Pricing policy in the Tanzania Railway Corporation and its relationship to the performance of the Railway transport mode in Tanzania

The railway system in East Africa was built with the purpose of making contributions to economic development of the respective countries namely, Kenya, Uganda and Tanzania. Also the railways were required to be financially self-supporting. This necessitated the use of the value of service pricing system in the railways in order to accomplish these objectives. This dissertation investigates this pricing policy as has been used in Tanzania ever since the railway system was built and the problems brought about by road competition. Road competition.in East Africa in general can be traced as far back as in the 1930s. In the late 1960s and 1970s the problem of competition became acute calling for remedial action. Two methods were used by the railways to combat competition, namely the use of government controls and tariff changes. Both of these methods could not cure the railways financial ills because government controls were not restrictive enough and tariff changes indicated one characteristic of the erosion and ultimate removal. of concessionary rates for low value agricultural commodities. We hence analyse a different remedial action and most of the assumptions advanced have been confirmed by the theoretical analysis, and we have recommended a pricing policy based on the cost of service charging principles for the Tanzania Railways Corporation.