Kenya Won Dangote. Tanzania Must Now Build Its Own Refinery.

Kenya won. The debate is over. Dangote Industries has confirmed its proposed 700,000-barrel-per-day refinery will be built in Kenya, citing stronger port infrastructure, a more developed pipeline network, and a larger domestic fuel market. Tanzania should resist the temptation to frame this as a loss to mourn. It is more useful as a prompt to ask a harder question: should Tanzania remain a petroleum transit corridor, or does it have the industrial ambition to become a refining economy? That question has a specific answer available to it that it did not have twenty years ago. EACOP changes the arithmetic. EACOP changes what is possible Once the East African Crude Oil Pipeline is fully operational, up to 246,000 barrels of Ugandan crude per day will move through 1,443 kilometres of Tanzanian territory to the export terminal at Chongoleani near Tanga. Uganda has already secured the first call on up to 60,000 barrels per day for its own domestic refinery. The remainder flows to export. Tanzania moves the crude. Someone else refines it. Someone else captures the margin. That is a coherent commercial arrangement. It is not an industrial strategy. The argument that Tanzania should consider its own refining capacity does not rest on sentiment about the Dangote decision. It rests on the observation that EACOP has already demonstrated the infrastructure and financing case for moving large volumes of crude through Tanzanian territory, and that the incremental argument for adding refining capacity is now considerably stronger than it was before the pipeline existed. Tanzania has done this before and walked away Tanzania once had a refinery. The facility established at Dar es Salaam in the 1960s processed imported crude until closure in 2000, after which the site was converted into the TIPER petroleum storage terminal. The closure made sense under the logic of that era. Small refineries in developing markets were losing ground to cheap imported refined products from large-scale Middle Eastern and Asian operations. The economic case for domestic refining looked weak. It looks different now. The COVID-19 pandemic, the war in Ukraine, Red Sea shipping disruptions, and the broader fragmentation of global energy supply chains have each demonstrated what energy economists had long argued: refining capacity is not just an economic asset. It is a strategic one. Countries that can convert crude into usable fuel domestically are less exposed to the supply shocks that periodically make imported refined products either unavailable or unaffordable. Tanzania closed its refinery during a period of global energy stability and relatively predictable supply chains. Neither of those conditions applies today. The economics are no longer the objection they were The standard objection to building a refinery is margins. Importing refined products is often cheaper per unit than operating a domestic refinery, particularly for smaller markets. That argument has genuine force. It also misses the point. A refinery is not primarily a fuel production facility. It is an industrial anchor. Refining generates demand for petrochemicals, lubricants, bitumen, plastics, engineering services, maintenance industries, laboratory capacity, and skilled technical employment. The Nigerian experience with the Dangote refinery illustrates the spillover effect: the facility has shifted Nigeria from chronic dependence on imported fuel while creating new industrial linkages in petrochemicals and logistics that compound over time. Those spillovers frequently exceed the refining margin itself in economic value. East Africa's fuel demand is also no longer the fragmented, low-volume market that made domestic refining economically marginal in earlier decades. Urbanisation is accelerating. Vehicle ownership is rising. Manufacturing investment is expanding. Aviation demand is growing. Mining and industrial park development require stable, high-volume diesel supply. The market that a Tanzanian refinery would serve in 2030 is materially larger than the market that existed when TIPER closed in 2000. Uganda understood this. Kenya acted on it. Tanzania is still deciding. Uganda made its position clear before EACOP was agreed. President Museveni consistently argued that crude export without domestic value addition was not development. Uganda's 60,000-barrel-per-day refinery exists precisely because Kampala decided it would not simply export raw crude while importing the refined products made from it. Kenya, which does not produce significant crude volumes, has nonetheless secured the region's largest proposed refinery through private investment. Nairobi concluded that being the refining hub was worth competing for even without being the upstream producer. Tanzania is the crude corridor. It has the pipeline. It has the export terminal. It has the gas reserves, at over 57 trillion cubic feet of proven natural gas, that provide feedstock diversity a refinery would benefit from. And it has a closed refinery site at TIPER that represents an existing land and infrastructure asset. What it has not yet produced is a government decision that these assets should become the foundation of a downstream petroleum industry rather than simply a transit arrangement. This is a Vision 2050 question Tanzania's Vision 2050 targets a trillion-dollar economy built on manufacturing, logistics, and value addition. Those objectives require industries that sit on top of infrastructure, not simply infrastructure that moves commodities through the country on someone else's behalf. Refining is precisely that kind of industry. It converts a raw material into a higher-value product. It anchors logistics, engineering, and chemical industries around it. It generates government revenue from domestic processing rather than transit fees. It reduces foreign exchange outflows on refined product imports. It creates the kind of technical employment base that industrialisation requires. None of that argues for building a refinery at any cost or on any terms. A credible feasibility process, examining volume assumptions, financing structures, private sector partnership models, and integration with EACOP's throughput, is the correct next step, not a political announcement. But the feasibility process should begin. Tanzania has been waiting for the right conditions. EACOP provides them. The risk of permanent transit status There is a scenario Tanzania should take seriously. Kenya's Dangote refinery, once operational, will serve regional markets including Tanzania. Tanzania will import refined products from Mombasa, paying the refining margin to a Kenyan-located facility, while Ugandan crude moves through Tanzanian territory to export. Tanzania will be simultaneously the corridor for crude and the customer for the refined output. That is not an industrial economy. It is a geography performing a service. The countries that became industrial powers did not simply move resources across their territory. They built industries that transformed those resources before they left. Tanzania has the territory, the resources, and the corridor. The question is whether it will build the industry. Kenya has made its answer clear. Uganda made its answer clear before the pipeline was built. Tanzania's answer is still being written. The moment to write it is now. FAQ Why did Tanzania lose the Dangote refinery to Kenya? Mombasa's deeper port, Kenya's established pipeline distribution network, and Kenya's larger domestic fuel consumption were the deciding factors. Dangote was optimising a complete logistics system, not just a production site. Tanzania's upstream position via EACOP was not sufficient to overcome Kenya's integrated infrastructure advantage. Does Tanzania have the resources to support a refinery? Yes. Tanzania has over 57 trillion cubic feet of proven natural gas reserves, hosts EACOP's export terminal at Chongoleani near Tanga, and has the former refinery site at TIPER in Dar es Salaam as an existing infrastructure asset. The resource and infrastructure base exists. The policy decision does not yet. Would a Tanzanian refinery compete directly with Kenya's Dangote facility? Not necessarily. East Africa's fuel demand is large enough and growing fast enough to support multiple refining centres serving different regional markets. Kenya's facility will primarily serve northern corridor markets. A Tanzanian facility would serve southern and central corridor markets including Zambia, Malawi, and DRC's eastern provinces. What happened to Tanzania's previous refinery? Tanzania operated a refinery at Dar es Salaam from the 1960s until 2000, when it was closed and converted into the TIPER petroleum storage terminal. Closure reflected the economics of that era, when imported refined products were cheaper than small-scale domestic refining. Those economics have shifted materially since then. What is the first practical step Tanzania should take? Commission a credible feasibility study examining refinery capacity options in the context of EACOP throughput volumes, regional demand projections, private sector partnership structures, and financing models. A political announcement without that analytical foundation would not be credible. The feasibility process is the investment Tanzania needs to make now. The views expressed in this article are those of the author and do not represent the editorial position of Uchumi360.