ISLAMABAD - The government, in a discriminative move by giving exemption to oil refineries engaged in producing LPG, is gearing up efforts to jack up LPG prices by imposing 10 percent petroleum levy (PL) on selective local LPG producers, it has been learnt. The proposal to impose PL will affect LPG prices of the Oil and Gas Development Company Limited (OGDCL), Pakistan Oilfields Limited (POL), Ocean Pakistan Limited, British Petroleum (BP), Pakistan Petroleum Limited (PPL), and Jamshoro Joint Venture Limited (JJVL). There is no plan in hand so far to impose PL on refinery-produced LPG, which accounts for 42 percent of local production. Pak-Arab Refinery Limited (PARCO) is a major producer of LPG in refining sector, market sources said. Government is mulling imposition of 10 percent PL, a kind of tax, on selective local LPG producers in upcoming budget 2011-12, which will definitely hit the LPG industry, sources said, adding, However, oil refineries engaged in producing LPG may be recommended to be exempted from PL that may invite strong criticism due to discriminative treatment. Finance Ministry was considering a proposal to impose 10 per cent PL on LPG to generate revenue ranging between Rs3 to Rs4 billion per annum, sources added. Sources in LPG sector said that LPG demand had already declined due to high ceiling prices and further imposition of PL in coming budget would further cause a collapse of LPG industry. After imposition of PL, price of LPG would increase and product would be beyond the reach of the low-income consumers, they all said, adding, Demand of LPG fuel in the country would resultantly also decline. It is not out of place to mention here that state-owned OGDCL produces 132 metric tons per day LPG from five gas fields. Because of low demand and the inability of consumers to afford LPG, its price has been revised five times during the ongoing month. OGDCL increased its LPG base-stock price from Rs. 75,570 per metric tons in April 2011 to Rs. 82,646 per metric ton with effect from May 3 this year. The sharp 10.29 percent hike in the Saudi CP has been witnessed from $884 per metric ton in April to $975 per metric ton for May 2011. Facing low demand, OGDCL reduced its price to Rs. 80,000 per metric tons on May 6 that was further cut down to Rs. 73,000 per metric ton on May 16. OGDCL slashed again its price to Rs. 68,000 per metric ton on May 20, 2011. Similarly, state-owned refinery PARCOs LPG base-stock price of Rs. 75,570 per metric ton in April 2011 was increased to Rs. 82,600 per metric ton on May 3. PARCO subsequently lowered its price to Rs. 78,600 per metric ton on May 8 and further slashed it to Rs. 73,000 metric ton per day on May 14. However, according to reported official figures, LPG production has fallen by 25 percent on account of depletion of gas fields from an average 1,600 metric tons per day in 2006 to 1,194 metric tons per day in March 2011. LPG prices, which are linked to Saudi export prices, change on a monthly basis and have risen so sharply that demand continues to decline. Imposition of PL will make things worse and lower its demand, industry sources said, adding that even in the absence of PL, the demand for LPG is declining due to high prices. Market sources say that the downward price revisions have not yet boosted demand and the PL imposition on LPG produced from gas extraction plants like OGDCLs facilities will render the product economically unviable for local consumption. In such circumstances, gas-based LPG producers could seek to export their product but government of Pakistan does not allow the export of LPG, sources added. It is worth mentioning here that the proposal to impose PL on LPG was first conceived in 2008 soon after the Pakistan Peoples Party came into government. But the then newly-elected government decided not to burden consumers through the imposition of PL. The proposal is said to be favoured by a couple of private sector LPG marketing companies, sources claimed.A