Pricing Template – PMS(Premium Motor Spirit- Petrol)
| PPPRA PRODUCT PRICING TEMPLATE (PMS) | ||||||
| Based on 30 Days Moving Average Platts Posted Price for: | ||||||
| 11th April – 11th May, 2016 | ||||||
| PMS | ||||||
| Naira/Litre | ||||||
| A | Cost Elements: | |||||
| 1 | C+F | 109.05 | ||||
| 2 | Lightering Expenses | 4.56 | ||||
| 3 | NPA | 0.84 | ||||
| 4 | NIMASA Charge | 0.22 | ||||
| 5 | Financing | 2.51 | ||||
| 6 | Jetty Thru’ Put Charge | 0.60 | ||||
| 7 | Storage Charge | 2.00 | ||||
| 8 | Landing Cost | 119.78 | ||||
| B | Distribution Margins: | |||||
| 1 | Retailers | 6.00 | ||||
| 2 | Transporters Allowance (NTA) | 3.36 | ||||
| 3 | Dealers | 2.36 | ||||
| 4 | Bridging Fund | 6.20 | ||||
| 5 | Marine Transport Average (MTA) | 0.15 | ||||
| 6 | Admin Charge | 0.30 | ||||
| 7 | Total Margins | 18.37 | ||||
| C | Total Cost | 138.15 | ||||
| D | Retail Price Band | 135 – 145 | ||||
Shown above is the PPPRA pricing template for Premium Motor Spirit, PMS (Petrol) for the new price regime.
One of the reasons given for the new pricing regime is the need to save funds for infrastructural developement. Another reason that is not so often mentioned is the need to discourage the diversion of this scarce commodity to other countries, where they are sold at higher prices (Niger sells at about N180).
Looking at the template, item 4, highlighted in red, under distribution margins, is bridging fund.
This fund is aimed at making the price of PMS uniform nationwide. That is, the government pays(with tax payers' money remember) a dealer/marketer, major or minor, for the movement of PMS to distant locations like Sokoto.
This way the marketer in Sokoto does not have to transfer the cost of transport from Lagos(landing point) to Sokoto(retail point). Thus, on paper, consumers in Sokoto, Maiduguiri, Enugu or Abakaliki will buy PMS at the same price. The big question is, is this the reality? Story for the gods. Thus the aim of bridging fund is defeated.
As mentioned earlier, one of the seldom mentioned scourge of the petroleum downstream sector is the diversion of PMS to other countries. These diversions still happen. Now, think of it, the FG pays bridging fund (for a 33k litre truck @ N6.20, we have N204,600) to a marketer in Sokoto and instead of selling in Sokoto, he diverts to Niger republic and sells at about N180. Does this happen, YES! N204,600 extra into the pocket of the marketer, plus the whatever margin selling in Niger brings.
The big question then is, why do these things in half measures. It is either we are doing it or not. Why don't we fully deregulate and scrap PPPRA and truely let market forces come into play instead of saying we want to save money for the government but end up giving tax payers' money to FANTASTICALLY crafty PMS marketers.
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