Uganda, Tanzania eye Tanga refinery in regional energy hub push

The Memorandum of Understanding (MoU), signed in Dar es Salaam on Thursday [last week] and witnessed by Presidents Yoweri Museveni and Samia Suluhu Hassan, marks the latest expansion of energy cooperation between the two neighbours, following the $5 billion East African Crude Oil Pipeline (Eacop), which is nearing completion.

At the heart of the plan is the transformation of Tanga into one of Sub-Saharan Africa’s largest integrated energy hubs, serving as a centre for petroleum refining, storage, logistics, trading and distribution.

The proposed refinery is expected to process crude from both the region and international markets, providing another major refining centre for East Africa. Uganda is on the verge of becoming an oil-producing country, with production at its Kingfisher development expected to begin in a few weeks’ time.

Tanzania Petroleum Development Corporation Managing Director Mussa Makame said the proposed refinery would complement Uganda’s planned 60,000-barrel-per-day Hoima refinery, with both projects linked through a bi-directional pipeline capable of transporting refined petroleum products according to market demand.

It places Tanga back on the map of refinery but could signal upcoming rivalry with Kenya. Nigerian tycoon Aliko Dangote had initially proposed Tanga for his refinery on the east coast of Africa but later changed to Lamu in Kenya. The changes also followed a public rebuke by Tanzanian President Samia to Kenyan counterpart William Ruto, who had previously announced Tanga as the site of Dangote refinery, without consulting Dodoma.

So far, however, officials are avoiding suggestions of regional rivalry, while suggesting important roles for both sites in improving energy security for the continent.

Uganda’s Energy Minister, Dr Monica Musenero, said the agreement represented a significant step in regional integration and reflected both governments’ commitment to using energy infrastructure to drive industrialisation, trade and job creation.

Rather than simply exporting crude oil, she said, Uganda aims to maximise value through downstream industries that create skilled employment and support manufacturing and technology development.

“These are not merely infrastructure projects. They are strategic investments that will create jobs for our young people, deepen regional trade and strengthen the logistics systems that support our economies,” she said.

The infrastructure package also includes a refined petroleum products pipeline between Uganda and Tanzania, expanded storage and distribution facilities, and a proposed natural gas pipeline connecting the two countries.

Tanzania’s Energy Minister, Deo Ndejembi, described the MoU as the next phase of the Uganda-Tanzania energy partnership established through Eacop, shifting the focus from transporting crude to refining, storage, logistics and industrial development.

He said the Tanga Regional Energy Hub has the potential to become one of the largest integrated energy infrastructure developments in Sub-Saharan Africa, attracting investments exceeding $20 billion while strengthening East Africa’s energy security and export capacity.

The proposed bidirectional pipeline, he added, will allow refined products to move in either direction depending on demand, opening wider regional markets while reinforcing supply security.

He revealed that feasibility and front-end engineering design studies for the refined products pipeline and storage terminal, are expected to be completed later this year, while studies for the proposed Uganda-Tanzania natural gas pipeline are scheduled for completion by October.

Beyond petroleum, Dr Musenero said Uganda had secured $250 million from the World Bank to finance its section of the planned Uganda-Tanzania 400kV electricity interconnector, a project expected to strengthen regional power trade through the Eastern Africa Power Pool and improve electricity exchanges with Southern Africa.

She emphasised that the Hoima refinery and the proposed Tanga hub are complementary projects designed to improve regional energy security and enable East Africa to capture greater value from its petroleum resources.

The new partnership builds on the 1,443-kilometre Eacop, which is nearing completion and has become the flagship cross-border energy project linking Uganda’s oilfields to Tanzania’s Indian Ocean coast.

Officials say the experience gained from delivering the project has strengthened investor confidence.

Written by Julius Barigaba