A few thoughts on the new PMS price announced by PPMC
Nov 11, 2020. PPMC published a memo indicating an increase in PMS, eff. Nov 13:
• Ex-depot (with collection): N155.17 
• Estimated Min. Pump Price: N153.86/litre
PPMC included a Price Proposal Template for reference
Typically, PPPRA publishes PMS Price Templates in Nigeria. Last template published via their website was for Mar 6, 2020.
Apr 2020. No template, just a clarification memo on the expected price band N123.50 - N125/litre

May 2020. PPPRA released a memo on market based pricing for PMS implying marketers have freedom to determine product price. PPPRA would continue to guide on market trends
Jun 2020. PPPRA advised on a PMS price band of N121.50 - N123.50/litre via a memo dated May 31

Aug 2020. PPMC announces new pump price of N138.62/litre.
Basically, PPPRA did NOT publish any PMS pricing templates from May - Oct 2020.
Sep 2020. PMB submits revised PIB to NASS. Rumored details include the scrapping of units like PPPRA and NNPC in it's current form.
Following this, and recent announcements on pricing, you start to wonder if PPMC assumed PPPRA responsibilities, esp in light of the PIB in review?
Btw, also noted that...

- PPPRA always advised a rate band via their template

- PPMC rather specifies a particular rate
Also, it appears we either now have 2 pricing templates or 1 outgoing and 1 incoming.

Cos PPMC Price Proposal Template is different from PPPRA Pricing Template.
PPMC Price Proposal Template introduces new cost items e.g. Demurrage provision, Inspection, Dischage loss, Loss recovery, Coastal margin.
Now, a quick reconciliation of PPPRA vs. PPMC Pricing Templates.

*Items in red, blue highlight are add-on's in the PPMC template
Per reconciliation, the recent increase in PMS price for Nov is mainly driven by:

1. Increased freight cost from N5.04 to N12.54/litre .. almost 3 times the Sept/Oct cost... noted as DSDP winter premium - impact of bad weather, poor visibility, increased travel duration or?
2. Increased Lightering Expenses: from N4.57 to N6.17/litre

3. Note that Product (crude) Cost $/MT decreased from N114.73 to N111.35
A few other concerns with the PPMC Template:

1. Demurrage provision: N2.50/litre. Lightering expenses already include a 10 day coverage for demurrage already. Are we double dipping?
2. Dischage loss: N0.11/litre. Lightering expenses also include a 0.3% factor for losses incurred in transferring product across coastal vessels e.g. mother to daughter vessel to enable access to jetty. Another case of double dipping?
3. Loss recovery: N2/litre. This is confusing. First, lightering expenses, then discharge loss, then loss recovery? What loss is being transferred to the customer here that has not been accounted for already? Clarity needed
4. Statutory Collections: N12.78/litre. I reason that this tallies with PPPRA Distribution Margins (Transporters, Bridging Fund,  MTA, Admin charge).

However, under PPPRA, such margins are fixed.. but PPMC shows it as variable from Sept - Nov. Same item or different?
So long, short...

• No clarity of pricing policy. Have we deregulated or not?

• No clarity on regulatory responsibilities. Is it PPPRA or PPMC?

• Which Pricing Template governs? PPPRA or
PPMC? PPMC Template needs to be opened up.. cos the more you look, the less you see
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