Dangote's $16bn Kenya refinery faces second legal challenge over state stake

Nigerian billionaire Aliko Dangote's planned $16bn oil refinery in the Kenyan port town of Lamu faces a second legal challenge after the Consumers Federation of Kenya (COFEK), a consumer-rights lobby group, petitioned for a review of the government's proposed equity stake and other state support for the project.

COFEK filed the petition with the Public Private Partnerships Petition Committee under Section 75 of the Public Private Partnerships Act, 2021, asking it to scrutinise the project's public equity, land arrangements and government support.

The filing argues that the 700,000-bpd facility violates Kenya's constitution by failing to comply with the law governing public-private partnerships, according to Bloomberg. Kenyan media describe the petition as a request for disclosure and review, and COFEK itself says the refinery's reported capacity alone does not establish consumer harm, Capital FM reported.

At issue is Kenya's proposed 10% stake in the refinery, reported to be worth about $500mn (KES65bn). President William Ruto said at the September 30 groundbreaking that the government would hold a stake. COFEK wants the government to disclose the acquisition vehicle, share class and payment terms, and to say whether the money has been budgeted, committed or disbursed. It is also seeking clarification of a reported KES21.5bn seed allocation linked to the project and of whether public land will count as part of Kenya's contribution.

COFEK secretary-general Stephen Mutoro said in an affidavit supporting the petition that he had not been given the decision authorising the project, the identity of the contracting authority or the procurement route, Kahawatungu reported.

The petition follows a separate land case. A group of 133 residents obtained temporary orders from the Malindi Environment and Land Court requiring the parties to maintain the status quo on disputed land in Lamu County, although the court declined to stop the groundbreaking, The Star reported. A hearing is set for October 14, according to a statement from the African Energy Chamber, an industry lobby group.

Dangote Group, the privately owned Nigerian conglomerate that operates a refinery in Lekki, said the land ruling would not halt the launch but might affect activities at the site. Responding to the residents' case before the groundbreaking, Dangote said: "If you want to go to court to stop the Lamu Refinery, go ahead; we are ready for you," as quoted by The Star.

Ruto and Dangote presided over the groundbreaking. A day before the ceremony, Ruto said the project would proceed despite court orders and accused "disgruntled opposition sponsors" of trying to undermine the investment, Citizen Digital reported. On October 1, he said those opposed to industrialisation were behind the court cases, according to Dawan Africa.

Opposition politician Ndindi Nyoro, leader of the People's Party of Kenya, has separately demanded that the government publish the names of all shareholders in the refinery.

The refinery is Kenya's largest-ever foreign direct investment. Most of the crude will initially have to arrive by ship, with Dangote saying he would source it from the Middle East, the United States and elsewhere. Dangote has pledged to commission the refinery within 40 months of the groundbreaking. That is in line with the 2030 completion target cited by the African Energy Chamber, which has warned that prolonged legal proceedings could affect the timeline.

COFEK is separately challenging a KES93.68bn oil storage agreement between the government and Gulf Energy, a petition the High Court has certified as urgent, Nation reported.