Aliko Dangote starts $160 million Djibouti terminal to pump fuel into Ethiopia by pipeline

Nigerian billionaire Aliko Dangote broke ground on Thursday on a $160 million fuel storage terminal and pipeline in Djibouti, the first piece of an East African supply chain he says will grow into nearly 4,000 kilometres of pipelines feeding landlocked markets.

Dangote laid the foundation stone at the Damerjog Industrial Park alongside Djibouti's President Ismaïl Omar Guelleh, Prime Minister Abdoulkader Kamil Mohamed and Ethiopian Prime Minister Abiy Ahmed, a show of political weight that reflects what the project means to both governments.

The terminal will sit on about 80 hectares and hold 375,000 cubic metres of gasoline, diesel and other products, with transit capacity of up to 5 million tons a year. It connects to the Damerjog-Nagad railway and to the Damerjog Liquid Bulk Port through a shared collector system, and a 120-kilometre multi-product pipeline will run from the tanks to Dawanleh, the border town in eastern Ethiopia.

The point is Ethiopia. With no coastline of its own, the country imports nearly all its fuel through Djibouti and hauls it inland by road, a slow, expensive and congested route. A pipeline cuts logistics costs, takes tankers off the highway and gives Addis Ababa a reliable long-term supply line.

Dangote's partner is Ethiopian Investment Holdings, the state investment arm, which had already secured land at Damerjog for the storage facility when Guelleh approved the pipeline plans in May. The two are also joint owners of the $2.5 billion Gode urea complex in Ethiopia's Somali region, where Dangote broke ground with Abiy last October, and Dangote has said fertilizer plants in Ethiopia are part of his push from 3 million to 12 million tons of urea a year.

The groundbreaking arrives on the schedule Dangote set himself. Speaking at the Qatar Economic Forum on Sunday, he said work on a Djibouti-to-Ethiopia line would begin "next week," alongside a separate 2,650-kilometre pipeline across Namibia, Botswana and South Africa budgeted at more than $3.5 billion. "By the time we finish, I am sure we'll end up with almost 4,000 kilometers of pipelines," he said.

The East African network also connects to his planned $16 billion refinery at Lamu on the Kenyan coast, where Engineers India was hired this week and groundbreaking is set for Sept. 30. Dangote has talked of a Lamu-to-Ethiopia line to complete the loop.

Djibouti gains too. The government has been building Damerjog into a bulk liquids and industrial hub since Afreximbank financed the free zone, and a Dangote-branded terminal moving 5 million tons a year is the kind of anchor tenant it was built for.

Together, the terminal, the pipelines and the refineries add up to something Dangote has been describing all month: a group that no longer just refines fuel in Lagos, but owns the route it travels across the continent.