Uganda and Tanzania signed an ambitious energy partnership Thursday that could attract more than $20 billion in investments and transform the Port of Tanga into one of Sub-Saharan Africa's largest integrated energy hubs, officials announced in Dar es Salaam. The deal, witnessed by Presidents Yoweri Museveni and Samia Suluhu Hassan, promises thousands of skilled jobs and positions the two nations to capture greater value from their petroleum resources rather than simply exporting crude.
The memorandum of understanding between the Uganda National Oil Company, the Tanzania Petroleum Development Corporation and Vitol Bahrain EC establishes an integrated energy corridor linking the two countries through multi-product fuel pipelines, oil and gas infrastructure, storage terminals and a proposed refinery. It's the latest expansion of energy cooperation following the $5 billion East African Crude Oil Pipeline, which is nearing completion.
A Regional Manufacturing Vision
Uganda's Energy Minister, Dr Monica Musenero, framed the agreement as a strategic investment in industrialisation and job creation, not just infrastructure. "These are not merely infrastructure projects," she said. "They are strategic investments that will create jobs for our young people, deepen regional trade and strengthen the logistics systems that support our economies." Rather than simply exporting crude oil, Uganda aims to maximise value through downstream industries that create skilled employment and support manufacturing and technology development.
The proposed refinery is expected to process crude from both the region and international markets, providing another major refining centre for East Africa. Tanzania Petroleum Development Corporation Managing Director Mussa Makame said the 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.
Uganda is on the verge of becoming an oil-producing country. Production at its Kingfisher development is expected to begin in a few weeks' time.
Infrastructure Package Includes Gas Pipeline
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 memorandum of understanding 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.
Ndejembi 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 will allow refined products to move in either direction depending on demand, opening wider regional markets while reinforcing supply security, he said.
Feasibility and front-end engineering design studies for the refined products pipeline and storage terminal are expected to be completed later this year. Studies for the proposed Uganda-Tanzania natural gas pipeline are scheduled for completion by October.
Power Grid Expansion Funded
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 said 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.
Officials said the plan could signal rivalry with Kenya, after 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 saying both sites have important roles in improving energy security for the continent.
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 said the experience gained from delivering the project has strengthened investor confidence.
Why This Matters:
This partnership represents a strategic shift toward value-added industrialisation that could create thousands of skilled jobs in two nations where youth unemployment remains a persistent challenge. By building refining capacity and downstream industries rather than simply exporting crude, Uganda and Tanzania are positioning themselves to capture more economic value from their natural resources while developing the technical expertise and manufacturing base needed for broader economic development. The $250 million World Bank commitment to the electricity interconnector demonstrates how regional cooperation on energy infrastructure can attract multilateral support and strengthen public capacity to deliver essential services. Whether these ambitious projects deliver on their promise of shared prosperity will depend on transparent governance, environmental safeguards, and ensuring that local communities benefit from the jobs and revenue these massive investments generate.