Petrojam Report | AGD questions oil refinery's pricing formula
The Auditor General’s Department has raised questions about the formula used by Petrojam, the state-owned oil refinery, to calculate the weekly prices at which it sold petroleum to local marketing companies.
Following a comprehensive audit of the operations of Petrojam, the department said it could not ascertain whether the “market adjustment” used to calculate the weekly ex-refinery prices “was always determined in a transparent manner.”
Petrojam has never adequately discuss it’s pricing formula publicly.
But, according to the report, ex-refinery prices are determined by Petrojam’s pricing committee after its members' review of the United States Gulf Coast reference price and other “pricing elements.”
The department said in calculating the final prices, the committee applies a “market adjustment” to its formula.
“We note that the market adjustment is a discretionary value that Petrojam’s pricing committee determines,” the report revealed.
“However, owing to absence of minutes for meetings we could not determine whether the market adjustment was always determined in a transparent manner,” the AGD said.