President of Dangote Industries Limited, Aliko Dangote, has declared that his business group is prepared to confront legal challenges surrounding its investments, as the conglomerate simultaneously navigates a land dispute over its planned $16 billion refinery in Kenya and continuing litigation over petroleum product import licences in Nigeria.
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Dangote, who spoke during a fireside chat at the Nairobi Securities Exchange in Kenya, also disclosed that he was prepared to significantly reduce his ownership interest in the Dangote Petroleum Refinery, potentially to between 20 and 25 per cent, if increased participation by African investors requires further share sales.
His remarks came as the Dangote Group moved ahead with its planned 700,000-barrel-per-day refinery in Lamu County despite a court order arising from a dispute over the land earmarked for the project.
The Malindi Environment and Land Court, presided over by Justice Jane Onyango, had ordered that the “status quo prevailing” on the disputed land be maintained until October 14, when the matter is expected to return for further hearing. The case was brought by 133 residents of Chandavai, who claim that the affected land is ancestral property occupied and cultivated by their families for generations.
The residents have raised allegations concerning land ownership, displacement and compensation, among other issues. Those claims remain before the Kenyan court and have not yet been finally determined.
The Dangote Group maintained that the order did not prevent the ceremonial groundbreaking of the refinery but acknowledged that activities at the project site could be affected while the order remains in force.
“The court has not halted the groundbreaking ceremony of the refinery at this stage. However, activities at the site may be affected by the ruling as both parties are required not to carry out activities until the case is heard on 14th October,” the group said.
Dangote, however, told investors that litigation was not unusual for businesses operating at the scale of his group and expressed confidence that the Kenyan project would proceed.
“I’m sure some of you must have seen that one court has given an order that we shouldn’t do any construction? I said no, no. This is normal for us in Africa. In fact, this is even small,” he said.
He went further, saying he believed he knew the interests behind some of the legal opposition to his businesses.
“Anyone who wants to cause trouble, we are ready for them,” Dangote said.
He cited the group’s experience in Senegal, where he said one of its factories was prevented from operating for about a year before the dispute reached the country’s Supreme Court.
“In Senegal, it’s not even the court. They stopped our factory for one year. We went up to the Supreme Court to get a judgement. So anybody who wants to cause trouble, we are ready for them,” he said.
The Kenyan legal dispute comes at a time when Dangote Petroleum Refinery is itself engaged in a separate court battle in Nigeria over petroleum product import licences.
The refinery has a pending suit at the Federal High Court in Lagos challenging import licences allegedly issued or renewed in favour of the Nigerian National Petroleum Company Limited and several oil marketing companies, including NIPCO, AA Rano, Matrix, Shafa, Pinnacle and Bono. The matter, before Justice Chukwujekwu Aneke, was adjourned to October 7.
Dangote Refinery contends in that litigation that petroleum products should only be imported where domestic production is insufficient and alleges that some licences were issued in breach of an earlier court order maintaining the status quo. Those claims are being contested.
The dispute became more significant this week after a separate Federal High Court in Abuja ordered the Nigerian Midstream and Downstream Petroleum Regulatory Authority to continue granting and renewing import licences to Matrix Energy, AA Rano and AYM Shafa once they satisfy the applicable statutory and regulatory conditions.
Justice Inyang Ekwo held that the Petroleum Industry Act does not impose a blanket prohibition on the importation of petroleum products and found that the regulator’s refusal to issue or renew licences for the three marketers was inconsistent with the Act.
The Abuja judgment is separate from the case pending before Justice Aneke in Lagos, but the two proceedings form part of the wider legal and commercial debate over the role of petroleum imports as Nigeria expands domestic refining capacity.
Against that background, Dangote’s declaration that his group is prepared for court battles adds another dimension to an increasingly contested downstream petroleum market.
In Kenya, meanwhile, the planned Lamu refinery is expected to process 700,000 barrels of crude oil daily and is designed to serve Kenya and other East African markets.
Dangote has estimated the project cost at between $15 billion and $16 billion and said it should be completed by 2030. Reuters reported on Wednesday that the groundbreaking went ahead, with Kenyan President William Ruto and other African leaders attending the launch.
The project is intended to replicate, on an East African scale, the refining model established by the Dangote refinery in Lagos.
Dangote told the Nairobi gathering that Kenya had become an important part of the group’s continental investment strategy.
“We’re taking Kenya as our home. It is home here, and that’s why we’re here to invest. Anywhere in Africa is home, because we understand the issues, we understand the problems,” he said.
He said the project had advanced rapidly from discussions to implementation, with construction equipment already deployed.
According to Dangote, the refinery could require more than 60,000 workers during its development, with the group intending to train local workers for participation in the project.
“We will try as much as possible to train a lot of people here because part of the project will need over 60,000 people working there,” he said.
Beyond direct employment, Dangote said the refinery would create opportunities for small and medium-sized enterprises and attract ancillary industries around the project area.
The project is expected to include additional industrial infrastructure rather than operate as an isolated refinery. Reuters reported that the development will also incorporate a 1,000-megawatt power plant and is intended to serve a wider East African market. Reuters
Dangote also disclosed plans to list the Lamu refinery on the Nairobi Securities Exchange instead of taking the Kenyan venture to the Nigerian Exchange.
“If there’s this kind of collaboration, it means that tomorrow, if we are going to have the refinery here in Lamu, it will be listed here in Lamu; we don’t have to list it in Nigeria. We shouldn’t list it in Nigeria. We should list it here,” he said.
The billionaire said the strategy formed part of a wider effort by the group to deepen African capital markets and ensure that Africans could participate directly in the ownership of major industrial assets.
He also provided details of the group’s capital-raising plans for the Dangote Petroleum Refinery.
According to him, the initial plan was to raise about $2.5 billion through a combination of a private placement and an initial public offering.
“The issue is that when we decided to do this expansion, we said, okay, fine, we’re going to sell about $2.5bn worth of shares,” Dangote said.
He explained that approximately $1 billion was initially intended to come from a private placement, while $1.5 billion would be raised through an IPO.
“And during that, we opened up a private placement; that’s just by invitation. The private placement was to get about a billion dollars, and then IPO, $1.5bn, so that’s a total of $2.5bn,” he said.
Dangote said investor demand for the private placement substantially exceeded the amount originally sought, reaching approximately $3.7 billion.
“But the private placement came out with a demand of $3.7bn. So we already took the $2.5bn after a lot of argument because we are two shareholders then, ourselves and the Nigerian National Petroleum Company, and we were able to convince them that, look, it’s better that we allow $2.5bn to go,” he said.
He disclosed that another $1.6 billion offering was subsequently created as part of the effort to broaden ownership.
“And then after that, we created another $1.6bn. The real purpose is for us to democratise wealth-making,” he said.
Dangote said the group would be willing to return to regulators for approval to sell even more shares if demand from African investors remained strong.
“This $1.6bn that we have, I can tell you for nothing that we will sell more. We will go to the regulator and ask the regulator that, ‘Look, there is more demand; we want more Africans to own it.’ As we go along, we don’t mind, even if Dangote will end up having twenty or twenty-five per cent, we have nothing to hide,” he said.
The statement means Dangote is prepared, subject to the eventual ownership structure, regulatory approvals and investor demand, to substantially dilute the group’s controlling economic interest in the refinery.
He said wider shareholding would also subject the management of the company to greater shareholder accountability.
“If we go to an AGM, if we are not doing the right thing, then change the leadership. You can vote us out, and put anything that you think can do better, which I doubt very much,” he said.
Dangote added that the group intended to maintain strong corporate governance standards and protect minority shareholders as more of its businesses enter public capital markets.
The latest developments therefore place three strands of Dangote’s refining strategy in focus: the continuing legal battle over petroleum imports in Nigeria, the land litigation surrounding the new refinery in Kenya, and the businessman’s plan to broaden African ownership of his refinery assets.
While the Nigerian cases concern the regulatory framework governing competition between domestic refining and imported petroleum products, the Kenyan proceedings concern disputed land rights and the development of the Lamu site.
In both jurisdictions, however, Dangote has signalled that litigation will not alter the group’s broader expansion strategy.
The $16 billion Lamu project formally broke ground on September 30 despite the continuing court proceedings, although the Kenyan court’s status quo order remains relevant to what physical activities may take place on the disputed land before the next hearing.
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