Kenyan Court Orders Status Quo on Land for Dangote’s $16bn Lamu Refinery

A Kenyan court has ordered parties to maintain the existing status quo on disputed land in Lamu County as 133 residents challenge the planned construction of Aliko Dangote’s proposed $16 billion oil refinery.

The Environment and Land Court in Malindi, presided over by Justice Jane Onyango, directed that the status quo on L.R. No. 13061 in the Hindi/Manda Magogoni area be maintained until October 14, when the case is scheduled for an inter partes hearing.

However, the court did not grant the applicants’ request to stop the planned groundbreaking or development of the refinery. It also declined to certify the application as urgent and directed the respondents to file their responses within 14 days.

The legal challenge was brought by 133 residents of Chandavai in Lamu County. The petitioners say they are farmers and local inhabitants whose ancestral and property rights could be affected by the development.

Local reports say the residents argue that the land has been occupied and cultivated by families for generations and that they were not adequately compensated or resettled. They are seeking court intervention before construction activities proceed on the disputed property.

The case comes just days before the planned September 30 groundbreaking for the refinery, which is expected to become one of the largest energy investments in East Africa.

Dangote’s planned refinery is designed to process about 700,000 barrels of crude oil per day and supply refined petroleum products to Kenya and other markets in the region. Reuters has reported that the project is expected to help reduce East Africa’s dependence on imported refined fuel, although questions remain over the refinery’s long-term crude supply because Kenya currently has no commercial oil production.

Preparations for the project have already advanced. Heavy construction machinery weighing about 2,930 metric tonnes arrived at the Port of Lamu aboard the vessel MV Da Yang ahead of the planned groundbreaking. Kenyan officials have described the refinery as a major industrial project for the region.

The project has been valued at between about $15 billion and $17 billion in different public statements and reports, with Dangote’s own figure around $16 billion. It is expected to be constructed at Lamu, a deep-water port on Kenya’s northeastern coast.

Engineers India Ltd. has also secured a contract worth more than $450 million to provide project management and engineering, procurement and construction management services for the planned refinery and petrochemical complex. The facility is expected to be built over several years.

The court case therefore creates a legal issue around part of the project site but, at this stage, does not amount to a judicial cancellation of the September 30 groundbreaking.

Dangote Group confirmed on Tuesday that the court ruling would not prevent the official launch ceremony from taking place on Wednesday, although the company acknowledged that the order could affect some activities at the site.

The October 14 hearing is expected to provide the next major indication of how the land dispute could affect subsequent construction activities.

For Dangote, the Kenyan project represents a major expansion of its refining ambitions beyond Nigeria. The company already operates the 650,000-barrel-per-day Dangote Petroleum Refinery in Lagos and has plans to increase that facility’s capacity.

The Lamu project is intended to establish another major refining hub serving African markets, but its progress will now be closely watched alongside the unresolved land claims and other challenges surrounding crude supply, infrastructure and financing.