The PPPRA products pricing template (Daily & Monthly) is a pricing information sheet detailing the components used in deriving the PPPRA daily/monthly guiding products prices. It employs Import Parity Principle and this includes;
(i) Landing Cost of Products
(ii) Margins for the Marketers, Dealers, and Transporters
(iii) Jetty-Depot Through-put
(iv) Other charges and Taxes
The objectives of the pricing template are:
- Full cost recovery
2.0. DESCRIPTION OF COMPONENTS ON THE PRICING TEMPLATE With Effect from February 2009
1. PRODUCT COST ($/MT)
This is the monthly moving average cost of products cost as quoted on Platts Oil gram. The reference spot market is North West Europe (NWE).
2. FREIGHT ($/MT)
This is the average clean tanker freight rate (World Scale (WS) 100) as quoted on Platts. It is the Cost of transporting 30, 000mt (30kt) of product from NWE to West Africa (WAF). Trader’s margin of $10/MT is also factored into the Freight cost.
3. LIGHTERING EXPENSES ($/MT)
STS/Local Freight charge is the cost incurred on the transshipment of imported petroleum products from the mother vessel into daughter vessel to allow for the onward movement of the vessel into the Jetty. This charge includes receipt losses of 0.3% in the process of products movement from the high sea to the Jetty and then to the depot. The mother vessels expenses are based on the allowable 10 days demurrage exposure at the rate of $28,000 per day.
The Lightering Expenses also includes the Shuttle vessel’s chartering rates from Offshore Lagos to Lagos and Port Harcourt which currently stands at N2.00 per litre and N2.50 per litre respectively. Transshipment (STS) process is as a result of peculiar draught situation and inadequate berthing facilities at the Ports.
4. NIGERIA PORT AUTHORITY (NPA) CHARGE ($/MT
It is the cargo dues (harbor handling charge) charged by the NPA for use of Port facilities. The charge includes VAT and Agency expenses.
Currently, NPA charge attracts $10.50/MT on the pricing template.
It refers to stock finance (cost of fund) for the imported product. It includes the cargo financing based on the International London Inter bank Offered Rates (LIBOR) rates+5% premium for 30 days (for Annual Libor rate of 2.07%, LIBOR cost would be 7.07%). Also included in the Finance cost is the inertest charge on the subsidy element being awaited for an allowable 60 days period at Nigerian Inter Bank Offered Rate (NIBOR) rate of 22%.
6. JETTY DEPOT THRU PUT
This is the tariff paid for use of facilities at the Jetty by the marketers to move products to the storage depots. The value is currently N0.80/litre.
7. STORAGE CHARGE
Storage Margin is for depot operations covering storage charges and other services rendered by the depot owners. The charge is currently N3.00/litre.
7. STORAGE CHARGE
8. LANDING COST
It is the cost of imported products delivered into the Jetty depots. It is made up of components highlighted above (1, 2, 3, 4, 5, 6 and 7).
9. DISTRIBUTION MARGINS
These include Retailers (N4.60 per litre), Transporters margins (N2.75 per litre), Dealers margin (N1.75 per litre), Bridging Fund (plus Marine Transport Average) (N3.95 per litre) and Administrative charge (N0.15 per litre). This amounts to N13.20 per liter on the template. The overhead cost and other running costs have been considered in the determination of these margins.
These include highway maintenance, government, import and fuel taxes. It has the overall objectives of revenue generation, social infrastructure investment and servicing and efficient fuel usage. Presently, all these attract zero taxes.
11. RETAIL PRICE
This is the expected pump price of petroleum product at retail outlet. It is made up of landing cost of imported product plus reasonable distribution margins.
See below for a detailed template on the computations