By Habitat Media Reporter
Dar es Salaam. Tanzania spent about Sh9.1 trillion on petroleum imports in the year to August 2026, a 51.7 per cent increase from the previous year, putting renewed focus on the country’s dependence on imported fossil fuels and the need to accelerate investment in alternative sources of energy.
The Bank of Tanzania (BoT) said the value of petroleum products imported during the year reached $3.425 billion (Sh9.1 trillion), up from $2.257 billion (Sh7.22 trillion) in the year to August 2025. The latest Monthly Economic Review was published in September 2026.
The increase accounted for about one-third of the overall rise in Tanzania’s import bill, which reached $21.27 billion, equivalent to about Sh56.15 trillion, during the year under review.
According to the central bank, the increase in the petroleum import bill reflected higher import demand and rising global oil prices amid continuing conflict in the Middle East.
The development is significant for Tanzania because higher spending on imported fuel means more foreign currency is required to meet domestic energy demand, potentially putting additional pressure on the country’s foreign-exchange resources and the earnings generated from exports.
Ecomost and trade expert Massawe Assey said the Sh9.1 trillion bill should be viewed beyond the cost of purchasing petroleum products because fuel imports also involve transportation, insurance and other associated costs.
“Beyond the cost of purchasing petroleum products, Tanzania has also seen an increase in expenditure on transporting imported goods into the country,” he said.
Mr Assey said the trend should strengthen the case for greater investment in domestically generated electricity and natural gas, particularly in sectors such as manufacturing and transport where petroleum products can, in some circumstances, be substituted.
“Every significant increase in global oil prices raises the cost of production, transportation and other services across the country,” he said.
The environmental dimension is equally important.
Tanzania’s National Carbon Trading Guidelines identify energy and transport as priority sectors for reducing greenhouse-gas emissions.
The guidelines note that increased motorised transport dependent on fossil fuels contributes to national emissions and identify cleaner energy in transport, mass rapid transit and non-motorised transport as potential areas for emissions reduction.
The World Bank has similarly warned that Tanzania faces a choice of development pathways in which cleaner production technologies, modern energy and climate-resilient transport can help reduce pollution and environmental degradation as the economy industrialises.
The bank’s Tanzania Country Climate and Development Report says the country has an opportunity to pursue a low-carbon growth path while protecting the environment and supporting economic development.
This means that reducing petroleum dependence is not only a question of saving foreign exchange. It could also help Tanzania reduce emissions from transport and industry, provided the transition is based increasingly on low-carbon electricity and other cleaner technologies.
Mr Assey said natural gas could play a role in the transition because Tanzania has domestic reserves and already uses gas in electricity generation.
He, however, said the objective should not be to eliminate petroleum products immediately but to reduce their use where electricity, gas or other alternatives can be deployed efficiently.
The government has already introduced measures intended to encourage such a shift.
From July 1, 2026, the government introduced various tax incentives targeting the energy sector, including measures aimed at encouraging the conversion of vehicles from petroleum fuels to gas and electricity, as well as investment in gas infrastructure.
The Ministry of Finance has presented the 2026 Finance Bill as part of the government’s wider economic agenda for implementing the National Development Vision 2050 and the 2026/27–2030/31 Five-Year Development Plan.
Previous tax measures have also supported the use of compressed natural gas, including VAT treatment for piped natural gas intended for conversion to CNG for motor vehicles and imports of CNG plant equipment.
The environmental case for the transition is broader than transport.
The World Bank’s analysis of Tanzania’s energy sector says the country’s clean-energy transition requires greater use of alternatives such as electricity, biogas and other modern fuels, while improved energy efficiency can reduce pressure on forests and emissions.
At the continental level, Tanzania is also part of the Mission 300 agenda, which seeks to expand electricity access while scaling up renewable energy and clean cooking. The initiative combines grid expansion, renewable and distributed energy, private investment and utility reforms.
For Tanzania, the challenge will therefore be to ensure that the response to rising oil costs does not simply replace one fossil-fuel dependence with another, but gradually expands reliable electricity, renewable energy, cleaner transport and energy efficiency.
That transition could reduce the amount of foreign currency spent on imported petroleum while supporting Tanzania’s climate commitments and reducing pollution.
The scale of the challenge is underscored by the rest of the import bill. Intermediate goods accounted for $11.91 billion, followed by capital goods at $4.1 billion. Within intermediate goods, industrial raw materials and supplies accounted for $5.72 billion.
The figures underline the close relationship between energy costs, industrial production and trade. As Tanzania seeks to expand manufacturing and exports, reducing exposure to volatile international fuel prices could become increasingly important.
The question is therefore no longer only how much Tanzania spends importing oil, but how efficiently the country can use its domestic energy resources to support production, exports and economic growth while reducing the environmental cost of that growth.