By Atom Markarian
The head of the World Bank office in Yerevan joined senior Armenian officials on Thursday in downplaying negative effects of the upcoming surge in the price of Russian natural gas on Armenia’s population and economy.
“While the raising of the gas price in Armenia will have some negative impacts on certain parts of the economy and will hurt the budgets of some people, my personal feeling is that the overall impact will not be as severe as some people believe or fear,” Roger Robinson said.
Robinson predicted that the doubling of the gas price, which is due to take effect this Saturday, will primarily hit hard low-income Armenians that already have trouble paying their electricity and gas bills. “It will affect or has the potential to affect the electricity prices,” he said. “It will obviously affect the household budgets of those homes and households that use gas for heating during the winter months in Armenia.”
State regulators have already sanctioned a 50 percent rise in the cost of gas supplied to individual consumers. They are also likely to agree to price increases requested by Armenia’s thermal power plants that use Russian gas for electricity production. Officials in Yerevan say the retail price of electricity will go up by at least 10 percent as a result.
Some economists and opposition politicians say the increased cost of energy will automatically push up other key consumer prices. However, the chairman of the Armenian Central Bank, Tigran Sarkisian, insisted earlier this month that the gas price increase will push up Armenia’s inflation rate projected for this year by only one percent.
The Armenian government appears to be less sanguine, however. It has asked the World Bank to study the economic cost of new Russian gas tariff and come up with their own forecasts. According to Robinson, World Bank experts will unveil the findings of their study “very soon.”
The World Bank official also assured reporters that Armenian industrial enterprises using Russian will not be significantly hurt by the price hike. The Armenian Ministry of Trade and Economic Development estimates that their production costs will rise by an average of 20-25 percent.
Robinson pointed out in this regard that Armenia’s struggling economy has grown “very energy-efficient” over the past decade not least because of its post-Soviet de-industrialization. “Ten or fifteen years ago Armenia had a large number of very large industries and businesses that depended upon gas for their production,” he said. “We don’t have those industries today.”