Kenyan PPP panel throws out bid to disclose state commitments to $16bn Dangote refinery

A Kenyan public-private partnership (PPP) review committee has dismissed a consumer group’s attempt to compel disclosure of government investment commitments and agreements relating to Nigerian billionaire Aliko Dangote’s planned $16bn oil refinery in Lamu County, ruling that the project had not been shown to qualify as a PPP.

The Public Private Partnership Petition Committee rejected a petition by the Consumers Federation of Kenya (Cofek) in an October 30 ruling, finding that the organisation had failed to establish that the refinery was subject to the country’s PPP Act or to identify a decision that the committee had jurisdiction to review, Business Daily reported on November 5. The committee concluded that a potential state shareholding alone did not establish a PPP arrangement.

Cofek filed its petition on September 30, the day President William Ruto and Dangote broke ground on the project in Lamu County. It sought feasibility studies, risk assessments, public participation records and agreements detailing potential government equity participation, public funding, land allocation and guarantees.

IntelliNews reported on October 2 that Cofek’s petition was the second legal challenge to the refinery, following a land dispute involving 133 residents. The consumer group questioned whether the government’s proposed participation complied with the PPP Act and sought details of the proposed acquisition vehicle, share class and payment terms.

Among the commitments Cofek questioned were a reported KES21.5bn ($166mn) government contribution through the National Infrastructure Fund (NIF) and a proposed 10% state holding reportedly valued at $500mn. The NIF said it had made no investment decision.

Treasury Cabinet Secretary John Mbadi told the committee that discussions on possible government participation were continuing, but that the refinery was being developed, financed and operated by its private promoter, which would bear the commercial risks.

“If the government decides to take an equity interest in the project, that interest will be an investment in a private company, and shall be regulated by the laws on public investment and not the PPP Act,” Mbadi said. He acknowledged government support through statutory incentives, including special economic zone status and tax benefits.

Peter Lazarus, representing the Dangote Group, said the project had received no government equity contribution or comparable public financing.

The committee’s ruling does not settle a separate High Court petition brought by Francis Onyango Awino seeking disclosure of agreements and public commitments relating to the refinery. That case was certified urgent on October 6, with a further mention scheduled for November 12.

Meanwhile, 133 Lamu residents are pursuing land rights and compensation claims over the refinery site. The Environment and Land Court in Malindi declined in October to extend temporary restrictions on the land after the petitioners failed to serve the respondents and misidentified the disputed parcel, but the underlying dispute remains unresolved, according to The Standard. The matter is scheduled to return to court on November 24.

The proposed industrial complex is designed to process up to 700,000 barrels of crude oil per day (bpd) and includes a 1,000-MW power plant, fertiliser and chemical production facilities, pipelines and marine infrastructure. Construction is expected to take about 40 months, with commissioning targeted for early 2030.

On the engineering side, India’s state-owned Engineers India (NSE: ENGINERSIN) has secured a contract worth more than $450mn for project management and engineering, procurement and construction management services. However, financing, statutory approvals and commercial crude-supply arrangements remain unresolved.

Oxford Economics has also questioned whether the refinery can secure sufficient crude at competitive prices. Even under an optimistic scenario, regional upstream developments could eventually provide only 400,000-500,000 bpd, below the planned capacity of 700,000 bpd. The consultancy excludes Lamu from its central refining forecast because of unresolved financing, ownership and legal issues.

Dangote also acquired a 24.76% stake in Nairobi-listed Kenya Pipeline Company (NSE: KPC) for KES42.5bn ($327mn) in October, expanding his group’s exposure to regional fuel distribution. The acquisition involved existing shares and did not inject new capital into KPC. No commercial agreement linking its pipeline network to the proposed Lamu refinery has been disclosed.

See IntelliNews: Kenyan court declines to extend land restrictions linked to planned $16bn Dangote refinery
See IntelliNews: Dangote hires Engineers India for $450mn work on planned Kenya refinery, but key hurdles remain
See IntelliNews: Africa’s refinery boom draws billions while financing and crude-supply risks mount
See IntelliNews: Nigeria’s Dangote confirms $327mn purchase of 24.76% stake in Kenya Pipeline Company