OUR STAFF REPORTER LAHORE The LPG Policy 2011 which stipulates the imposition of a Petroleum Development Levy of $130 per ton on locally produced LPG would weaken demand for the product across the country, says All Pakistan LPG Association (LPGAP). Under considerable pressure from the media and the consumers, the Petroleum Ministry asked all public sector producers to absorb the petroleum levy which came into effect from September 21, by delinking their prices from Saudi Aramco Contract Price. However, according to the Association statement issued on Saturday, the impact of the levy outweighed the reduction in prices as a result of which retail prices arose by Rs five per kg. LPG was retailing for Rs 110 per kilo, prior to the notification issued by OGRA said Belal Jabbar spokesman for the LPGAP. The spokesman criticised those individuals who have been making statements in the media in the favour of the new Policy. Some people gave have no stake in the LPG business but have been appreciating the policy mere to please government and they do not know the negative impact of the policy on the countrys economy, he added. LPG prices have arisen after OGRA allowed a higher price of Rs 115 per kg, said Belal. The new policy seeks to restrict competition in the LPG industry by creating a state monopoly of SSGC and SNGPL, the LPGAP held. Section 3.1 of the policy explicitly states that public sector gas utility companies will have first preference for the LPG extracted by public sector E&P companies. This effectively deprives 87 LPG marketing companies of supply of LPG and will force them to either import expensive LPG or shut down their operations altogether. SSGC is in the process of acquiring an import terminal from a bankrupt company in Karachi, whereas SNGPL has issued an expression of interest for purchasing the operations of LPG marketing companies. The LPGAP maintained that the government which already controls 65 per cent of LPG produced in Pakistan was now keen to dominate the downstream segment of marketing. It is obvious that the governments intention is to drive out the private sector from the business and create instead a state monopoly by the very Sui companies that exited the business over a decade ago. It is largely feared that on October 3, the government will allow LPG producers to pass on the full impact of the Saudi Aramco Contract Price along with the Petroleum Levy to the marketing companies and consumers. In such an event, prices will escalate by 15pc leading to severe erosion in demand and most likely worsen deforestation in the northern areas, concluded Belal.