Inside the proposed Tanga oil refinery: Regional power play, billions at stake, and what it means for East Africa

A proposal to construct a mega oil refinery in Tanzania’s coastal city of Tanga has quickly evolved from a regional industrial vision into a diplomatic talking point, exposing both the promise and sensitivities of East Africa’s integration agenda.

The refinery plan, backed by President William Ruto, Yoweri Museveni and Nigerian industrialist Aliko Dangote, is being framed as a transformative project that could redefine how the region exploits its oil resources.

Yet, remarks by Tanzanian President Samia Suluhu Hassan have highlighted the delicate politics behind such cross-border investments.

At the heart of the proposal is the construction of a 650,000-barrel-per-day refinery in Tanga, an ambitious scale that would place it among Africa’s largest refining complexes.

The idea is simple but far-reaching: process crude oil within East Africa instead of exporting it raw, then re-importing refined products at a premium.

President Ruto, speaking during his visit to Tanzania, framed the refinery as a cornerstone of regional industrialisation.

“I have been told that our announcement to build a refinery in Tanga has upset you. Had I known, I would have announced that the refinery would be built in Mombasa,” he remarked, in a candid acknowledgement of the debate the proposal has sparked.

He underscored that refining crude locally unlocks far more than fuel production.

According to him, such a facility would catalyse petrochemical industries, fertiliser manufacturing, plastics production, and a broader ecosystem of industrial activity.

“The building of a refinery is a big opportunity for business, industrialisation…fertiliser industries and plastic industries,” Ruto said.

WHY TANGA?

Tanga’s strategic location is central to the proposal.

The city sits along the Indian Ocean and is relatively close, about 190 kilometres, to Mombasa, East Africa’s main petroleum import and distribution hub.

Ruto outlined a logistics chain that leverages existing and planned infrastructure across the region. Crude oil from Uganda would be transported via pipeline to Tanga, refined there, and then distributed through established networks, including pipelines linked to Mombasa, for onward supply across East Africa.

“We will use our crude pipeline coming from Uganda to transport the crude, refine it in Tanga, take it to Mombasa and transport it back to our region,” he explained.

This integration model aligns with ongoing projects such as the East African Crude Oil Pipeline (EACOP), which is expected to transport Uganda’s crude to the Tanzanian coast.

SULUHU’S CONCERNS: PROCESS MATTERS

Despite the economic logic, President Samia Suluhu publicly raised concerns over how the announcement was made.

Speaking at the Kenya-Tanzania Business Forum at the Julius Nyerere International Convention Centre on Monday, May 4, she questioned why such a major project was unveiled without prior consultation.

“When we were having a conversation, I asked Ruto why he announced a refinery in Tanga without my knowledge. Now he will explain to himself why he announced it,” she said jokingly.

Her remarks point to a broader issue in regional cooperation: while integration is widely supported, sovereignty and consultation remain critical.

Large-scale infrastructure projects require alignment not just at the leadership level, but also within national planning frameworks.

Ruto, however, defended the move, saying the proposal emerged from broader regional discussions rather than unilateral action.

President William Ruto in Tanzania on May 4, 2026/PCS

THE DANGOTE FACTOR

The involvement of Aliko Dangote adds significant weight to the proposal.

Dangote, who built Africa’s largest refinery in Nigeria, has expressed interest in replicating a similar model in East Africa.

During the Africa We Build Summit 2026 held in Nairobi on April 23, Dangote proposed the development of a refinery of comparable scale, 650,000 barrels per day, arguing that the region has both the resource base and market demand to sustain it.

At the summit, leaders and investors reportedly agreed on several key points:

The refinery would be structured as a public-private partnership, with governments providing policy support and infrastructure while private investors drive capital and execution.

Regional governments, including Kenya, Uganda, and Tanzania, would take up equity stakes, ensuring shared ownership and benefits.

The project would be integrated with existing and planned oil infrastructure, particularly pipelines and port facilities.

A timeline of approximately five years was proposed, contingent on regulatory approvals and financing commitments.

Dangote emphasised that Africa must move away from exporting crude and importing refined products, a cycle he described as economically unsustainable.

Most African crude oil is exported outside the continent to destinations like Europe, Asia and the United States.

Nigeria is the largest oil producer and exports it to the US, while Angola exports it to Asia.

Algeria and Libya are the key suppliers to Europe, while Egypt produces and imports depending on demand.

In East Africa, crude oil exports are still developing.

Uganda has discovered significant oil reserves in the Albertine Graben but has not yet begun large-scale exports.

Production is expected to start soon, with crude set to be exported via the East African Crude Oil Pipeline (EACOP) to the Tanzanian coast.

South Sudan is currently the only major crude oil exporter in East Africa.

It exports most of its oil through pipelines that pass via Sudan to Port Sudan on the Red Sea, where it is then loaded to tankers and shipped to international markets.

Kenya has small oil discoveries in Turkana but exports have been pilot-scale and intermittent, not yet commercial.

Energy Cabinet Secretary Opiyo Wandayi announced recently that the country would commence commercial oil production in South Lokichar, Turkana by December.

Tanzania is not a crude oil exporter; it mainly has natural gas resources.

Regional buy-in expands

Ruto indicated that interest in the project extends beyond Kenya, Uganda, and Tanzania.

Countries such as South Sudan and Rwanda are expected to join, signalling a broader East and Central African coalition around energy industrialisation.

“Tanzania is going to lead the way… I am sure South Sudan will come on board, Rwanda has already said it is coming on board,” Ruto said.

Such a coalition could guarantee a stable market for refined products, improving the project’s commercial viability while strengthening regional trade ties.

ECONOMIC IMPACT: JOBS, INDUSTRY, AND VALUE ADDITION

If successful, the Tanga refinery could be a game-changer for East Africa’s economy.

Currently, most countries in the region export raw materials, including crude oil, only to import finished products.

The main reasons why Africa exports crude instead of refining it is because of limited refining capacity in that many African countries do not have enough or modern refineries.

Others are the cost of building refineries, which costs billions of dollars with current infrastructure historically designed for exporting raw materials.

The other issue is logistics, where it has often been easier to ship crude abroad and import refined fuel.

This model exports jobs and industrial opportunities.

By refining oil locally, the region could create thousands of direct and indirect jobs in construction, operations, and auxiliary industries.

It will also lower fuel import costs by reducing reliance on international refineries, stimulate downstream industries, including plastics, chemicals, and fertilisers and boost government revenues through taxes and export earnings.

Ruto framed the refinery as part of a broader philosophy of self-reliance.

“We can no longer continue to export raw materials. We need to be intentional about creating jobs and opportunities here rather than exporting them,” he told Tanzania’s Parliament.

POLITICAL UNDERTONES: TANGA VS MOMBASA?

Ruto’s remark that he could have chosen Mombasa instead of Tanga hints at underlying regional competition for mega investments.

While framed partly in jest, the comment underscores how infrastructure projects often carry political and economic weight, influencing national pride, employment, and revenue streams.

However, Ruto insisted his decision to back Tanga was guided by regional solidarity rather than national interest.

“I chose Tanga out of neighbourly faith and African unity,” he said.

Despite the optimism surrounding the project, several hurdles remain.

Chief among them is financing, as a refinery of this scale will require billions of dollars in investment.

Coordination is another major challenge, with multiple governments needing to align despite differing national priorities.

Regulatory approvals, particularly environmental and legal clearances, could also slow progress and delay timelines.

In addition, market risks persist, especially as the global shift toward renewable energy raises questions about the long-term demand for fossil fuels.