The planned Dangote refinery in Lamu, Kenya, could help the country reduce its dependence on imported petroleum products and ease pressure on its foreign exchange reserves, the African Export-Import Bank (Afreximbank) has said.
The bank said the 700,000-barrel-per-day refinery would strengthen Kenya’s energy security by allowing more petroleum products to be processed closer to the markets where they are consumed.
The project, being developed by Dangote Group, is expected to supply refined products to Kenya and other East African markets, with crude sourced from African producers, including Uganda.
Afreximbank President and Chairman, Dr George Elombi, said the investment could help African countries retain more economic value from their natural resources while reducing their exposure to disruptions affecting international supply routes.
The comments come as Kenya faces increased pressure on its foreign exchange reserves following higher global oil prices linked to conflict in the Middle East.
Data from the Central Bank of Kenya showed the country’s foreign exchange reserves stood at about $15.25 billion earlier this month. Rising fuel costs have also increased pressure on transport and other consumer prices.
Once operational, the Lamu refinery is expected to reduce Kenya’s need to purchase finished petroleum products from overseas. This could lower the amount of foreign currency required to pay for fuel imports and reduce pressure on the country’s import bill.
The refinery is also projected to create about 60,000 jobs and support wider industrial activity in Kenya and East Africa.
Afreximbank said recent disruptions around major shipping routes, including the Strait of Hormuz and the Red Sea, had exposed the risks African economies face when they depend heavily on distant sources for strategic commodities.
The bank said increasing refining capacity within Africa would help shorten supply chains and encourage greater trade in petroleum products between African countries.
Afreximbank has been a major financial partner of Dangote Group. Its support for the group includes a $2.5 billion participation in a $4 billion syndicated term loan for the Dangote Petroleum Refinery in Nigeria, as well as a $1 billion working-capital facility.
The bank said its support for the Lamu project is part of a broader effort to promote African industrialisation, strengthen intra-African trade and encourage the processing of raw materials within the continent.
