By Shakeh Avoyan
An Armenian state body regulating public utilities approved Friday a partial increase in the retail prices of natural gas, in a move that failed to satisfy the country’s Russian-owned gas distributor that has been pushing for a higher tariff hike. After weeks of deliberations, the Commission on Public Utility Regulation ruled to allow the ArmRosGazprom operator to charge 59,000 drams ($104) per thousand cubic meters from individual consumers from March 1. The household tariff was previously set at 51,000 drams.
But more importantly, the commission rejected the company’s demands to raise the fee for the industrial gas consumption from the current $80 to $95, saying that the measure would not be justified.
ArmRosGazprom’s chief executive, Karen Karapetian, was unhappy with the decision, saying that it will bring only “negligible” additional revenues to the company as most of its imported gas is sold to thermal power plants and large industrial enterprises. He said ArmRosGazprom will again approach the regulatory body with the same request later this year.
Under Armenian law it can do so only in six months’ time.
ArmRosGazprom executives have for months complained that the existing tariffs are set too low and do not allow them to make more capital investments in the Soviet-era network that fell into decline during the severe energy crisis of the early 1990s. In their written proposals filed to the commission they also argued that the company needs to recoup 3.5 drams ($6.2 million) worth of such investments it claims to have made last year.
But the commission chairman, Robert Nazarian, brushed aside the figure, saying bluntly that much of the investments were politically motivated and resulted from the 2003 parliamentary elections. He claimed that ArmRosGazprom spent money on resuming gas supplies to many villages at the request of wealthy election candidates bent on wooing local voters.
The allegations were denied by Karapetian who argued that the restoration of gas deliveries is part of his company’s strategy of expanding the number of its individual consumers across the country. He said it increased in 2003 as fast as it did in the previous six years taken together and now stands at 186,000.
This is still a far cry from Soviet years when virtually every urban Armenian family had access to centralized gas supplies. Tens of thousands of them still use liquefied gas stored in special tanks for cooking purposes.
Armenia buys the bulk of its natural from Russia, notably from the Gazprom giant which holds a 45 percent share in ArmRosGazprom. The imports totaled approximately 1 billion cubic meters in 2002 and were unlikely to grow this year as the country increasingly relied on cheaper electricity generated by its hydro-electric plants.