Kenya must address community grievances, environmental concerns and financing risks surrounding the Sh2.1 trillion Dangote East Africa Refinery in Lamu to secure the long-term success of the mega-project, experts now say.
According to the International Policy Group (IPG), a consultancy, research and advisory organisation based in Nairobi, the 700,000-barrel-per-day refinery presents a strategic opportunity to strengthen Kenya’s energy security.
This could also reduce dependence on imported refined petroleum products and establish the country as a major petrochemical manufacturing and export hub.
However, its policy paper dubbed “Lamu and the Dangote Refinery: Strategic Opportunities, Execution Risks and Regional Implications, shared yesterday, cautions against rushing implementation without resolving concerns over land acquisition, public participation, water resources and security.
IPG chief executive Kenneth Orengo and the report author said the project could transform northern Kenya’s industrial landscape, generate thousands of engineering and logistics jobs and strengthen regional energy supply chains.
“Building domestic refining capacity could stem persistent dollar demand, generate thousands of direct engineering and logistical jobs and anchor industrial infrastructure in northern Kenya,” Orengo said, “But issues surrounding the project must be addressed.”
The land compensation case filed by Lamu residents against the project is active in the Malindi Environment and Land Court, with the next major hearing scheduled for November 24.
There has also been environmental concerns and management of resources such as the Tana River waters, which is expected to be the main source of the refinery’s water.
Speaking during a media briefing on the project and the study findings, in Nairobi yesterday, experts at IPG, energy sector and academia further insisted that the investment must also account for the global energy transition.
They warned that a $16 billion refinery could face the risk of becoming a stranded asset as countries gradually shift towards cleaner energy.
The evaluation report by IPG recommends full implementation of the planned expansion of the petroleum project to include polymers, agricultural fertilisers and industrial chemicals, creating alternative revenue streams as electric mobility and renewable energy expand.
The International Energy Agency data cited in the brief indicates that renewable electricity capacity is projected to expand by about 5,500 gigawatts between 2024 and 2030, with solar and wind accounting for 95 per cent of net power additions worldwide.
Despite this shift, the consultancy argues that fossil fuels will continue to meet a substantial share of global energy demand in the foreseeable future, presenting an opportunity for the Lamu facility if it diversifies production and markets.
The refinery could also benefit from shifting global energy trade routes and disruptions linked to geopolitical tensions, positioning Lamu as an Indian Ocean refining and supply hub serving East and Central Africa and international markets.
According to IPG, Lamu’s naturally deep harbour, at approximately 18 metres, could accommodate large crude carriers without costly lightering operations, giving it a logistical advantage over competing regional ports such as Tanga and Mombasa.
However, regional competition is intensifying, with neighbouring countries pursuing alternative oil transport and refining arrangements.
It recommends stronger regional diplomacy and integration through the African Continental Free Trade Area to turn competition into an opportunity for shared industrial growth.
Industry Principal Secretary Juma Mukhwana said the government recognises the concerns surrounding the project, but must balance public participation and environmental safeguards with the need to accelerate economic development.
“We have a very progressive Constitution, which allows a lot of public participation,” Mukhwana said, adding that Kenya must also consider its national interests and the risk of losing investment opportunities to competing economies.
He said the refinery fits into the government’s industrialisation agenda and could support an emerging manufacturing ecosystem along the coast, including industrial parks, special economic zones, commercial agriculture and related processing industries.
Mukhwana said the government was optimistic that the investment would stimulate additional industries and create opportunities for young people.
But IPG identified land rights and water use as two of the most sensitive challenges facing the project.
Communities in the Lamu area have raised concerns over compulsory land acquisition and inadequate consultation.
It warns that unresolved historical land grievances could undermine public confidence and delay implementation, particularly as political activity intensifies ahead of the next election cycle.
Competition over water during recurring droughts could also trigger conflict unless the project adopts transparent allocation arrangements and effective community consultation.
Energy consultant and Kenya Private Sector Alliance board member, Engineer James Mwangi, said the refinery could unlock significant opportunities for local businesses and skilled workers.
He urged investors to involve Kenyan graduates and technical trainees early through internships and practical training, rather than waiting until the facility is operational to recruit workers.
According to Nigerian billionaire Aliko Dangote, the Lamu East Africa Oil Refinery will create about 60,000 total jobs across construction, engineering, logistics, and related manufacturing.
