Dangote’s 1,000MW Lamu power plan could reshape Kenya’s coastal energy ambitions

Kenya is negotiating with Dangote Industries to expand the planned power plant attached to its proposed Lamu refinery to 1,000MW, potentially creating a major new market for Tanzania gas while adding another layer to the coastal industrial infrastructure taking shape around Lamu.

The proposed Dangote 1,000MW Lamu power plant would use liquefied natural gas (LNG) and is being considered as an expansion of an earlier 500MW captive power plan for the refinery. The larger facility could supply the refinery and planned petrochemical operations, provide electricity to the Lamu Special Economic Zone and potentially sell excess power to Kenya Power.

The proposal remains under negotiation. There is no final investment decision, gas supply agreement or power purchase agreement that would make the 1,000MW facility committed generation capacity.

The talks nevertheless matter because the scale of the proposed plant would put it among Kenya’s largest individual generation projects. The Ministry of Energy currently lists Kenya’s installed electricity capacity at 3,309MW against peak demand of 2,514MW. A 1,000MW plant would therefore be equivalent to roughly 30% of the country’s current installed capacity and about 40% of its current peak demand.

Lamu refinery creates the anchor demand

The power proposal is tied to Dangote’s much larger refinery project, which is scheduled for a September 30 groundbreaking.

The proposed refinery is designed to process up to 700,000 barrels of crude oil per day and has been valued at roughly $15 billion to $17 billion in recent reporting. Dangote has selected Lamu after considering other locations in East Africa, with the project intended to supply refined petroleum products to Kenya and regional markets.

The scale of that industrial operation helps explain why the power requirement is being considered separately from ordinary household electricity demand. A refinery and associated petrochemical facilities require continuous, reliable electricity for processing, pumps, storage, control systems and other industrial operations.

The wider Lamu development is also expected to include manufacturing, storage and logistics activity around the refinery. That creates a potential concentration of large industrial electricity consumers in an area where power infrastructure will have to expand alongside the petroleum project.

For Dangote, a dedicated gas-fired plant could provide greater control over the refinery’s electricity supply. For Kenya, a larger facility creates the possibility of selling some of that generation beyond the refinery.

Tanzania gas could become the missing link

The most consequential part of the proposal may therefore sit outside Kenya.

The government is considering Tanzania as a potential source of natural gas for the Lamu project. Two broad options have been discussed: transporting LNG by tanker to a receiving facility at Lamu, or developing pipeline infrastructure connecting the two countries.

Those options would create very different infrastructure and cost structures.

An LNG-by-sea arrangement would require facilities for receiving, storing and regasifying the fuel before it reaches the power plant. A pipeline would require a much larger cross-border infrastructure commitment but could eventually provide a continuous gas supply.

Either option would create a new commercial link between Tanzania’s gas resources and Kenya’s electricity and industrial markets.

That is significant because Tanzania is already developing its own coastal energy infrastructure around Tanga and other parts of the country. A future Lamu gas supply arrangement would therefore make the two countries competitors in some areas of the regional petroleum trade while becoming partners in another part of the energy market.

Kenya is already pursuing another coastal LNG project

Dangote’s proposal also comes as Kenya advances a separate LNG-fired power project at Dongo Kundu in Mombasa.

The National Treasury’s April 2026 PPP progress report said the Dongo Kundu project concept had been approved in March and was moving towards a feasibility study, with transaction-adviser procurement underway. The project is being considered under a build-own-operate or build-own-operate-transfer structure.

The two projects are at different stages and should not be treated as committed capacity. They do, however, point to a broader interest in LNG-fired generation along Kenya’s coast.

That interest is partly linked to the changing requirements of the electricity system.

Kenya’s electricity supply remains dominated by renewable sources, particularly geothermal, hydro and wind. At the same time, demand is rising as the government targets industrialisation, electric mobility, digital infrastructure and wider electricity access.

The Energy Ministry’s own long-term planning documents project substantial growth in peak demand over the coming decades and emphasise the need for adequate firm generation capacity and reserve margins.

That gives gas-fired generation a potential role as dispatchable capacity that can operate alongside variable renewable sources.

It does not, however, automatically make LNG the cheapest option. The eventual economics will depend on the price of the gas, transportation, regasification, plant efficiency, financing, transmission requirements and the terms of any power purchase agreement.

The 1,000MW figure is not yet 1,000MW for the grid

This distinction is important.

The proposed facility is being discussed partly as captive generation for Dangote’s industrial operations. Only electricity that is contracted for sale outside the refinery complex would become additional supply for Kenya Power or other consumers.

The reported proposal would allow Kenya Power to purchase excess electricity, but the commercial terms have not been finalised.

The same applies to the reported cost advantage. Government officials have pointed to LNG generation as a potentially competitive source of electricity, but there is no publicly disclosed long-term PPA establishing a final tariff for the proposed Lamu plant.

Until those agreements exist, the 1,000MW figure should be understood as proposed capacity rather than new electricity already available to Kenya.

Lamu is becoming more than a refinery site

The significance of the power proposal becomes clearer when placed alongside the other infrastructure being developed around the coast.

The refinery is intended to sit within the wider LAPSSET and Lamu industrial development, while the proposed LNG plant would add dedicated power generation. The area is also attracting logistics and digital infrastructure, including planned connectivity between Mombasa and Lamu.

That creates the possibility of a much broader industrial cluster in which energy supply, petroleum processing, logistics, manufacturing and digital infrastructure reinforce each other.

The risk is that each project could also become dependent on infrastructure that does not yet exist.

The refinery needs reliable crude supply, storage, transportation and financing. The power plant needs a dependable gas supply, financing, environmental approvals and a route to market. The wider industrial zone needs roads, transmission, water, logistics and other supporting infrastructure.

Dangote’s refinery itself faces unresolved questions around crude supply and project financing, with analysts warning that the scale of the proposed investment will require substantial coordination and capital.

A new energy corridor is possible, but not yet guaranteed

If the 1,000MW proposal progresses, its biggest regional consequence could be the creation of a sustained Tanzanian gas market in Kenya.

A large industrial customer in Lamu would provide a potential anchor for investment in gas transportation and LNG infrastructure. If other coastal power projects also proceed, the potential market would become larger.

For Kenya, that could add dispatchable generation to a system increasingly dominated by renewable electricity. For Tanzania, it could create a new cross-border outlet for natural gas. For Lamu, it could help turn the refinery from a standalone petroleum project into the centre of a wider energy and manufacturing hub.

But the proposal still has several gates to clear.

Kenya and Dangote need to settle the power plant’s final size and ownership structure, establish how the gas will reach Lamu, secure financing, agree on electricity purchases and complete the necessary environmental and regulatory processes.

The refinery’s September 30 groundbreaking may mark the beginning of construction on the main industrial project. It does not, by itself, commit Kenya or Dangote to building the proposed 1,000MW LNG plant.

For now, the more consequential development is that Kenya is considering whether the refinery can become the anchor for a much larger coastal energy system, with Tanzania gas potentially sitting at its centre.

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