Tanzania’s $1.2 billion fertiliser deal promises to end imports
From right to left: TIC executive director Gilead Teri, commissioner and board member of ESSA Industries Rahul Puri, TPDC managing director Francis Mwakapila and TFRA executive director Joel Laurent signing the MOU in Dar es Salaam yesterday. PHOTO | THE CITIZEN CORRESPONDENT
What you need to know:
- The partnership, involving the TPDC and the TFRA, is expected to revolutionise the agricultural sector and create hundreds of thousands of jobs
Dar es Salaam. Tanzania is poised to become self-sufficient in fertiliser production after signing a landmark $1.2 billion deal with Indonesian firm ESSA Industries.
The agreement aims to utilise the country’s abundant natural gas reserves to produce urea fertiliser within the next five years.
The partnership, involving the Tanzania Petroleum Development Corporation (TPDC) and the Tanzania Fertiliser Regulatory Authority (TFRA), is expected to revolutionise the agricultural sector, create hundreds of thousands of jobs and reduce the government’s fertiliser subsidy burden.
During the MOU signing ceremony, a commissioner and board member of ESSA Industries, Mr Rahul Puri, highlighted the transformative impact of the project.
He said that Tanzania’s role in facilitating fertiliser importation and transportation to neighbouring landlocked countries will be greatly enhanced by converting natural gas into fertiliser.
“We have observed that the government has been shouldering a substantial subsidy to ensure that farmers have access to fertilisers since the Covid-19 pandemic.
By implementing our gas pricing model, we aim to eliminate this subsidy, thereby providing considerable relief to the national treasury,” he said.
Currently, Tanzania allocates approximately Sh500 billion annually for fertiliser subsidies.
The new project promises to reduce this financial burden while bolstering the country’s economic standing.
He said by producing and exporting fertiliser, Tanzania will not only decrease its reliance on expensive imports but will also generate foreign currency, boosting its financial resources.
The project’s potential extends beyond Tanzania’s borders.
The fertiliser produced will be distributed across the country and exported to several neighbouring countries, including Zambia, Congo, Uganda, Kenya, Rwanda, Burundi, and Malawi.
Many of these countries, being landlocked, face challenges in importing essential goods, making Tanzania’s role as a regional fertiliser hub particularly valuable.
Mr Puri highlighted that this strategic approach will position Tanzania as a key player in regional agriculture.
“By becoming the primary channel for domestic fertiliser distribution to these countries, Tanzania will not only enhance its agricultural growth but also strengthen its economic position within the region.
This initiative has the potential to sustain and further develop the agricultural sector in Tanzania,” he said.
Additionally, he mentioned that approximately 400,000 jobs will be created as a result of the project.
The TFRA executive director, Mr Joel Laurent, echoed Puri’s sentiments, describing the project as a game-changer for the country’s agricultural sector.
Mr Laurent provided insight into Tanzania’s current fertiliser dependency, noting that about 87 percent of the fertilisers used in recent seasons are imported.
“Despite recent increases in local fertiliser production—from 42,000 metric tonnes in 2021 to 158,000 metric tonnes in 2024—the sector remains heavily reliant on imports, particularly for nitrogenous fertilisers and raw materials,” he said.
He said that the new facility will play a crucial role in achieving Tanzania’s goal of self-sufficiency.
“Given Tanzania’s strategic location and the opportunities available, this facility aims not only to replace imports but also to establish the country as a regional hub for fertiliser supply
Our objective is to meet the national demand for fertilisers by 2030 and reduce our dependency on imports,” he explained.
Mr Laurent also highlighted the significant growth in domestic fertiliser consumption, which has been increasing at an average annual rate of 30 percent from 2021 to 2022.
“With this growth trend, we anticipate that fertiliser consumption will be more than double by 2029, and we will exceed our needs as a country when the new facility is expected to be fully operational,” he added.
This growth provides a substantial market opportunity for the planned investment and aligns with Tanzania’s strategic vision for agricultural development.
On the other hand, TPDC Managing Director Francis Mwakapila provided further details about the project’s gas requirements.
According to Mwakapila, ESSA Industries will initially require 70 million standard cubic feet of gas, starting in 2027, with the demand potentially increasing to up to 100 million cubic feet over 20 years. While Tanzania’s current gas reserves are approximately 54.57 trillion cubic feet.
“This means that supplying 70 million standard cubic feet to ESSA is a manageable quantity, given our extensive reserves,” he said.
He also noted that the agreement focuses on sharing data regarding gas availability, with plans to move forward with a gas sales agreement shortly.
“Following the signing of this MOU, we expect to proceed to the next phase of formalising the gas sales agreement and commence the supply of gas to ESSA,” he revealed.
However, the minister of State in the President’s Office for Planning and Investment, Prof Kitila Mkumbo, underscored the project’s urgency.
He urged ESSA and TPDC to consider accelerating the project timeline from five years to three or four years.
“Given the project’s critical role in advancing agricultural development, driving industrial transformation, and fostering overall economic growth, expediting its implementation is essential.
By doing so, we can maximise the benefits of this initiative before the end of President Samia Suluhu Hassan’s tenure,” Prof Mkumbo stated.
