Africa’s richest man plans Mombasa oil refinery: Why this matters | Business and Financial Issues

After successfully establishing Nigeria’s only oil refinery in 2024, billionaire businessman Aliko Dangote has eyed East Africa as the next major oil refinery project, according to recent reports.

It comes when African countries are looking for ways to increase energy efficiency, following a major international crisis between the US and Israel’s war on Iran and Tehran’s closure of the Strait of Hormuz, through which about 20 percent of the world’s oil and gas is exported.

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Dangote, Africa’s richest man, was seen as one of the winners of the fallout when his fledgling refinery, located in Nigeria’s Lagos state, began selling more oil to the world as war with Iran escalated in March and global oil prices rose.

Currently, West, South and East Africa rely mainly on imports of refined oil from the Middle East, meaning they are at high risk of disruption there.

Nigeria’s neighbors – Cameroon, Togo, Ghana and Tanzania, to the east – are among the countries that have turned to Nigeria when goods from the Middle East dry up.

By the end of March, the refinery, which can produce 650,000 barrels per day (bpd), is said to be receiving orders from other countries, especially for the rare jet fuel as hundreds of planes have been grounded across the region.

The discovery from the Dangote oil refinery has reduced the impact of the war on the supply of oil to Nigeria and neighboring countries, experts say.

Nigeria is Africa’s largest oil producer, and the $19bn project in Lagos is currently the world’s first single-ship refinery, meaning it uses a single refinery instead of multiple units. But it reached full release in February 2026, the same month the war with Iran began.

Nigeria does not have a state-owned refinery, so Dangote Oil Refinery has now set the country up to become an exporter of jet fuel and diesel.

This is why refining in Africa is important to the continent:

What are Dangote’s plans for oil refineries in East Africa?

In April, Kenyan President William Ruto announced that East African countries were discussing the construction of an oil refinery at Tanga port in Tanzania, which would be similar to Dangote’s in Lagos.

“We don’t want to be captured by the Strait of Hormuz again,” Ruto said at a business event in Nairobi in April, where Dangote was present.

“We don’t want to be caught in wars that are started by other people. We have our resources here, and we are saying that we will use our resources in Africa to develop our region.”

In an interview with the Financial Times on Sunday, Dangote said he would prefer to build the project in Kenya rather than Tanzania.

“I am leaning more towards Mombasa because Mombasa has a bigger and deeper port,” the billionaire told a UK newspaper.

“Kenyans eat a lot. It’s a big economy,” he said, adding that “the ball is in President Ruto’s hands… Whatever President Ruto says I will do.”

They have estimated construction costs of between $15bn and $17bn.

But entering East Africa, which is very different from West Africa’s trade, could be difficult, analyst Dumebi Oluwole of the Lagos-based intelligence firm Stears told Al Jazeera.

“Dangote has proven that (his work) can produce at scale,” he said. “The test for East Africa will be if it can also manage the politics and the situation of the fragmented, multinational market.”

Why are African countries not producing more oil?

Despite having large reserves, African countries only refine about 44 percent of their total oil consumption, with exports making up the rest, according to the 2022 African Union report.

The main producers of refined oil are Algeria, Egypt and South Africa. There are about 21 refineries in North Africa.

Southern Africa has another seven, while West Africa has 14. However, most refineries in the two regions are not operating or are producing below capacity.

The only existing refinery in East Africa is in Mombasa, but it stopped operating in 2013 due to a combination of government policies and those who left the investment, which they deemed unprofitable.

There is currently no refining capacity in East Africa, although the region has about 4.7 billion barrels, according to the African Union, mainly in Uganda, South Sudan, Kenya and the Democratic Republic of the Congo.

Kenya exports 40 million barrels of petroleum by 2025. It regularly buys oil from the UAE, Saudi Arabia, India and Oman, all of which have been hampered by Iran’s blockade of the Strait of Hormuz.

Nigeria is the largest producer in Africa with a capacity of 1.5 to 1.6 million people. The country is not well prepared since 2019.

What difference will local refineries make to African countries?

Exporting large amounts of what are arguably refined products is expensive and puts Africa ahead, researcher Oluwole said.

More refined oil on the continent would mean lower gasoline prices, lower transportation costs, and more energy available to people and businesses, theoretically. It could also mean greater access to other products such as fertilizers for farmers, for example, or petrochemicals for manufacturers.

“Dangote has shown that an energy-efficient, scalable, sustainable approach to Africa is possible – proof of concept is very important,” Oluwole said.

“It shows the conviction of the faith of all countries that Africa can provide for itself, and that this is no longer wishful thinking,” he added.

In Nigeria, the Dangote refinery would still have eased the problem. For example, regional airlines have complained that they have to pay high prices for jet fuel despite having good supplies in the region. Experts say this could be because the Nigerian government removed oil subsidies in 2023. The government within the state oil company also forced the Dangote oil refinery to import oil.

However, the refinery is contributing to a “transparent and competitive market”, Oluwole said, adding that the results should show in the end.

Some countries are on the rise. Last week, the $470m Cabinda refinery in Angola began supplying both domestic and foreign markets. The project is owned by Gemcorp Capital of the United Kingdom and has a capacity of 30,000bpd, with plans to double it by the end of 2026.

Dangote’s refinery in Kenya, once completed, will also help reduce East Africa’s dependence on the Middle East.

A separate, government-sponsored project in the Hoima region of Uganda is also underway. Officials expect the project to be able to process 60,000bpd when it becomes operational in 2029. It will be supported by the Uganda-Tanzania East African Crude Oil Pipeline (EACOP), an ongoing project that will transport crude oil from Lake Albert in Uganda to the port of Tanga in Tanzania.

Uganda will also produce diesel, jet fuel, kerosene and Liquefied Petroleum Gas (LPG).

With big plans in place, Oluwole says it is now up to African governments to create a good business environment for the private sector.

“Dangote has opened the door,” he said. “The question now is whether African institutions and governments will go through with it.”