Tanzania’s compressed natural gas (CNG) market is beginning to move from policy ambition into measurable transport demand.
The opportunity is real, but it is still early. CNG cannot yet replace petrol and diesel at scale, and it will not transform Tanzania’s fuel market overnight.
However, it can become a practical domestic buffer against rising petroleum-import dependence—especially if adoption expands beyond three-wheelers into buses, trucks, port logistics, municipal fleets, and industrial transport.
For investors, the question is not simply: “Is CNG cheaper than petrol?”
The better question is: “Can this specific CNG station, conversion business, or fleet project secure enough local demand, reliable gas supply, and utilisation to generate sustainable returns?”
The Macro Case: Fuel Imports Are Rising
Tanzania’s petroleum-import profile shows why CNG matters.
In the 2024/25 financial year, Tanzania imported 10.66 billion litres of petroleum products, a 15.6% increase from 9.22 billion litres a year earlier. Of that volume, 40.28% was for the domestic market, while 59.72% was transit fuel for neighbouring countries moving through Tanzanian ports.
Domestic petroleum imports were almost flat, declining by 0.46%. But transit imports surged, with transit diesel alone rising 36.21% to 4.56 billion litres.
This creates an important distinction for investors and policymakers:
- Domestic CNG adoption can reduce Tanzania’s exposure to imported petrol and diesel.
- Transit CNG adoption can create commercial opportunities along regional corridors, but it does not directly reduce Tanzania’s domestic fuel-import bill unless transit vehicles refuel with domestically supplied gas.
At the same time, Tanzania holds discovered natural gas reserves of about 57.54 trillion standard cubic feet, according to EWURA. That creates a policy question with real economic weight: can Tanzania use more of its own gas in transport to reduce external fuel dependency, lower logistics exposure, and improve energy security?
The answer is increasingly data-driven.
CNG Demand Is Growing From a Low Base
CNG is not yet large enough to materially replace imported petroleum. But the growth curve is difficult to ignore.
In the 2023/24 financial year, CNG use in vehicles rose by 292%, with average daily refuelling increasing from 490 vehicles to 1,919 vehicles.
The following year, CNG production reached 12.80 million kilogrammes, up from 7.27 million kilogrammes in 2023/24. Vehicles consumed 11.19 million kilogrammes, or 87% of total CNG output, while industrial users consumed 1.40 million kilogrammes and commercial users took 207,902 kilogrammes.
That is strong growth from a low base.
It does not yet change the structure of Tanzania’s petroleum market. Domestic petroleum consumption was 5.12 billion litres in 2024/25, while vehicle CNG consumption was only 11.19 million kilogrammes. But it shows that where supply exists, users are responding.
For investors, this is the key insight: CNG demand is not theoretical. It is emerging—but it is still geographically concentrated and vehicle-segment specific.
The Fleet Mix Shows Where the Opportunity Is
Tanzania’s CNG vehicle fleet is expanding, but adoption is not evenly spread across vehicle classes.
By June 2025, Tanzania had 15,954 CNG vehicles and three-wheel motorcycles, up from about 7,000 a year earlier. The fleet included:
- 11,460 three-wheel motorcycles
- 2,093 hatchbacks
- 1,001 sedans
- 603 trucks
- 451 vans and minibuses
- 312 SUVs and wagons
- 34 buses
The central limitation is clear: adoption remains concentrated in smaller mobility, especially three-wheelers, while penetration in the highest fuel-consuming vehicle classes—trucks and buses—remains very small.
That matters because a station serving 1,000 three-wheelers has a very different demand profile from one serving 100 trucks or 30 buses.
Three-wheelers can generate frequent transactions, especially in dense urban areas, but each purchase is relatively small. Trucks and buses consume far more fuel per vehicle, making them strategically important for station economics—but their CNG fleet is still too small to support broad infrastructure on its own.
Infrastructure Is Beginning to Follow Demand
CNG adoption depends on refuelling confidence.
Fleet owners will not convert trucks or buses if station access is limited, queues are long, or supply is unreliable.
The early network is expanding. In 2024/25, EWURA issued 28 construction approvals and seven operation licences for natural-gas supply facilities and CNG filling stations, mainly in Dar es Salaam and Pwani.
As of June 2025, Tanzania had 186.177 kilometres of natural-gas distribution pipelines and four CNG receiving terminals supplying gas through virtual pipeline systems.
CNG filling stations increased from five in 2023/24 to nine in 2024/25, with operators located mainly in Dar es Salaam, alongside own-use facilities such as Dangote Cement’s stations in Mtwara and Mkuranga.
For a national transport economy, that remains a small base.
Heavy transport needs corridor coverage, not only urban visibility. Stations must be placed near port gates, truck yards, inland container depots, bus terminals, industrial parks, cement routes, mining corridors, and major highways.
Dar es Salaam and Pwani are the logical first markets because they combine port activity, industry, fleet concentration, and consumer demand.
The next stage would need to follow freight and passenger corridors toward Morogoro, Dodoma, Tanga, Mtwara, Mbeya, Mwanza, and regional routes serving Zambia, Rwanda, Burundi, Malawi, Uganda, and the Democratic Republic of Congo.
Petroleum Demand Projections Sharpen the Urgency
EWURA says Tanzania’s petroleum demand has followed a long-term upward trajectory, with historical data indicating average annual growth of about 6%.
If domestic petroleum consumption grows at that historical average, demand would rise from 5.12 billion litres in 2024/25 to about 6.85 billion litres by 2029/30. The transport-heavy retail segment would rise from 3.16 billion litres to roughly 4.24 billion litres over the same period.
These are indicative calculations based on EWURA’s historical growth reference, not official forecasts. But they show the scale of the challenge.
Tanzania does not need CNG to replace all petroleum products for the fuel to matter. It needs CNG to slow the growth of imported petrol and diesel in the parts of the economy where fuel consumption is highest.
Even after rapid growth, CNG remains marginal relative to Tanzania’s petroleum market. Vehicle CNG consumption of 11.19 million kilogrammes in 2024/25 is still small when measured against domestic petroleum consumption of 5.12 billion litres.
Its energy-security value therefore depends less on current volumes and more on whether adoption can move into high-consumption fleets such as trucks, buses, port-logistics vehicles, municipal fleets, and industrial transport.
Without that shift, CNG will remain a cost-saving niche rather than a national energy-security strategy.
What Investors Must Prove First
Before investing in a CNG station, conversion centre, mobile refuelling unit, or fleet-conversion project, investors should prove five things.
- Is There Enough Local Demand?
National CNG growth does not guarantee demand at a specific site.
Investors must define a realistic catchment area and assess:
- How many CNG vehicles operate nearby
- The vehicle mix: three-wheelers, cars, taxis, vans, buses, and trucks
- Daily refuelling patterns
- Fleet routes and depot locations
- Competing CNG stations
- Distance customers must travel
- Expected station capture rate
A useful demand formula is:
For example, 1,000 vehicles refuelling every two days at 8 kg per visit would generate approximately 4,000 kg per day.
But the estimate must be adjusted by vehicle type. A station serving many three-wheelers will have frequent but smaller purchases. A station serving trucks or buses may have fewer customers but much larger purchases.
- Is Gas Supply Reliable and Affordable?
Tanzania has gas, but a CNG station needs gas delivered to the right place, at the right pressure, at a competitive cost.
Investors must assess:
- Access to pipeline gas, compression capacity, or transported gas
- Gas purchase price and contract terms
- Compression capacity and electricity availability
- Distance from gas infrastructure
- Storage, pressure, and dispensing requirements
- Competition for gas from power generators and industrial users
- Supply reliability during maintenance, demand peaks, or infrastructure disruptions
Tanzania’s gas production of 62.65 billion standard cubic feet in 2024/25 was slightly below consumption of 63.30 billion standard cubic feet. That does not mean CNG cannot grow, but it does mean investors should not assume additional CNG demand will automatically be met without careful supply planning.
- Can the Station Achieve Enough Utilisation?
A CNG station earns money through utilisation: the number of vehicles served, the volume sold, and the frequency of repeat purchases.
A station may have modern compressors, good land, and strong branding, but still fail if too few vehicles refuel there.
Investors should calculate:
- Expected daily kg sold
- Expected daily revenue
- Gas purchase cost
- Compression and electricity cost
- Staffing and maintenance costs
- Land or lease costs
- Loan repayments
- Break-even volume
- Return on investment
The break-even point depends on station size, capital cost, gas price, selling price, operating costs, and financing structure.
A larger station with high compression capacity, expensive land, and significant debt will need more daily volume than a smaller, lower-cost station.
- Is the Vehicle-Conversion Economics Real?
CNG conversion can be attractive when fuel savings are large enough to recover the conversion cost within a reasonable period.
But conversion economics vary by vehicle type, mileage, fuel price, maintenance quality, and financing terms.
Investors and fleet owners should test:
- Conversion cost
- Expected fuel savings per kilometre
- Daily distance travelled
- Petrol or diesel baseline cost
- CNG price and refuelling access
- Maintenance and inspection requirements
- Vehicle resale value
- Financing cost
- Payback period
A conversion may make sense for a high-mileage taxi, delivery vehicle, bus, or commercial fleet. It may make less sense for a low-mileage private vehicle with poor access to CNG stations.
- Is the Business Model Clear?
“CNG investment” can mean several different businesses:
- Building a CNG filling station
- Operating a mobile CNG refuelling unit
- Running a vehicle-conversion workshop
- Financing vehicle conversions
- Supplying fleets with CNG
- Developing a station network
- Partnering with an oil-marketing company or gas supplier
Each model has different capital needs, risks, revenue drivers, and customer requirements.
Investors should define the model before spending money. A station without enough vehicles is a problem. A conversion business without enough refuelling access is also a problem. A fleet project without credible conversion economics is another.
The Risks Investors Must Manage
CNG is promising, but it is not risk-free.
Key risks include:
- Demand risk: Too few converted vehicles near the station.
- Supply risk: Gas availability, pressure, transport, and pricing uncertainty.
- Utilisation risk: Station capacity exceeds actual demand.
- Conversion risk: Poor-quality conversions, weak maintenance, or customer dissatisfaction.
- Financing risk: Customers cannot afford conversion costs or vehicle financing.
- Regulatory risk: Safety, licensing, inspection, and compliance requirements.
- Competition risk: Nearby stations capture the same fleet or corridor demand.
- Price risk: Changes in gas, petrol, diesel, electricity, or foreign-exchange costs.
A CNG project should be stress-tested against lower vehicle growth, lower utilisation, higher gas costs, and delayed conversion adoption.
The Bottom Line
CNG can be a good investment in Tanzania—but only for investors who prove the fundamentals first.
Tanzania has gas, a growing vehicle fleet, expanding refuelling infrastructure, and supportive policy momentum. But CNG remains a small part of total gas consumption and an even smaller part of the petroleum market.
The near-term opportunity is not mass conversion of every private car. It is targeted adoption by high-mileage fleets, buses, logistics operators, taxis, and commercial users operating on predictable corridors.
The best opportunities will be found where local demand, fleet density, gas supply, and station economics overlap.
Know before you build. Invest with evidence. Build with Afifa Energy.
Considering a CNG Investment?
Tanzania Petroleum provides market intelligence, bankable feasibility studies, and business-planning advisory for CNG filling stations, fleet-conversion businesses, mobile refuelling operations, and natural-gas distribution projects in Tanzania and East Africa.
Book a discovery call with Tanzania Petroleum to assess your site, demand, gas supply, regulatory framework, and financial viability before you commit capital.
