History and Future Strategy of Oando

58 59 Industry Overview: Regulatory Landscape How the Subsidy Works Oando 1. Product Cost 2. Freight 3. Lightering Expenses 4. Nigeria Port Authority Charge 5. Financing NWE monthly moving average as quoted on Platts Oil gram Average clean tanker freight rate (World Scale 100) as quoted on Platts (from NWE to West Africa), plus trader's margin of $10/MT Cost incurred on the transhipment of imported petroleum products from the mother vessel into daughter vessel and to allow for the onward movement of the vessel into the jetty. Includes: Receipt losses of 0.3% • Mother vessels expenses (10 days demurrage at $28,000/day) • Shuttle vessel's chartering to Lagos (N2.00/litre) and Port Hartcourt (N2.50/litre) Harbour handling charge charged by the NPA for use of port facilities (currently at $5.25/MT) Component PMS HHK C + F 0.75 0.53 NGN 110.17 103.94 PORT + + Other Charges (N) 12.09 9.48 + + Landing Costs (N) 122.27 113.42 Tariff paid for use of facilities at the jetty by the marketers to move products to the storage depots (currently NO.80/litre) Stock finance (cost of funds) for the imported product (30 days at LIBOR + 5%) Interest charge on the subsidy receivables (60 days at 22% NIBOR rate) 6. Jetty Depot through-put Storage Margin is for depot operations covering storage charges and other services rendered by the depot owners. The charge is currently N3.00/litre. 7. Storage Charge 8. Landing Cost Cost of imported products delivered into the jetty depots (1+2+3+4+5+6+7) 9. Distribution Margins N15.49 per liter, including: •Retailers' margin (N4.60 per litre) Margins (N) 15.49 15.49 Expected Price (N) 137.76 128.91 · • Transporters' margins (N2.99 per litre) • Dealers' margin (N1.75 per litre) • . Bridging Fund (plus Marine Transport Average) (N6.00 per litre) Administrative charge (NO.15 per litre) Retail 87.00 50.00 Price 10. Taxes 11. Retail Prices These include highway maintenance, government, import and fuel taxes (currently 0) Expected pump price of petroleum product at retail outlet (8+9+10) PPMC Ex-Depot 50.76 78.49 Price

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