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Resolution of RPF May 2001. That the proposed BPI be monitored and reported to the next RPF. What is a BPI?. a transparent and defendable mechanism of price adjustment irrespective of the agreements negotiated between particular suppliers and their customersdriven largely by global factors
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1. The introduction of a Bitumen Price Index (BPI) Follow-up report
2. Resolution of RPF May 2001 That the proposed BPI be monitored and reported to the next RPF
3. What is a BPI? a transparent and defendable mechanism of price adjustment irrespective of the agreements negotiated between particular suppliers and their customers
driven largely by global factors
does not promote price regulation
does not encourage arrangements related to market share
4. Why a BPI? Demise of a “regulated” WLSP in August 2000
Lack of a creditable datum for adjustment of a product with a price tag linked to global dynamics of crude prices and f.e rates
5. Advantages of a BPI promotes just and fair practice
lends credibility to periodic price adjustments
facilitates equitable administration of state contracts
6. Initial study How did WLSP of bitumen vary compared to the landed cost of related hydrocarbon products
Model to simulate the WSLP movements (exc. incentives) during Jan 89 - Jan 01
Proposed method
7. Correlation MFO (Durban) - WLSP
8. Effects of local inflation Introduced through factoring
FPi = WSLPi-1 [f*MFOi/MFOi-1 +
(1-f)*PPIi/PPIi-1)]
Tracks a theoretical WLSP with monthly adjustments
9. Comparison - Actual WLSP and factored prices
10. WLSP and Factored prices
11. Conclusions reached Model simulates actual movements in WLSP very well
Introduction of local PPI improves the simulation
Suitable mechanism for introducing a BPI
In the absence of a WLSP there is evidently no other alternative
The notion that presentation of invoices of supplier as a means of substantiation of increases is probably naďve
That the proposed BPI be monitored and reported to the next RPF
12. Monitoring process Price movements of relevant products
PPI
Market quoted prices
Testing the model proposed
13. Tracking price movements Durban Bunkers Price (USD) - daily
USD - ZAR exchange rates - daily
quoted prices of various producers - date of change
Volumes declared
PPI from SSA
14. Parameters determined Durban bunkers prices (DBP) in ZAR
Indicator price =
WLSPi-1(0.6?DBPi/DBPi-1+ 0.4?PPIi/PPIi-1)
Weighted market price
15. Comparative Price Movements
16. Price Correlation
17. Conclusions Historical pattern continues
Model has proved to be robust
Month-to-month “indicator price” can be published 1 month in arrears
Basis of a “recommended retail price”
Primary producers are in favour of the scheme