The pipeline, measuring 120km (75 miles), will include storage capacity of about 400 million litres. Ethiopian Prime Minister Abiy Ahmed said the pipeline would reduce the time needed to transport fuel from Djibouti's port to the Ethiopian capital, Addis Ababa, from five days to one.
Landlocked Ethiopia relies heavily on Djibouti's port for imports, including petroleum products. The new infrastructure is expected to relieve pressure on existing transport systems and support industries such as transport, aviation, agriculture and construction.
Speaking at the groundbreaking ceremony, Dangote said the project would strengthen Ethiopia's energy security and make its fuel supply chain more resilient. Djibouti is also expected to benefit from increased port activity, job creation and higher government revenues.
The pipeline is part of Dangote's wider expansion across Africa. His Dangote Cement produces about 55 million tonnes per year, and his oil refinery in Nigeria processes 700,000 barrels of crude daily, with plans to double capacity. The refinery recently listed 4.1 billion ordinary shares on the Nigerian stock exchange aiming to raise about $1.63 billion.
In Kenya, Dangote is due to break ground next week on a proposed 700,000-barrel-a-day crude oil refinery in Lamu.