Construction begins on Wednesday of a $16-billion Kenyan oil refinery aimed at lowering East Africa's fuel costs and saving the region hard currency used to import refined products.

Aliko Dangote and Kenyan President William Ruto will break ground on the site, where the billionaire wants to replicate his group's 700 000 bl/d Nigerian refinery as countries including Kenya and Uganda look to start producing crude oil.

Dangote, Africa's richest man, has offered regional governments a combined 30% stake in the Kenyan refinery, which is due to be completed in 2030. A $450 million engineering contract has been awarded to Engineers India.

"When you look at East Africa, not only East Africa, most of all the 54 countries in Africa, they import petroleum products," Dangote told reporters in Nairobi, adding that the goal was to make the region "self-sufficient".

CONSTRUCTION EQUIPMENT SPURS HOPE
Dangote joined Ruto, Ethiopia's Prime Minister Abiy Ahmed, Uganda's President Yoweri Museveni and Togo's President Jean-Lucien Savi de Tové for the ceremony at the port of Lamu, ringed by a row of excavators and earth movers.

"I am very hopeful when I see these machines lined up here because I know I have a chance to work and change my life from my menial jobs now to become a machine operator which is what I'm trained to do," said local resident Evans Hundo.

Situated along Kenya's northern shoreline, Lamu Port, which welcomed its first cargo ships in 2021, is central to Kenya's bid to open a new transport corridor linking its vast northern region and neighbouring countries to the sea.

The refinery is expected to boost that initiative, while addressing annual demand for petroleum products in the region which Ruto's chief economic adviser, David Ndii, said is estimated at 20-million to 30-million metric tons.

Meeting that demand would require capacity of more than one-million barrels a day, said a financier involved in African refineries.

East Africa has been hit hard by surging fuel prices resulting from the Iran war, sparking deadly protests in countries such as Kenya over rising pump prices.

TESTING NIGERIAN MODEL
Oil industry analysts say it is not a given that the new Kenyan project can replicate the Nigerian model, which turned the West African country from a major fuel importer into a growing exporter.

Officials have said the facility is also expected to spur industries such as petrochemicals and bitumen production and create more than 50 000 jobs.

But doubts remain over local crude supplies and the region's energy infrastructure, while the project also faces opposition from environmental campaigners, who fear it could affect Lamu Old Town, a World Heritage site hosting fragile marine life.

Kenya's High Court ordered the preservation of parts of the site pending a hearing in a case brought by local residents.

Dangote attributed the opposition to traders and businesses whose profit models would be threatened by the refinery.