Pricing strategies for petroleum products in Tanzania

A major input to the economic process is energy, especially petroleum products. Petroleum product prices in Tanzania are determined mainly on the basis of political considerations, with the aim of ensuring sufficient Government revenue in the form of taxation. TPDC pricing strategies do not deliver satisfaction to both the company and petroleum product buyers. The major impact on the petroleum prices is TIPER processing costs associated with production constraints which restrict the market from operating efficiently. Three hypotheses have been advanced to describe the situation. The first hypothesis concerns, the factors affecting pricing objective. The second hypotheses concern the effect of cost-plus pricing strategies. The third hypothesis concerns effect of liberalization of Petroleum Imports on pricing. The results confirm other studies, that the petroleum product prices are affected by taxation policy; monopolistic conditions which lower distributor margin and customer satisfaction and that liberalisation of petroleum imports is likely to create competition and satisfy buyers of petroleum products.