Nigerian industrialist Aliko Dangote and Kenyan President William Ruto have launched construction of a $16 billion Kenya oil refinery in Lamu.
The facility is designed to process 700,000 barrels of crude oil per day and is scheduled for completion by 2030.
Business Insider Africa reported that the project is intended to serve growing petroleum demand across East Africa while reducing the region’s dependence on imported fuel.
Regional governments have also been offered a combined 30% equity stake in the project.
Construction begins on $16bn Kenya oil refinery
President Ruto announced the start of construction on Wednesday as work formally began on the Lamu project.
The refinery is expected to become a major part of East Africa’s energy infrastructure.
Dangote has said the broader aim is to increase Africa’s ability to meet its own energy needs.
“What we are trying to do is to make sure that we become self-sufficient in whatever we consume,” Dangote said, according to Reuters.
The Lamu facility is expected to process up to 700,000 barrels of crude oil each day once completed.
Project expected to create thousands of jobs
The project is also expected to support employment and related industries in Kenya.
President Ruto said the development could create about 60,000 jobs.
Kenyan officials expect the refinery to support industries including bitumen and petrochemicals.
The facility could also process crude oil from other countries in the region as East African producers develop their energy industries.
Uganda, for example, is advancing plans to produce its own crude oil.
East African governments offered refinery stake
Regional governments have been offered a combined 30% equity stake in the refinery, Business Insider Africa reported.
The proposal could give neighbouring countries a direct financial interest in the project.
Dangote has previously highlighted Africa’s heavy dependence on imported petroleum products.
During a press briefing in Nairobi, he said most African countries continue to import petroleum products despite the continent’s energy resources.
The new Kenya oil refinery is intended to help meet regional demand and reduce spending on imported fuel.
Lamu project faces land and environmental concerns
The start of construction comes despite an ongoing dispute over part of the proposed refinery site.
Local residents have raised concerns over land ownership, while conservation groups have warned about possible environmental effects around Lamu.
Lamu Old Town is a UNESCO World Heritage site, and the surrounding area contains sensitive marine ecosystems.
Following a petition by residents, a Kenyan court ordered the status quo to be maintained on disputed land pending a hearing.
The order could affect some site activity, although Dangote has said it will not stop the wider project from moving forward.
Reuters reported that Dangote attributed opposition to the project partly to traders and businesses whose commercial interests could be affected by the refinery.
The land claims and environmental concerns remain contested as construction of the wider project begins.
Refinery targets completion by 2030
The refinery is scheduled to be completed by 2030.
If completed as planned, the 700,000-barrel-per-day facility would significantly increase refining capacity in East Africa.
The project forms part of Dangote’s broader expansion beyond Nigeria, where his company already operates a major oil refinery.
Construction in Lamu will now proceed as the company works toward the 2030 completion target while legal and environmental issues surrounding the project continue to be addressed.