A lively debate is taking place in the region over the proposed location of a 650,000 barrels-per-day oil refinery in East Africa, reportedly to be developed by Aliko Dangote in collaboration with East African governments. The key question is whether the refinery should be located in Tanga or Mombasa.
Earlier, Kenya’s President William Ruto announced during the “Africa We Build Summit” that the refinery would be built in Tanga. Dangote attended the summit alongside Uganda’s President Yoweri Museveni.
Questions have since emerged over what appears to be a shift in position. The matter gained public attention after President Ruto’s recent state visit to Tanzania, during which concerns were raised over the announcement of the project before formal consultation with the Tanzanian authorities. President Ruto later indicated that, had he known the announcement would generate such a reaction, he might have supported locating the refinery in Mombasa instead.
Soon thereafter, Reuters reported that Dangote was now leaning towards Mombasa Port. The reason given was straightforward: Mombasa has a deeper port than Tanga. He also cited Kenya’s larger economy, higher fuel consumption and stronger oil distribution infrastructure. More significantly, Dangote reportedly added that the final decision would depend on what President Ruto says.
Those who support Tanga as the ideal location often point to the East African Crude Oil Pipeline factor. This is an important consideration, but it should not be the only one. While locating a refinery close to a crude oil source can be advantageous, it is not always the deciding factor.
Many major refineries around the world are located in places with little or no domestic oil supply.
Singapore, for example, has virtually no oil reserves, yet it is among the world’s leading refining and petrochemical centres. The Port of Rotterdam is also one of Europe’s major refining centres, despite the Netherlands having limited oil reserves. Its strength lies in its deep port, pipeline connections across Europe and advanced logistics. Tanzania itself once had the TIPER refinery, despite not having domestic crude oil production.
Whatever the final decision may be, the issue should be handled with careful diplomacy, technical analysis and regional cooperation. A potential investment of this scale requires governments to focus less on public disagreement and more on how best to secure the project for the benefit of the wider East African region.
If prospective investors are discussing a $15 billion investment in the region, the priority should be to engage them constructively, provide technical clarity and demonstrate readiness. Governments should dispatch the relevant ministers, experts and investment authorities to assure the investors that the region is prepared for such a major project.
I do not know what the technical team will ultimately recommend. My view, however, is that East Africa should consider a distributed value-chain hybrid model that captures the comparative advantages of both Tanga and Mombasa.
Under this model, Tanga would host the primary refining and petrochemical complex because of its connection to EACOP and its potential for expansion.
