In July last year, the Energy and Petroleum Regulatory Authority (Epra) raised the pump price of diesel by Sh8.67 a litre. In April this year, it increased the price of diesel by Sh40.30 in a single review.
Between those two announcements, the Strait of Hormuz went from disrupted to effectively closed, and Brent crude peaked at $126 a barrel.
Kenya had no influence over any of these, and has now responded in the biggest way possible. Dangote Industries has confirmed that its 700,000 barrels-a-day East African refinery, an investment of between $15 billion and $20 billion, will be built at Lamu. Soil testing is under way, and design and engineering have started.
This is a significant win and deserves to be recognised as one. The refinery gives the Lamu Port-South Sudan-Ethiopia Transport (Lapsset) corridor the anchor investment it has lacked since inception.
But it will not refine a single litre of diesel before the end of this decade.
Construction is expected to take three to four years, and that does not allow for delays that commonly affect projects of this magnitude.
Even in the best case, production will start around 2030.
Until then, our exposure does not change. We still import nearly all our petroleum. The government-to-government arrangement with Saudi Aramco, the Abu Dhabi National Oil Company and the Emirates National Oil Company fixes freight and premium, not the cost of the fuel itself, as the Energy Cabinet Secretary has acknowledged.
And all three suppliers sit behind the same waterway. Three suppliers, one chokepoint, is not diversification. It is concentration with more paperwork.
We have secured an answer for 2030 and left 2027 unaddressed.
The interim option is not hypothetical. Nigeria’s Dangote refinery in Lagos has reached its full capacity of 650,000 barrels a day and is exporting across the continent. Its clean fuel exports more than doubled between February and March as African importers sought to reduce their exposure to long-haul shipments. Cargoes have gone to Côte d’Ivoire, Cameroon, Ghana, Togo and Tanzania.
A route from Lagos to the East African coast does not pass through Hormuz. It is a longer voyage around the Cape, and freight will cost more. But it is running today, our neighbours are already using it, and it offers something the Gulf route currently cannot: supply that does not depend on a single contested waterway.
This is what intra-African trade looks like when it moves from communiqué to cargo manifest. Its first serious test has arrived as a fuel crisis, and there is little public sign that our supply route has changed.
Winning the site is also not the same as delivering it. Reporting on the decision points less to diplomacy than to execution: land acquisition, permitting timelines and port depth. Kenya has been rewarded for looking stronger on those variables. We now have to execute in time and prove it.
Certainty is not returning to this market. The strait may reopen next month or next year, and none can say which.
Lamu is the right long-term decision. It is not an answer to the cost and availability challenge we face today, and in fuel those are two different problems. Price can be negotiated, hedged or absorbed. A shortage cannot.
Given how strategic petroleum sourcing is to the economy, building resilience in the interim means treating the supply route, not just the supplier, as a strategic choice, and making that choice before the next shock rather than after it.