Arreglo de Madrid relativo al Registro Internacional de Marcas y el Protocolo concerniente al Arreglo de Madrid

At the end of 2008, the provincial government commissioned an evaluation of the fuel price regulation to review the performance of the regime over the first two years of petroleum and diesel price regulation. The results are summarised in the table below.

Table 26 – Review of Pricing regulation in Nova Scotia Policy objectives Findings

Price stability _{Regulation results in increased predictability in the timing and reduced} frequency in the number of gasoline and diesel price changes.

Regulation results in fewer price changes compared with unregulated markets in eastern North America.

Regulation removes much of the price variation within Nova Scotia. Differences are attributable to transportation and the extent to which competition drives prices below the maximum allowed under regulation. Industry

infrastructure Half the independent retail dealers (surveyed as part of the two year review) _{indicate they are better off with regulation. The dealers better off are} located mainly in rural areas. About one-quarter indicate they are worse off, while another one-quarter indicate no change.

The rate of decline in the number of closures has slowed since the inception of regulation, and several stations have entered the industry. Regulation, specifically the minimum retail price, has played a role in stabilizing retail and wholesale infrastructure, particularly in rural areas.

Higher costs are eroding margins. In particular, current labour and credit card costs are not reflected in the historic basis used to set margins when regulation was introduced.

Promotions, including discounts, coupons and loyalty schemes undermine the viability of independent dealers.

The larger wholesalers indicate that, due to a slightly higher marketing margin, they are either better off or at least no worse off financially than they were at the outset of regulation.

Conditions facing resellers have improved with the shift from two-week to one-week adjustments and by removal of the full-serve cap. As a result of adjustments they have made in their arrangements with the dealers they supply, most resellers indicate they are better off or at least no worse off as a result of regulation.

The proportion of independent dealers deciding to opt out of regulation (just over 60%) does not represent a reliable indictor of the merits of the

regulatory program from a dealer‘s perspective. Many opted out because opting in would have resulted in fundamental changes in their operating arrangements, while others opted out because their margins compared favourably with the regulated margin.

Minimizing cost _{The average marketing margin across Nova Scotia has risen by an estimated} 0.51 cpl in the two years since regulation was introduced. The increase is due to higher minimum retail prices under regulation.

Prices in most major centres in Canada have risen relative to those in Halifax since July 2006. The relative increase is attributable to differences in

competitive conditions, including the ability to pass on higher operating costs through higher margins. Regulation in Nova Scotia has fixed margins, serving to constrain the ability to pass on the rising costs industry faces.

Pricing

mechanism The Regulator should continue to use the NYH spot price as the benchmark _{for adjusting fuel prices. The NYH spot price serves as the best benchmark} for adjusting regulated prices in Nova Scotia because it is competitively determined (can‘t easily be manipulated), transparent and highly visible. Rack prices provide a weak alternative because they are not set transparently

and do not represent the actual price at which the commodity is traded, but rather they serve merely as a guide to trading prices.

The Regulator should conduct periodic reviews of margins in light of rising costs facing the industry. This review should provide guidance on a method for making routine margin adjustments in response to changes in key cost factors such as minimum wage and credit card fees.

The Regulator should develop a benchmark price for winter blend diesel fuel based on actual costs as reported by industry. For example, the price could be derived from the weighted average daily NYH spot price of kerosene and diesel fuels, with the weighting factor tied to the proportions of each fuel in the blend. Alternatively, depending on industry practice, the price could be based on diesel plus the cost of additives.

Source: Evaluation of petroleum products pricing regulation in Nova Scotia

A.3

Road fuel price regulation in South Africa

Road fuel price regulation in South Africa dates back to 1977, at a time when South Africa faced an international oil embargo. Considered by many as a hangover from the past, the opinion is divided for and against continued regulation of road fuel prices in South Africa. Besides the historical roots, regulation has endured as a means of ensuring international market prices for locally produced oil. South Africa produces roughly 30% of the oil it uses from domestic coal resources.

A.3.1.1 Methodology and mechanics of regulation

The South African fuel price is set by the Central Energy Fund on behalf of the Department of Minerals and Energy and is revised on the first Wednesday of each month. The current methodology is highlighted below:

Pump price = Basic Fuel Price (BFP) + Domestic cost component Basic fuel price

Basic Fuel Price =Fuel Spot prices + Cost of Freight + Insurance Cost + Ocean loss allowance +cargo dues + coastal storage

International petroleum market spot prices for physical importation is set as follows:

 Petrol = 50% (Mediterranean spot for premium unleaded FOB) + 50% (Singapore spot for 95 Octane unleaded FOB)

 Diesel = 50% (Mediterranean spot for Gas oil FOB) + 50% (Arab Gulf spot for Gas oil FOB)

Cost of freight – from Augusta; Singapore and Mina-al-Ahmadi, plus demurrage, adjusted with Average Freight Rate Assessment of the London Tanker Brokers Panel + premium for transportation

Insurance cost = 0.15% of product FOB and freight costs, plus premium for miscellaneous (broker fees, letters of credit etc)

Ocean loss allowance = 0.3% normal leakage allowance

Cargo dues = National Ports Authority of South Africa contract tariffs for petroleum products

Domestic cost component

Domestic cost component = Transport cost + Delivery Cost + Wholesale Margin + Retail Margin + Miscellaneous Charges

Transport costs (zonal differential)

Delivery costs (depot related costs, storage and handling) – historical costs averaged on a national basis

Wholesale (marketing margin) – aimed at a 15% return on depreciated book value of assets, before tax and interest

Retail margin – fixed by the Department of Minerals and Energy on basis of actual cost of distributing petrol based on rental, labour overheads and profit

Miscellaneous charges include:

 equalization fund levy – to smooth fluctuations in prices, provide synfuel tariff protection

 fuel taxes – VAT

 customs and excise levy

 road accident levy – third party victim compensation fund

 slate levy – recovery to oil companies due to time delay in adjustment of pump prices