The environment chief said yesterday if oil companies failed to reach a deal within two months on providing more liquefied petroleum gas (LPG) filling stations, the Government would consider further moves to open the market. Secretary for Environment and Food Lily Yam Kwan Pui-ying told a Legco panel meeting yesterday the Government would spend two more months talking to oil companies on converting fuel stations to LPG to meet the need for more LPG taxis. 'If the conditions set out by the companies are too harsh, we will opt for granting [more premium-free land to companies to] build new stations to ensure a sufficient supply.' The land premium is compensation a company pays to the Government when a lease is renewed, taking into account the increased value of the land. 'It will be ideal if we can reach an agreement with the companies but [converting stations to LPG] is only part of the anti-pollution measures,' Mrs Yam said. She had earlier admitted difficulties in negotiating with oil companies for more LPG refuelling facilities, which will encourage diesel taxis to switch to the cleaner fuel. Oil firms have demanded a refund of part of the land premium they paid for existing stations. Some cited difficulties in converting their stations due to lack of space. A spokeswoman for Shell yesterday hit back at the Government, saying the company had never set conditions. 'The crux is we're under physical constraints in converting our stations to LPG. Forty-four out of 61 of our stations are not suitable for the change. They are either too small or cannot meet safety standards.' Democrat legislator Fred Li Wah-ming said: 'Many leading companies, including Shell and Caltex, have told me about their concerns that the majority of their stations cannot offer LPG. How will the small number of LPG stations meet market demand?' However, Howard Chan Wai-kei, Principal Assistant Secretary for Environment and Food, said officials had been told by oil companies that 60-plus existing filling stations could be used for LPG. Mr Li said: 'Either the oil companies are telling lies or Mr Chan is too optimistic. More filling stations should be set up in urban areas.' Au Yeung Kan, a representative of the transport sector attending the meeting, voiced fears that taxi drivers might flock to the five new LPG stations, to be run by China Resources and the Hong Kong and China Gas Company, that have been granted leases without land premiums. The stations will offer LPG at about $2.01 a litre, compared with $3.88 offered by those with a premium. 'The discrepancy may cause serious traffic jams,' Mr Au Yeung said. But Mr Chan said stiff market competition would drive higher prices down. 'The five stations have to offer a price in line with the international price of LPG.'