delegation to Nigeria in April last year to explore purchasing fertiliser from Dangote's operations. According to the President, the delegation returned convinced there was an opportunity for a much larger industrial partnership.

Ruto said he subsequently wrote to Dangote on April 7 this year, inviting him to Kenya and asking him to consider a regional energy security and refining platform.

The discussions eventually developed into the Lamu refinery project.

Dangote and Ruto formally launched construction on Wednesday. The project is targeted for completion by 2030 and regional governments are being offered a combined 30 per cent ownership stake, according to Reuters.

Ruto puts Lamu at centre of development agenda

The President also used his speech to link the refinery to infrastructure development in Lamu County.

He recalled visiting the county after the 2022 election and ordering that a planned murram road connecting Lamu towards Ijara, Isiolo and Moyale be upgraded to bitumen standard.

Ruto said about 100 kilometres of the planned 153-kilometre road had now been tarmacked and pointed to road construction in Lamu East alongside housing, markets and other government programmes.

He contrasted Lamu's historic importance as a centre of commerce with what he described as its marginalisation from modern economic development.

“Lamu, which stood at the centre of our history, has too often been at the margins of our progress,” he said.

The refinery project, Ruto argued, could help change that position by making Lamu a major regional energy and industrial hub.

The project nevertheless faces unresolved legal and environmental questions. A land dispute involving 133 residents has reached the Environment and Land Court, while concerns have also been raised over environmental impacts around Lamu. Reuters reports that the court has ordered the status quo maintained on part of the project area as the dispute proceeds.

For Ruto, however, Wednesday's ceremony represented a wider statement about the continent's economic direction.

“This is African ambition backed by African capital, building African industry for Africa's prosperity,” he said.