1. Nigeria Downstream Brief | Vol_1 Jan 30th 2015
Jan 16th 2015 PMS Price Adjustment Evaluation
In order to evaluate the current downward review in the regulated pump price of PMS to N87 per
litre from N97 per litre vis-à-vis determine the most likely Open Market Price(OMP), the PPPRA
Pricing Template for some selected periods as indicated in the Chart below were analyzed.
The result of the analysis indicates that the most likely OMP for PMS is N88 per litre which was
determined by escalating the Feb ‘09 price level with reference to the 2-month average crude oil
price prior to price adjustments and applying YOY price inflation increase of 1.25% over circa. 6-years,
while also considering the Distribution Margin differences between Feb ‘09 and Jan ‘15 using the 6th-
tenth rule.
Government PMS Price Adjustment decision is given a Fair Value from our traffic light rating.
88.0
N/litre
Decision
Rating
65
PMS Price Regime Scale: Naira/litre
70 75 80 85 90 95 100 105 110 115
 Fair
Estimated Price level based on using a
2-month crude oil average price, prior
to price adjustment (This was
determined using the 6-tenth rule from
Feb ‘09 OMP level and an inflationary
increase of 1.25% over a circa. 6-years
period.
PPPRA Price
Adjustment
Period
2-months Crude
Price Average Prior
to Price
adjustment($/bbl)
Landing Cost
(Naira per
liter)
Distribution
Margin (Naira
per liter)
Expected
Open Market
Price (Naira
per liter)
Regulated
Price (Naira
per liter)
Subsidy
(Naira per
liter)
Exchange
Rate
(Naira:$USD)
Period 1_Feb '09 44.05 58.51 13.20 71.71 65.00 6.71 141.78
Period 2_Dec '10 88.74 112.82 13.20 124.75 65.00 59.75 152.03
Period 3_Apr '11 118.80 145.56 13.20 158.76 65.00 93.76 155.42
Period 4_Dec '14 67.51 83.80 15.49 99.29 97.00 2.29 158.85
Period 5_16th Jan
'15
52.37 74.35 15.49 89.84 87.00 2.84 158.85
89.84
N/litre
87.00
N/litre
Newly Announced
Regulated Price for PMS
EOM Price for the same
period for PMS
Source: PPPRA Templates (2009-2015)
Opec Crude Oil Open Basket Regime
Authors Analysis