Tanga energy plan: How Vitol became the private power in East Africa's oil - UG Standard - Latest News
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The Memorandum of Understanding was signed on Thursday at State House in Dar es Salaam, witnessed by Tanzanian President Samia Suluhu Hassan and her Ugandan counterpart, Yoweri Museveni, who was on a two-day working visit at Samia’s invitation. When Presidents Yoweri Museveni and Samia Suluhu Hassan watched their two national oil companies sign a deal to build a $20bn energy hub at the Tanzanian port of Tanga on Thursday, a third name sat on the same document: Vitol Bahrain E. C. , a subsidiary of the world’s largest independent oil trader. Its presence was easy to overlook amid the presidential ceremony. It should not be. Over roughly three years, a single privately held Swiss-Dutch trading house has moved from supplier of last resort to a structural fixture in how East Africa buys, finances, stores and now refines its fuel. The Tanga agreement, signed by the Uganda National Oil Company (UNOC), Tanzania’s TPDC and Vitol, is the latest and largest link in that chain. But it rests on a footprint the trader has been assembling across the region for years, one that now touches almost every stage of the petroleum value chain. At the retail end, Vitol already controls the pumps. Through Vivo Energy — the business built on Shell’s former African downstream network, which Vitol took full ownership of in 2022 — the company runs thousands of filling stations across more than 20 African countries, Uganda, Kenya, Tanzania and Rwanda among them. A 2024 agreement to absorb further Shell downstream assets deepened that reach. When a motorist fills up in Kampala or Nairobi, there is a growing chance the fuel and the forecourt trace back to the same trader. At the import end, Vitol became Uganda’s lifeline. In 2023, Kampala broke with Kenya’s government-to-government fuel arrangement, accusing intermediaries of inflating its pump prices, and empowered UNOC to import directly. The supplier it turned to was Vitol, under a five-year deal that took effect in May 2024. Uganda imports roughly 2. 5 billion litres of fuel a year, worth about $2bn; Vitol now sits at the head of that supply line. At the financing end, the trader became Uganda’s creditor. In December, Vitol agreed to lend UNOC up to $2bn over seven years, at an interest rate of 4. 92%, money earmarked for storage, terminals, pipelines and Uganda’s long-delayed Hoima refinery. A commodity trader financing the state oil company whose fuel it also supplies, in a market whose retail stations it part-owns, is a concentration of roles that would draw scrutiny in most jurisdictions. The Tanga hub now extends that position into cross-border infrastructure and refining. Vitol enters as the private investor alongside two state firms, in a project their governments say could attract more than $20bn. If built as described — storage, refining, logistics and trading on Tanzania’s coast — it would place the trader inside the physical machinery of East Africa’s energy exports, not merely its imports. None of these arrangements is unlawful, and no impropriety has been alleged in any of the company’s East African deals. Traders increasingly take equity in the assets they once merely served, and Vitol’s regional expansion mirrors a wider industry shift from lean merchant trading into owning refineries, terminals and even upstream production. The company has pursued the same strategy from Ivory Coast to the Republic of Congo, farming into Eni-led projects worth well over a billion dollars. But Vitol carries a record that makes the scale of its regional role a matter of legitimate public interest. In December 2020, the trader’s US affiliate admitted to a decade-long scheme of paying bribes to officials at state oil companies in Brazil, Ecuador and Mexico, resolving investigations by the US Department of Justice and the Commodity Futures Trading Commission for combined penalties of about $163m. Prosecutors described payments routed through shell companies, sham consulting contracts and fake invoices to secure preferential access to oil cargoes. A former Vitol trader was later convicted by a US jury on foreign-bribery and money-laundering charges. The misconduct did not touch East Africa. It did establish, in a US federal court, how the company had operated when dealing with state-owned oil firms elsewhere. That history sharpens an obvious question as Vitol’s East African position widens: who is watching the watcher? Uganda and Tanzania have signed a private trader into supply, credit, retail and now infrastructure, largely through direct arrangements rather than open competitive tenders. The parliaments and auditors-general of both countries have shown, in other cases, that scrutiny of large energy contracts often arrives years after the ink dries, if at all. Publicly, both governments frame the partnership as a win for regional value and sovereignty. Uganda’s Minister of Energy and Mineral Development, Monica Musanza Musenero, described the Tanga projects as strategic investments to create jobs and deepen regional trade rather than mere infrastructure. Tanzania’s Minister of Energy, Deo Ndejembi, said the hub would transform the region’s petroleum resources into prosperity. Neither minister addressed the growing concentration of that value chain in the hands of one private firm. Vitol’s answer, consistent across its expansion, is commercial logic: it brings the capital, the trading networks and the global reach that state firms lack, and it takes the risk that governments cannot. That case is real. So is the counter-weight. A landlocked country that traded dependence on Kenyan middlemen for dependence on a single global trader has not removed the vulnerability that drove the switch — it has relocated it. As Tanga moves from memorandum to construction, the central question for East Africa is no longer whether Vitol is powerful in its oil sector. It is how much of that sector one private company should be allowed to hold, and who decides.