Museveni's Dangote oil refinery dilemma

Uganda President Yoweri Museveni during the groundbreaking of the Dangote East Africa Petroleum Refinery in Lamu on September 30, 2026. [PCS]

President Yoweri Museveni has blown hot and cold about the Dangote East African Refinery that broke ground on Wednesday and left the region unsure whether Uganda would invest in the project.

At the ceremony Museveni said Uganda was more focused on putting up its own refinery in Western Uganda, where it will refine crude oil produced at the oil fields at Hoima.

The Ugandan president also said his country was keen on the proposed Tanga refinery that Uganda and Tanzania are jointly developing in the coastal town.

The three projects, all of them at their early stages, are despite observers noting that a joint project for EAC would have offered more benefits as well as eased capital raising.

“This one (Lamu refinery) I support but I will not invest yet,” said Museveni, further explaining that Uganda has been in plans to build another refinery in Hoima that will process Uganda oil for local use as well as export to neighbouring countries, including parts of Kenya and Tanzania, that currently pay high pump prices due to the high cost of moving fuel from the coast to the hinterland. He added that Uganda was also committed to the Tanga refinery.

“We are going to build a small refinery in Uganda. We had planned this long ago and we cannot change that. The refinery will produce for Uganda and interior parts of Africa.”

“We had also discussed with President Samia (Suluhu) about building the refinery in Tanga but there were some problems... I want to check on that first. I want to discuss with Samia and Ruto and find out what happened to that refinery of Tanga so that we harmonise.”

There have been arguments that EAC should have pooled its resources together to build a joint refinery that would refine crude oil discovered in the region. Uganda expects to produce 60,000 barrels per day from the oil fields at Hoima while Kenya expects its production to reach a peak of 50,000 barrels of oil per day in 2032. This might mean that the oil refined by the different refineries in the region will heavily import crude oil, which could mean that Kenya and the region are not shielded from the volatility of the international oil markets.

Museven, however, sees no problem with three refineries going ahead, noting that “we need more than just two or three refineries.”

He explained that a refinery is key for Uganda, which has resisted exporting crude oil without first having a local processing facility. The country discovered oil in 2006 and is only expected to start exporting by June next year.

Museveni told off critics of the planned refineries in the region, noting that Uganda had been dissuaded from setting up a refinery “because refineries do not make profits”. He however embarked on a fact finding mission including to oil producing countries including Iran, where he found the countries have multiple refineries, all of which are profitable.

On account of this, Museveni said, there was a place for the three refineries being pursued by the three EAC countries.

The idea of the Tanga refinery was suggested by President Ruto in April this year at an infrastructure conference in Nairobi that was also attended by Musevenni, who appeared to be in agreement.

There however to have been cracks in communication at the top level with President Suluhu claiming she was unaware and at some point asked Ruto to explain at a public forum how EAC countries reached the decision to set up a joint refinery at Tanga. Tanzania and Uganda later agreed to build the refinery without Kenya. The two countries signed a memorandum of understanding with Vitol Bahrain in August this year to develop the refinery as Kenya pursued the Lamu refinery with Dangote.

Tanga is increasingly being viewed as an emerging energy hub. Other than the proposed refinery, the East African Crude Oil Pipeline (EACOP), which Uganda will use to export its crude, terminates at Tanga.

Senior Kenya government officials defended Museveni’s position and tried to put context to what he said on Wednesday.

Kenya’s High Commissioner to Uganda Ababu Namwamba explained that Uganda was committed to the project and only that it had decided to hold off on investing in the refinery.

Namwamba defended Museveni’s position on Thursday, saying the Ugandan President’s decision not to invest in the Lamu refinery “yet” should not be interpreted as a rejection of the project or a retreat from regional cooperation.

“The key word here is ‘yet’. That means Uganda is fully engaged in this cooperation. Museveni is a champion of integration of East Africa and the rest of the continent. He never tires to remind us that we are stronger together. I have no doubt about his commitment to the collaborative and joint efforts of our countries,” Namwamba told The Standard.

At the same time, the State Department for East African Community Affairs said the refinery represents an opportunity for East Africa to expand its refining capacity and reduce exposure to disruptions in global oil supply chains.

Principal Secretary for EAC Affairs Dr Caroline Karugu said the Dangote Refinery would have economic benefits beyond Kenya and would strengthen regional energy systems and support cross-border trade in refined petroleum products. She added that it would strengthen regional energy security, support industrialisation and reduce exposure to disruptions in global supply chains.

“It is not merely a game-changer for Kenya; it is a catalyst for East Africa’s economic integration and prosperity,” Karugu said.

The refinery is also expected to create opportunities for value addition and related industries, including logistics, manufacturing, technology and other services linked to the energy sector.

According to Karugu, such investments could generate direct and indirect employment opportunities, particularly for young people, while supporting technology transfer and the development of local industrial capacity.