Tanzania: Regional Oil Refinery – Why It Matters for Tanzania
Dar es Salaam — TANZANIA has expressed readiness to host the envisaged oil refinery plant in Tanga, a project expected to boost fuel supply in East Africa, enhance energy security and strengthen regional integration.
Minister for Foreign Affairs and East African Cooperation, Ambassador Mahmoud Thabit Kombo, welcomed the proposal on Monday in an exclusive interview with the Daily News, responding to recent plans floated by Kenya’s President Dr William Ruto, Uganda’s President Mr Yoweri Museveni and Dangote Group President Mr Aliko Dangote.
In the interview, Amb Kombo said Tanzania remains open to all investments provided they comply with national laws and regulations.
“Tanzania’s stance on the refinery project proposal is clear. We welcome all investors as long as they adhere to the country’s legal investment requirements,” he said.
He noted that the mega refinery project, alongside other strategic initiatives such as the Lindi Liquefied Natural Gas (LNG), Kabanga and Mchuchuma projects, is critical in creating employment opportunities, particularly for youth, while boosting the country’s economy.
On the prospect of Tanzania partnering in the refinery project, Amb Kombo expressed the country’s commitment to play a leading collaborative role.
His remarks echo a recent investment proposal presented by Kenya, Uganda and the Dangote Group during a conference on infrastructure financing held in Nairobi.
During the forum, Mr Dangote said he is ready to spearhead the project if participating governments reach a consensus, with a possible completion timeline of four to five years once agreements are in place.
“My commitment today is that if we agree with the governments involved, we will lead and ensure that the refinery is built within the next four to five years,” he said.
Africa’s richest businessman added that he could replicate his 650,000-barrel-per-day refinery model from Nigeria in East Africa, subject to regional government support.
Economists and business analysts have welcomed the proposal, noting that it could significantly improve fuel supply in East Africa, positioning Tanzania as a regional hub.
The refinery project is expected to leverage crude oil production from Uganda, which will be transported through the East African Crude Oil Pipeline (EACOP) from Kabaale-Hoima to the Chongoleani Peninsula near Tanga in Tanzania.
The pipeline stretches approximately 1,443 kilometres and has a peak capacity of 246,000 barrels per day.
A business and entrepreneurship expert from Saint Augustine University of Tanzania (SAUT), Dr Sylvester Jotta, said the proposal addresses longstanding challenges associated with oil imports in the region.
“It is very important that this proposal comes early. The crude oil will now be refined locally, replacing the earlier plan of exporting it overseas for value addition,” Dr Jotta said.
He added that the refinery presents a significant opportunity to reduce reliance on imported fuel while easing the cost burden on consumers.
“With the construction of the refinery plant, Tanzania will significantly reduce the economic risks associated with fuel imports,” he said.
Dr Jotta further noted that the project could stimulate petroleum exploration, particularly in regions such as Mtwara and Lindi, which already show strong indications of natural gas and potential oil reserves.
Looking ahead, he said Tanga is likely to emerge as an industrial hub, attracting manufacturing industries due to improved fuel availability and affordability.
The project is also expected to generate substantial employment opportunities and boost government revenue through Value Added Tax (VAT) and other levies.
Currently, Tanzania imports 100 per cent of its petrol and diesel, mainly from the Middle East.
Economic analyst Mr Kelvin Msangi described the proposal as a test of the region’s ability to transform its dependence on fuel imports into a viable industrial opportunity.
“The Tanga refinery should be viewed not as a prestige project, but as a strategic hedge against imported inflation, foreign exchange losses and energy supply risks,” he said.
He noted that refined petroleum products remain the largest import category in the East African Community, valued at over 11 billion US dollars (about 29tri/-).
“This is not a marginal investment. It is about whether the region can retain part of a multibillion-dollar value chain currently controlled by foreign refiners and traders,” he added.
Citing Bank of Tanzania (BoT) data, Mr Msangi said oil imports cost 2.11 billion US dollars (over 5.4tri/-) in the year ending February 2026, accounting for 13.8 per cent of the country’s total import bill.
“Even when global prices ease, petroleum remains one of the largest pressures on imports,” he said.
He explained that while local refining would not eliminate exposure to global crude prices, it would reduce reliance on imported refined products, lower external refining costs, improve storage capacity and strengthen supply resilience during global disruptions.
Economist and investment banker Dr Hildebrand Shayo said the proposed refinery, supported by the Dangote Group and regional partners, could transform fuel supply dynamics in Tanzania and across East Africa.
“This initiative would enable the region to shift from near-total dependence on imported refined petroleum to a more self-sufficient and integrated energy system,” he said.
He added that the refinery would stabilise supply, reduce import bills, shorten supply chains and lower transport and transaction costs.
Moreover, Dr Shayo said the project would enhance port operations, improve logistics and increase foreign exchange earnings.
“The initiative will boost intra-African trade and reduce dependence on Middle Eastern fuel imports by linking upstream producers such as Uganda with regional markets,” he said.
By Daily News.
