By Emil Danielyan
The Armenian government and Russia’s Gazprom energy giant have failed to reach a final agreement on the price of Russian natural gas for Armenia, which is due to rise significantly next year.
The issue dominated President Serzh Sarkisian’s and Prime Minister Tigran Sarkisian’s talks on Monday with the visiting chairman of Gazprom, Aleksey Miller. Official Armenian sources did not report any definitive agreements reached by them. Both Tigran Sarkisian and Energy Minister Armen Movsisian refused to comment on the talks when approached by RFE/RL on Tuesday.
Gazprom already nearly doubled the price of its gas to $110 per thousand cubic meters two years ago. However, its cost for Armenian corporate and individual consumers remained virtually unchanged until this month due to a controversial April 2006 agreement that left more Armenian energy assets under Russian ownership. In particular, Gazprom solidified its controlling stake in Armenia’s gas distribution network and paid $249 million for an incomplete but modern thermal-power plant located in the central town of Hrazdan.
The Armenian government has since used the money for subsidizing the gas prices. The government said last month that it is running out of proceeds from the sale of the Hrazdan facility and will end the subsidies starting from May 1. This resulted in a 50 percent surge in the retail prices of gas supplied to Armenian households and business entities. With another Gazprom price hike planned for January 2009, they will likely go up further.
Gazprom said last week that by 2011 Armenia will have to pay for Russian gas at world prices that are currently above $200 per thousand cubic meters. According to the press offices of the Armenian president and prime minister, Miller confirmed this during his meetings in Yerevan.
President Sarkisian’s office said the two sides have agreed that the gas price will be raised to that level “step by step.” In doing that, it said, they will take into account the fact that Gazprom now owns 72 percent of the Armenian national gas distribution company, ArmRosGazprom.
A separate statement by the Armenian government said the first of those steps will come into effect on January 1, 2009. It said Miller and Tigran Sarkisian agreed that the extent of that price rise will be determined by Gazprom and the Armenian side through further negotiations that will be held within a “shortest possible period.” “The parties expressed confidence that a final decision on the issue under discussion will be taken soon,” added the statement.
The increased cost of natural gas has added to inflationary pressures on the Armenian economy mainly resulting from rising international prices of fuel, wheat and other imported foodstuffs. Russian gas has become the number one source of winter heating for the country’s population in recent years. It is also widely used, in liquefied and pressurized forms, by public transportation means and personal cars.
(Photolur photo: Miller is greeted by Tigran Sarkisian.)