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Uganda oil pact a potential boon for Tanzania, EAC
This agreement will see the construction of a crude oil refinery in Hoima District with a capacity of 60,000 barrels per day. PHOTO | COURTESY
What you need to know:
- The district, with a capacity of 60,000 barrels per day. This significant deal is expected to benefit Tanzania and other member states of the East African Community
Dar es Salaam/Kampala. Uganda has finalised an agreement with Alpha MBM Investments, a consortium based in the United Arab Emirates and led by Sheikh Mohammed Bin Maktoum, to develop a refinery in Kabaale, Hoima
The district, has a capacity of 60,000 barrels per day. This significant deal is expected to benefit Tanzania and other member states of the East African Community (EAC).
The agreement was officially announced by President Yoweri Museveni on Saturday.
“I want to thank His Highness Sheikh Mohammed Bin Maktoum and our friends from the UAE for their commitment to investing in Uganda. Today, I witnessed the signing of a historic oil refinery implementation agreement between Uganda and Alpha MBM Investments LLC, based in the UAE.
This agreement will see the construction of a crude oil refinery in Hoima District with a capacity of 60,000 barrels per day,” President Museveni said on his official X account.
Currently, Uganda and Tanzania are collaborating on the East African Crude Oil Pipeline Project (EACOP), which aims to transport oil from Uganda’s Lake Albert oilfields to the port of Tanga in Tanzania for global export.
The pipeline stretches 1,443 kilometres from Kabaale, Hoima, to the Chongoleani Peninsula in Tanga and is mostly underground to allow free movement of people and animals after the topsoil and vegetation have been restored. Notably, 80 percent of the pipeline passes through Tanzanian territory.
Tanzania eyes benefits
Officials from Tanzania expressed optimism about the project, noting potential advantages from Uganda’s refinery. Dr James Mataragio, the Deputy Permanent Secretary in them ministry of Energy, mentioned that Uganda could supply surplus refined petroleum products to regional markets, including Tanzania.
“Based on their needs, they may sell the surplus to other East African countries, including us,” he noted.
An oil expert, speaking anonymously, highlighted that the refinery could lower petroleum costs across the region and produce valuable by-products, such as liquefied petroleum gas (LPG), which could be distributed throughout East Africa. However, an economist at Dar es Salaam University College of Education (DUCE),
Prof Abel Kinyondo, explained that petroleum pricing is primarily influenced by oligopolistic market forces rather than geographical proximity. “Petroleum prices are collectively determined by major companies. Nevertheless, Tanzania’s proximity to Uganda provides logistical advantages for quicker product delivery,” he said. Since it does not produce crude oil, Tanzania imported refined petroleum products worth $2.627 billion in 2024.
Uganda’s vision
Speaking in Uganda, President Museveni emphasized that the refinery would help transition the country from exporting raw materials to producing and exporting finished petroleum products. “The oil refinery is not just about fuel but also about Uganda producing and exporting refined products instead of importing them. We must stop exporting raw materials and instead add value to everything we produce,” he asserted.
Uganda’s minister of Energy and Mineral Development, Ms Ruth Nankabirwa, also announced the signing on her official X account, stating, “Today, on behalf of the government of Uganda, I signed the Implementation Agreement for Uganda’s Oil Refinery with a capacity of 60,000 barrels per day, marking a historic step in our Nation’s Oil & Gas journey. This is transformative for our economy, our people, and our future.”
With this agreement, Uganda takes a significant step toward becoming a major oil producer, a long-anticipated milestone since the discovery of oil reserves decades ago. Beyond the refinery, President Museveni disclosed that the UAE-based investors signed five additional agreements covering aviation, afforestation, digital land management, logistics, storage facilities, and a comprehensive digital payment system for government transactions.
“I welcome these investments that will spur development in Uganda,” he stated.
Uganda initiated negotiations with Alpha MBM Investments after the Albertine Graben Energy Consortium (AGEC) withdrew from the project.
The $4 billion investment will be executed under a joint ownership structure, with Alpha MBM Investments holding a 60 percent stake and the Uganda National Oil Company retaining 40 percent. Government documents indicate that the refinery project is part of a broader plan to establish a petrochemical industry that leverages Uganda’s oil and gas resources.
The initiative also includes a 211-kilometer multi-product pipeline from Kabaale to a distribution hub in Namwambula, Mpigi District, a refined product storage terminal, and a raw water pipeline from Lake Albert to the refinery.
With the deal now in place, Uganda is set to advance its energy sector, reinforcing its position in the East African oil industry. East African oil industry.
