Oil & Gas

East Africa’s race for energy dominance is intensifying after Nigerian billionaire Aliko Dangote agreed to build a $17 billion, 700,000-barrel-per-day refinery on Kenya’s Lamu Island. The facility would serve Kenya and neighboring markets including Uganda, Rwanda, Burundi, South Sudan and the DRC, with capacity far exceeding the region’s current refined-fuel demand.

The project has also exposed tensions between Kenya, Tanzania and Uganda. A proposed location in Tanzania’s Tanga initially appeared likely, but disagreements emerged after Kenya’s President William Ruto backed the refinery without fully consulting Tanzania. The deadlock was eventually resolved when Dangote selected Lamu, with Kenya pledging Ksh21.5 billion in seed funding.

Tanzania and Uganda quickly responded with a proposed $20 billion energy hub in Tanga in partnership with Vitol Bahrain. The project will leverage the East African Crude Oil Pipeline and provide an alternative fuel-supply route for landlocked countries, reducing dependence on Kenya’s Mombasa port and the Lamu refinery. Uganda is also pursuing its own $4 billion refinery in Hoima.

The rivalry extends beyond oil, with Kenya and Tanzania competing for Uganda’s trade through their respective Northern and Central corridors. Tanzania is expanding its rail links to Uganda, while Kenya is pushing to complete the Naivasha-Kisumu-Malaba railway by 2027. The parallel projects highlight growing competition despite the East African Community’s broader goal of regional integration.