Tanzania: Museveni Backs Dangote Oil Refinery in Tanzania

President Yoweri Museveni's endorsement of the Dangote Group's proposed mega crude oil refinery in Tanzania signals a strategic pivot in East Africa's energy architecture. Uganda, sitting on proven crude reserves of 6.5 billion barrels, has signaled willingness to supply feedstock to the refinery slated for Tanga region—a move that could unlock regional economies of scale and reduce the continent's $90 billion annual petroleum import bill.

The Dangote refinery model is already reshaping African energy markets. Nigeria's flagship 650,000 barrels-per-day (bpd) facility in Lagos, operational since 2023, has cut fuel costs across West Africa by 15–20% and displaced imports from European refineries. A Tanzania-based East African counterpart could deliver similar disruption, with estimated throughput of 300,000–400,000 bpd serving Tanzania, Uganda, Kenya, and neighboring markets.

## Why Uganda's crude export matters for regional refining

Uganda has been producing oil since 2021 via the Kingfisher field (operated by Total Energies), with current output near 40,000 bpd. The country's 2026–2027 production targets exceed 230,000 bpd once the Tilenga and Kabaale projects come online. Rather than exporting raw crude at volatile global prices, Museveni's backing of regional refining ensures Uganda captures higher-margin refined product revenues—gasoline, diesel, jet fuel—within an integrated East African supply chain. This also anchors Uganda's oil wealth domestically, supporting local employment and tax revenue.

Tanzania brings geographic advantage: the Tanga port offers deep-water access for global crude imports and finished product exports. Dangote's track record—the Lagos refinery achieved 95%+ operational uptime in its first year—suggests execution capability. However, the $20 billion capital requirement demands sovereign backing, concessional financing from development banks (AfDB, World Bank), and long-term offtake agreements.

## What are the investor implications?

For equity and debt investors, a Tanzania refinery creates a 15–20 year cash-generative asset. Refined product margins in East Africa currently average $6–8 per barrel (vs. global norms of $2–3), reflecting supply scarcity. A fully operational facility could generate $2–3 billion in annual EBITDA, with returns sensitive to crude feedstock costs, FX volatility, and regional demand growth. Infrastructure bonds backed by government guarantees offer 6–9% yields with lower equity risk.

The refinery also anchors industrial clusters: petrochemicals, fertilizers, plastics manufacturing all benefit from cheap, stable feedstock. Kenya's energy-intensive sectors—cement, steel, beverages—would see cost deflation, boosting competitiveness.

## When will construction begin?

Timeline remains fluid. Dangote's Lagos refinery took 5 years from financial close to first oil. A Tanzania project requires: (1) final feasibility and environmental clearance by Q2 2025, (2) debt-equity structuring through H2 2025, (3) groundbreaking by late 2025–early 2026. First throughput is realistically 2029–2030.

Risks include financing bottlenecks, crude export restrictions from Uganda or Kenya, and regional demand disappointment if East African economies decelerate.

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