Nigeria Downstream Brief | Vol_2 Jan 30th 2015

PPPRA Price Adjustment Strategy Evaluation (Nov 2014-Jan 2015)

In order to understand and evaluate PPPRA’s Price Adjustment Strategy for the period(s) spanningNovember 2014 to January 16th 2015; the price adjustments made were mirrored against the daily OpecBasket prices for the same period.

From the analysis, it appears that PPPRA price adjustments were made constant for a period of 44days in theface of dropping crude oil prices over the same period. This delay in price adjustment could have onlyincreased the OMP and the subsidy borne by Nigerians and Government. This delay in price adjustment alsooccurred between 29th December and 16th January 2015.

While the decision to reduce the regulated price for PMS to N87 per liter is commendable, it was ratherbelated as the opportunity to create a positive perception by consistently reducing the OMP against fallingoil prices was missed by Government .

PPPRA Price Adjustment decision for these periods are given a Barely Fair Value from our traffic light rating.

Decision Rating

Barely FairSource: PPPRA Templates (2009-2015)

Opec Crude Oil Open Basket RegimeAuthors Analysis

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November-14 December-14 January-15

PPPRA Refined Product Price -Adjustment Strategy Evaluation(Nov 2014-Jan 2015)

PMS ($/bbl) DPK ($/bbl) AGO ($/bbl) FO ($/bbl) Opec Crude Oil Basket Price $/bbl