Dangote Group and China's GCL Group have signed a $4.2 billion, 25-year natural gas supply agreement to fuel what will become East Africa's largest fertilizer production complex. The deal, signed in Lagos in mid-March 2026, secures the critical energy input for Dangote's $2.5 billion urea plant under construction in Gode, Ethiopia's Somali Region. With a combined investment exceeding $6.7 billion, the project represents one of the largest industrial ventures on the African continent — and a procurement pipeline that contractors, engineers, and suppliers should be watching closely.
The Deal: $4.2 Billion in Gas Over 25 Years
The agreement commits GCL Group to supply natural gas from the Calub gas field in Ethiopia's Ogaden Basin through a dedicated 108-kilometer pipeline to the Dangote fertilizer complex in Gode. The Calub field, part of the broader Ogaden Basin reserves that Ethiopia has been developing since the 1970s, is already producing LNG after GCL inaugurated its first-phase Ogaden LNG facility in October 2025, generating 111 million liters annually.
Under the new deal, GCL will scale up production significantly. A second phase targets 1.33 billion liters per year, ensuring reliable feedstock for the fertilizer plant's full operational capacity.
"Africa's energy industry cannot continue indefinitely exporting raw materials while importing finished products," Aliko Dangote said at the signing. "Through cooperation with GCL, we will achieve an efficient closed-loop value chain from natural gas extraction to fertilizer production."
The project structure pairs Dangote Group's industrial capacity with Ethiopian state capital: Dangote Group holds 60% equity, while Ethiopian Investment Holdings (EIH) takes the remaining 40%. This public-private partnership model has become increasingly common in large-scale African infrastructure, offering international contractors the assurance of both private-sector efficiency and sovereign backing.
A $2.5 Billion Fertilizer Megaproject
The fertilizer plant itself carries a $2.5 billion price tag and is designed to produce 3 million metric tons of urea annually — a figure that would make it the largest urea facility in East Africa and one of the biggest on the continent. Construction began in October 2025 with completion targeted within 40 months, placing first production around 2029.
Several world-class engineering and technology firms have already been engaged:
- Topsoe (Denmark) will license ammonia technology and supply full process design packages for two ammonia plants at the Ethiopian site, using advanced solutions for cleaner and more efficient production
- Saipem (Italy) received a Letter of Intent for Front End Engineering Design (FEED) services, providing its proprietary Snamprogetti urea technology — with individual units featuring a record-breaking capacity of 4,235 metric tons per day, the highest ever achieved worldwide
- Thyssenkrupp UFT (Germany) will supply granulation technology and design packages for urea granule production, improving product strength for export markets
- Engineers India Limited (EIL) has been engaged for EPCM (Engineering, Procurement, Construction Management) services on the broader Dangote fertilizer expansion
The scale of engineering procurement alone — covering ammonia synthesis, urea melt processing, granulation, gas pipeline construction, power generation, water treatment, and storage infrastructure — will generate hundreds of contracts and subcontracts over the next three years.
Why This Matters: Africa's Fertilizer Crisis
The strategic significance of this project cannot be overstated. Ethiopia imported approximately 2.32 million tons of fertilizer in 2024, making it Africa's largest fertilizer importer. Over 90% of these imports are distributed through government-controlled channels, creating an acute vulnerability to global supply shocks.
That vulnerability proved devastating during the Ukraine-Russia conflict and COVID disruptions, when fertilizer prices nearly doubled across Kenya, Uganda, Tanzania, and Ethiopia between 2020 and 2022. Research from the International Food Policy Research Institute (IFPRI) shows that without fertilizer, grain yields for staple crops like maize, wheat, and teff could fall by 56 to 73% — a catastrophic outcome for a country where agriculture employs over 70% of the workforce.
The broader African continent imports over 80% of its fertilizer requirements, making the entire region vulnerable to price volatility and supply chain disruptions. The Africa fertilizers market, valued at approximately $15.69 billion in 2025, is projected to grow steadily through 2034 as governments expand subsidy programs and invest in domestic production capacity.
By producing 3 million tons of urea domestically, the Gode plant could not only eliminate Ethiopia's import dependence but also position the country as a net exporter to neighboring markets in Kenya, Tanzania, Uganda, Rwanda, and the Democratic Republic of the Congo.
Procurement Implications
The Dangote-GCL project will generate procurement opportunities across multiple sectors and contract types over the next three to four years. Here is what contractors and suppliers should be tracking.
Engineering, Procurement, and Construction (EPC)
The core fertilizer plant requires:
- Ammonia synthesis units — two full-scale plants with Topsoe technology
- Urea production lines — using Saipem's Snamprogetti process at record capacity
- Granulation facilities — Thyssenkrupp UFT systems for export-grade product
- Gas processing infrastructure — compression, treatment, and metering systems
- Utilities and offsites — power generation, water treatment, cooling systems, storage tanks, and loading facilities
Each of these workstreams involves specialized EPC contractors, technology licensors, and equipment suppliers. Given the project's remote location in Gode, logistics and camp construction contracts will also be significant.
Pipeline Construction
The 108-kilometer dedicated gas pipeline from the Calub field to Gode requires:
- Pipeline steel and coating procurement
- Right-of-way preparation and earthworks
- Welding, testing, and commissioning services
- Cathodic protection and monitoring systems
This is a distinct procurement stream from the fertilizer plant itself, likely managed under a separate works contract.
Supporting Infrastructure
A project of this scale in a developing region requires substantial supporting infrastructure:
- Roads and access routes to the plant site
- Power supply connections or dedicated generation capacity
- Water supply systems for industrial use and worker accommodation
- Worker housing and camp facilities for thousands of construction personnel
- Port and logistics upgrades for equipment delivery via Djibouti
Ongoing Operations and Supply Contracts
Once operational, the plant will need:
- Catalysts and chemical inputs on a recurring basis
- Maintenance and turnaround services
- Bagging, warehousing, and distribution logistics
- Export logistics through Djibouti's port infrastructure
Countries and Regions Affected
The project's impact radiates across East Africa and beyond.
Ethiopia is the direct beneficiary, with the Gode plant transforming the country from the continent's largest fertilizer importer into a potential exporter. Ethiopian Investment Holdings' 40% stake ensures the government retains significant influence over production and pricing decisions.
Kenya and Tanzania are the most likely export markets. Kenya already imports granular urea, ammonium sulfate, DAP, and NPK blends, with Mombasa serving as the primary gateway for East African fertilizer distribution. Tanzania's Dar es Salaam port is evolving into a regional hub for fertilizer storage and redistribution.
Uganda, Rwanda, and the Democratic Republic of the Congo are additional target markets reachable through existing rail and road corridors from Mombasa and Dar es Salaam.
Djibouti stands to benefit from increased port traffic and transit revenues, particularly if the long-discussed Ethiopia-Djibouti gas pipeline — originally planned at 767 kilometers — is revived for broader export purposes.
Nigeria is indirectly relevant as the home base for Dangote's existing fertilizer operations in Lekki, Lagos. The company is simultaneously expanding its Nigerian capacity from 3 million to 9 million metric tons per year, creating parallel procurement opportunities.
What This Means for Contractors
The Dangote-GCL Ethiopia project offers distinct opportunities for different types of firms:
- Large EPC contractors should monitor tender announcements for the main plant construction packages. Saipem's FEED award suggests that main EPC contract awards are approaching, likely in late 2026 or early 2027
- Pipeline contractors experienced in East African conditions should track the 108-km gas pipeline tender. Previous pipeline projects in the Ogaden region have been managed by Chinese contractors, but international firms with competitive pricing may find openings
- Equipment suppliers for pumps, compressors, heat exchangers, instrumentation, and control systems should register with the Dangote Group's procurement portal and monitor supplies tenders
- Consulting firms specializing in environmental and social impact assessments, project management, and construction supervision should watch for consulting opportunities from both Dangote and EIH
- Logistics companies with experience in the Djibouti-Ethiopia corridor will be essential for heavy lift and project cargo during construction
Monitor infrastructure tenders and energy sector opportunities in Ethiopia for related procurement. The agriculture sector will also see increased activity as distribution networks are built to move fertilizer from Gode to Ethiopian and regional markets.
Looking Ahead
The Dangote-GCL gas deal resolves one of the last critical uncertainties for the Ethiopia fertilizer project: long-term, affordable energy supply. With Topsoe, Saipem, and Thyssenkrupp locked in for technology licensing and FEED, the project is now moving from planning into active construction procurement.
The next major milestones to watch are the award of main EPC contracts — expected in the coming months — and the finalization of export agreements with neighboring countries. For procurement professionals operating in East Africa, this project represents a multi-year pipeline of contracts across works, services, supplies, and consulting.
Browse the latest tenders in Ethiopia and across Africa to stay ahead of emerging opportunities from this transformative project.
