Kenya and Tanzania in Diplomatic Storm Over East Africa Refinery Location

A diplomatic and commercial dispute between Kenya and Tanzania over the location of East Africa next major oil refinery has exposed fault lines between the two neighbouring governments, with Africa wealthiest individual, Aliko Dangote, publicly throwing his weight behind Kenya Mombasa proposal in a move that has left Tanzania President Samia Suluhu Hassan navigating awkward questions about her country investment climate and her own administration consistency on the issue.

Dangote, whose Nigerian conglomerate has built Africa largest oil refinery in Lagos, has been vocal in his view that Mombasa is the more logical site for a new refining complex capable of processing crude from Uganda Lake Albert oil fields, Kenya inland oil discoveries, and potential imports from Tanzania Songosongo gas fields. His intervention comes amid an escalating competition between Kenya President William Ruto and Tanzania President Hassan over which of their two ports will serve as the primary petroleum logistics hub for the broader East African hinterland, a contest with implications for billions of dollars in infrastructure investment and decades of trade flows.

The controversy intensified when it emerged that Ruto had publicly endorsed Tanzania Tanga port city as the preferred site for the refinery, a position that reportedly caught the Tanzanian president off guard and left many Kenyan analysts questioning whether the president had adequately consulted domestic industry stakeholders before expressing support for a rival infrastructure ambitions. Tanzania state petroleum authority had previously indicated interest in building a new refinery at Tanga, which benefits from proximity to existing pipeline infrastructure and a deep-water port capable of handling very large crude carriers.

The economic calculus is complex and neither option is obviously superior. Mombasa is East Africa largest port by volume, handling goods for not only Kenya but landlocked nations including Uganda, South Sudan, eastern Democratic Republic of Congo, and northern Tanzania. Its existing refining infrastructure, while aging, provides an established industrial base. Tanga, however, is considerably closer to Uganda oil fields and would reduce the unit cost of transporting crude to the refinery, a factor that Dangote technical teams have apparently emphasised in their own assessments circulated to government contacts in Nairobi.

Private sector analysts in Nairobi say the dispute reflects a broader tension in East African economic integration: while the African Continental Free Trade Area and the East African Community framework envision coordinated cross-border infrastructure planning, the reality is that individual member states continue to pursue competitive rather than collaborative strategies when major projects are at stake, with each government acutely aware that the location of a major refining hub translates into jobs, foreign direct investment, and long-term geopolitical leverage.

Uganda government, which stands to be the primary supplier of crude oil to whatever refinery is eventually built, has maintained a studied neutrality on the location question while quietly expressing a preference for the option that minimises transport costs and provides the most reliable offtake arrangement for its emerging oil production. Ugandan officials have met separately with both Kenyan and Tanzanian counterparts in recent weeks as part of efforts to ensure the country interests are adequately represented in whatever bilateral arrangement ultimately prevails.

The Dangote Factor adds an additional layer of complexity. The Nigerian billionaire track record of delivering on large infrastructure projects in Africa is unmatched, and his interest in the East African refinery project signals that major continental capital sees the region as a viable next phase in Africa downstream petroleum industry development. Whether his involvement tips the balance toward Mombasa or whether Tanzania own incentives prove sufficient to retain the project for Tanga remains to be seen, but what is already evident is that the competition between Kenya and Tanzania over this project is as much about economic sovereignty and regional leadership as it is about the refinery itself, and the outcome will shape the architecture of East Africa energy sector for decades.