Revised Guidelines on Index-Based Pricing for Procurement of Petroleum, Oil, and Lubricant Products

View previous topic View next topic Go down

Revised Guidelines on Index-Based Pricing for Procurement of Petroleum, Oil, and Lubricant Products

Post by HUNGKAG on Wed Dec 03, 2008 10:08 am

In the Guidelines, the MOPS is
used as an index. MOPS however as intended is not an index as the definition
clearly states:

"j. Mean of Platt’s Singapore or MOPS - refers to the
mean of the high and low components of a Platt’s assessment for oil cargoes
loading from Singapore as officially released by Platt’s, a publishing/trading
house based in Singapore which publishes daily information on oil price and
shipping rates
.

On the other hand an "index" (referring to price) as defined by
WIPEDIA is:

price index (plural: “price indices” or “price indexes”) is
a normalized average
(typically a weighted average) of prices for a given
class of goods or services in a given region, during a given
interval of time. It is a statistic designed to help to compare how these prices,
taken as a whole, differ between time periods or geographical locations.


Price indices have several potential uses. For particularly
broad indices, the index can be said to measure the economy's price level
or a cost of living. More narrow price indices can help
producers with business plans and pricing. Sometimes, they can be useful in
helping to guide investment.


Also from Wikipedia

"Mean of Platts Singapore
or MOPS is a measure of fuel oil pricing in Singapore. It
refers to the mean price of oil traded through Singapore as per the data from Platts, a commodity
information and trading company.MOPS typically will have a value referring to
its premium over ex-wharf bunker fuel prices. When demand is low and the supply
is good, premiums will be low or negative. Conversely, when demand is high and
the supply is tight, premiums will be high or positive. Eg: Low sulphur fuel oil
(LSFO) MOPS 380 cst


MOPS therefore cannot be used as a price index because it refers to a
specific product on a particular time of the day. The agency that will conduct
the bid and a prospective supplier will misinterpret these guidelines
particularly if the bid will call for a product blended and not in conformity
with the specific MOPS product used as a reference. This ambiguity in the
guidelines referring to price but using MOPS as a reference will result with a
bid for a product required by the buying agency but different from
the MOPS product referred to.



The bid will not be apple to apple with the MPOS product having
different Quality Specification than what is bidded out. Others opined
that the quality diffrential is already covered by the Premium but a reading of
the premium does not provide for Quality Diffrential as defined in the
guidelines and stated below:


"l. Premium - refers to all applicable and reasonable
cost or expenses (i.e.ocean freight, marine insurance, bank charges, ocean
loss,storage/handling/throughput fees, profit, margin, etc.) to arrive at a
landed cost of petroleum, oil and lubricant in the Philippines."



This
provision does not allow for any quality differential.


In
view of the foregoing I submit that
using MOPS as a price index is misleading and using a quality/
price differential component on top of
MOPS specified product will likewise be misleading because the budget estimate
will now be arbitrary and subjective.


Last edited by dlsn on Mon Dec 08, 2008 5:23 pm; edited 1 time in total (Reason for editing : Unnecessary use of capital letters on the subject)

HUNGKAG
New Member
New Member

Male Number of posts : 4
Company/Agency : ALP LAW FIRM
Occupation/Designation : CONSULTANT
Registration date : 2008-12-03

Back to top Go down

APPENDIX L REVISED GUIDELINES ON INDEX-BASED PRICING FOR PROCUREMENT OF PETROLEUM, OIL, AND LUBRICANT PRODUCTS Issued through GPPB Resolution 011-2007, dated 31 May 2007, and published in the Official Gazette on 13 August 2007.

Post by HUNGKAG on Wed Dec 03, 2008 12:43 pm

Further to my earlier post, in one agency where our client a foreign company, there are provisions in submitting bid offers as follows:

A) General Conditions of the Contract Section 8, Subsection 8.1 Purchase Price

“For and in consideration of the fuel to be supplied under this Contract and the faithful performance of the other
obligations herein of Supplier, NPC shall pay to Supplier in NPC’s checks a price in accordance with the following formula:

For Fuel Oil:

Delivered Price = Product Cost + Local Transshipment + EVAT

Product Cost = [(MOPS + Premium) x Forex]/ 158.984(liters per barrel

MOPS = Average of the Mean of Platt’s Singapore(MOPS) for a particular product within
the calendar month immediately preceding NPC’s billing month.

Note : MOPS shall correspond to the daily high and low price quotations of petroleum products as published in the Platt’s
Oilgram Report under “Singapore Cargoes “ with the following headings and units:

Fuel Oil: HSFO 180cST, 3.5 % Sulfur in US$ /MT


Premium = Bid offer for all applicable and reasonable costs or expenses (i.eocean freight, marine insurance, bank charges,
ocean loss, storage handling/ throughput fees, profit margins, etc.) to arrive at a landed cost of petroleum fuel and distribute the same in the Philippines, up to four(4) decimal places in US$/Bbl.

Forex
= Weighted average of the Philippine Dealing System (PDS) daily buying and selling rates of the peso to the US Dollars within the calendar month immediately preceding NPC’s billing month.


B) Bid Data Sheet Section 34.2 II. Methodology in the Evaluation and Comparison of Bids to Determine the Lowest Calculated Bid

Evaluation of Bid Offers:

The most advantageous bid offer for a particular delivery point shall be determined using the formula below:

For Fuel Oil:

Delivered Price = Product Cost + Local Transshipment + EVAT

Product Cost = [(MOPS + Premium) x Forex]/158.984(liters per barrel

MOPS = Mean of Platt’s Singapore value for the particular petroleum product as indicated in Section VIII-A (Bid Form) of the Bidding
Documents

Forex =
Philippine peso to the US Dollar exchange rate value as indicated in Section VII-A(Bid Form) of the Bidding Documents


Premium = Bid offer for all applicable and reasonable costs or expenses (i.eocean freight, marine insurance, bank charges,
ocean loss, storage handling/ throughput fees, profit margins, etc.) to arrive at a landed cost of petroleum fuel and distribute the same in the Philippines, up to four(4) decimal places in US$/Bbl.


C. Section VIII- (Bid Form) refers to pricing based on MOPS and not the items described in Section VII-Technical Specifications.

D. Under Section VII- Technical Specifications the product specified is different from product described in is not described in A) General Conditions of the Contract Section 8, Subsection 8.1 Purchase Price


The agency gave an opinion that what they bid out is a different product as indicated in Section VII and the MOPS price for a different product is already covered by the Premium. The premium as definedhowever in the Guidelines does not include quality differentials.

The BID FORM likewise does not specify that the product that a bidder will offer is different than what is required in their bid instruction since there is no qualification of any quality differential.

HUNGKAG
New Member
New Member

Male Number of posts : 4
Company/Agency : ALP LAW FIRM
Occupation/Designation : CONSULTANT
Registration date : 2008-12-03

Back to top Go down

APPENDIX L REVISED GUIDELINES ON INDEX-BASED PRICING FOR PROCUREMENT OF PETROLEUM, OIL, AND LUBRICANT PRODUCTS Issued through GPPB Resolution 011-2007, dated 31 May 2007, and published in the Official Gazette on 13 August 2007

Post by HUNGKAG on Wed Dec 03, 2008 1:04 pm

In the subject Guidelines under “3. DEFINITION OF TERMS” premium is defined as

“l. Premium
- refers to all
applicable and reasonable cost or expenses (i.e.ocean freight, marineinsurance, bank charges, ocean loss, storage/handling/throughput fees, profit, margin, etc.) to arrive at alanded cost of petroleum, oil and lubricant in the Philippines)”

Since the Guidelines refer to an index, does this definition of premiuminclude quality differential?

In buying different blend of a diesel fuel than what is listed in the MOPS, is it legal to use MOPS product traded in Singapore as a price reference although the product described is different and not traded in Singapore?

I think a more simple example is in the case of rice. If one agency needs a premium grade of rice, such as Sinandomeng and requires a bid for which price is based on the description and budget for NFA rice, does the agency has a basis for rejecting outright the bidder who submits bid based on NFA rice bid specification, justifying this by saying that the quality differential between what they actually need than what is interpreted as a call for bid for NFA rice is covered by the provision on premium?

HUNGKAG
New Member
New Member

Male Number of posts : 4
Company/Agency : ALP LAW FIRM
Occupation/Designation : CONSULTANT
Registration date : 2008-12-03

Back to top Go down

Re: Revised Guidelines on Index-Based Pricing for Procurement of Petroleum, Oil, and Lubricant Products

Post by Sponsored content


Sponsored content


Back to top Go down

View previous topic View next topic Back to top

- Similar topics

 
Permissions in this forum:
You cannot reply to topics in this forum