Kenya is in negotiations with Dangote Industries to double the planned capacity of a Liquefied Natural Gas (LNG) power plant at its proposed Lamu refinery to 1,000 megawatts.
The expansion aims to bridge domestic electricity shortfalls and reduce the country’s reliance on intermittent power sources by tapping into natural gas reserves from Tanzania.
The development is part of a broader strategy to integrate the proposed refinery infrastructure with power generation, creating a combined energy hub in the coastal region of Lamu.
The initial plans for the power component were significantly smaller, but the Kenyan government is now pushing for a larger installation to ensure industrial stability and lower energy costs for consumers.
Aliko Dangote, the president of Dangote Industries, has expressed interest in expanding his industrial footprint in East Africa, following the massive scale of his refining operations in Nigeria.
The proposed facility would utilise LNG as a fuel source, providing a more stable base-load of electricity compared to the wind and solar projects currently expanding across the Kenyan grid.
Officials indicate that the project will rely on a steady supply of gas sourced from Tanzania, where significant offshore reserves have been confirmed in recent years.
Tanzanian Gas and Regional Energy Integration
The reliance on Tanzanian gas marks a strategic shift in Kenya’s energy procurement. Tanzania has been aggressively developing its gas sector, with the Tanzanian government seeking new export markets to monetise its vast natural reserves.
The logistics of the gas supply are expected to involve either a pipeline connection or the shipment of LNG via tankers to a receiving terminal at the Lamu site.
This cross-border arrangement is designed to create a regional energy corridor, reducing the cost of energy for both nations by creating a structured market for gas trade.
The Ministry of Energy in Kenya has previously highlighted the need to diversify the energy mix to avoid the shocks associated with drought-induced drops in hydroelectric power generation.
By integrating a 1,000MW plant into the Lamu refinery complex, the project can leverage shared infrastructure, such as ports and transmission lines, significantly lowering the capital expenditure per megawatt produced.
The Lamu project sits within the wider framework of the LAPSSET (Lamu Port-South Sudan-Ethiopia Transport) corridor, a multi-billion dollar infrastructure project intended to open up northern Kenya and connect it to its neighbours.
Industry analysts suggest that the partnership with Dangote Industries provides Kenya with a partner capable of managing the complex technical and financial requirements of a combined refinery and power plant.
The scale of the 1,000MW target would make the plant one of the largest gas-to-power installations in East Africa, potentially altering the region’s energy trade dynamics.
However, the project’s success depends on the finalisation of a gas purchase agreement between Kenya and Tanzania, as well as the commitment of financing for the refinery’s overall construction.
The next phase of the negotiations will focus on the specific terms of the power purchase agreement (PPA) and the environmental impact assessments required for the expanded plant capacity.
Confirmation on the project’s final investment decision is expected following the conclusion of these technical discussions between the Kenyan state and Dangote Industries.
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