ISLAMABAD - The idea to get approval for imposition of Petroleum Development Levy (PDL) on locally produced LPG is seemingly proposed to facilitate Sui Southern Gas Company (SSGC) recently opted for Progas terminal in Karachi. While it would most likely to directly affect masses as LPG prices would further shoot up very soon, argued senior ministry official requesting anonymity. The ECC in its meeting approved in principle the imposition of Petroleum Development Levy (PDL) on locally produced LPG is said to accommodate Sui Southern Gas Company (SSGC) recently opting for Progas terminal in Karachi. The ECC that met one day earlier, under the chairmanship of Federal Minister for Finance and Economic Affairs Dr Abdul Hafeez Shaikh, approved PDL in a bid to generate Rs 3 billion every year with a claim that this levy would not be passed to the consumers so there would be no additional burden on the masses. Imposition of a PDL will make things worse and cut the already weak demand for the product. However, at the same time analysts argued that PDL will directly affect the end user of LPG since it will increase the price of the product. LPG shall no longer remain cheaper than petrol, which will further erode interest in setting up Autogas Stations. This PDL shall on immediate basis skyrocket the prices of LPG in the local market thereby further squeezing the poor consumers who already find it impossible to buy LPG in front of high ceiling inflation soaring up and up each passing day. However, the draft of the policy which was prepared behind close doors without seeking any input from the LPG stakeholders including the producers and marketing companies has ostensibly been prepared to favour SSGC which is in process of acquiring an import terminal from a bankrupt company in Karachi, discussions and repeated contacts with LPG producers and associations left this impression, adding, "In a letter addressed to the Minister of Petroleum, LPG Association of Pakistan (LPGAP) had requested a meeting of all the stakeholders with the Ministry to discuss the issue of PDL and other imperative matters, however no meeting time was provided to the Association or to any other stakeholder. They were of the view that the state-owned utility company; SSGC exited the operations of marketing LPG in 2000 after the donor agencies and its board recognised marketing LPG as a non-core business. However, more than a decade later the Ministry of Petroleum is aggressively supporting SSGC to return to the business of marketing LPG by purchasing the terminal of PRO Gas which has gone bankrupt. They said the Ministry of Petroleum has also proposed in the draft LPG policy 2011 to make it mandatory on all the licensed LPG marketing companies to import 25 percent of their local allocation in spite of the fact that the local market is unable to absorb the price of the imported LPG. They further said that the prices of LPG began to skyrocket in Pakistan after the price of the locally produced LPG was linked with the international Saudi Aramco price. The period between 2007 to till date has witnessed a decrease in the consumption of LPG as the poor masses find themselves unable to afford the expensive LPG. If this was not less, the Federal Government has now decided to impose a PDL (expected around $150), which shall further break the back of the masses and reduce its consumption nationwide. "80 percent of the country's LPG is locally produced at a cost far below its international price, sources said, adding, that to facilitate a mere 20 percent imports the Government is seeking to increase the price for all locally produced LPG. The levy obviously seeks to benefit SSGC, which is in the process of acquiring a LPG import terminal from a bankrupt company in Karachi, sources said. It is testimony of the fact that despite a drop in local production, demand for LPG has remained stagnant. LPG accounting for a mere 0.6 percent of the country's energy mix has seen a severe erosion in its demand due to all time high Saudi Aramco Contract prices with which local producer prices are already linked. Imports too have witnessed a sharp decline this year owing to high international prices. LPG Producers are finding it difficult to maintain a link with Saudi as CP were forced to slash their prices from Rs 82,646 to Rs 68,000 during the month of May alone. It seems that attempts to impose PDL on the same producers by increasing prices beyond Saudi CP by some $150 per ton will further erode the already weak demand. More so producers may be forced to flare LPG, in the event they are unable to reduce prices causing a loss of millions of rupees. It is relevant to mention that the draft LPG policy which was tabled before the ECC by the Ministry of Petroleum envisages imposing a PDL of $150 per MT in order to equate the price of locally produced LPG with CFR (Cost + Freight) prices of the imported LPG. This approval will affect LPG prices of the Oil and Gas Development Company Limited (OGDCL), Pakistan Oilfields Limited (POL), Ocean Pakistan Limited, BP, Pakistan Petroleum Limited (PPL), and Jamshoro Joint Venture Limited (JJVL), sources said.