By Anna Saghabalian
The retail price of electricity in Armenia will not rise as a result of the impending increase in the cost of imported Russian natural gas, the chief executive of the national power utility said on Monday.
Russian gas is used for meeting approximately 40 percent of Armenia’s electricity needs and is therefore a key factor behind the government-approved energy tariffs. Russia’s Gazprom monopoly nearly doubled its price to $110 per thousand cubic meters in 2006 and plans to raise it further next year.
Yevgeny Gladunchik, executive director of the Electricity Networks of Armenia (ENA), said the power distributor will not seek to raise its own prices as a result. “We don’t plan to do that,” he told journalists.
Armenian households pay 25 drams (8 U.S. cents) for every kilowatt/hour of electricity supplied by ENA. The price was set by state regulators in 1998 and has not changed since then not least because of recent years’ dramatic appreciation of the national currency, the dram.
“We are not interested in raising the tariff because we know it would be hard to enforce it [a higher fee],” Gladunchik said.
The Russian executive also implied that Armenia’s Public Service Regulatory Commission (PSRC), which has the exclusive authority to set utility prices, would block any unpopular tariff rises requested his company. “This issue will certainly be considered,” he said. “As far as I know, they approach the issue with a great deal of caution.”
A more expensive electricity would add to mounting inflationary pressures on the Armenian economy that have led the country’s Central Bank to considerably increase its benchmark re-financing rate in the first half of this year.
The Armenian government triggered a 50 percent surge in the cost of gas supplied to households and business entities when it stopped subsidizing domestic gas prices on May 1. The extent of the next price rise, effective from January 2009, is still not known. Armenian and Russian officials have said only that it will not be as sharp as many in Armenia feared.
(Photolur photo: Yevgeny Gladunchik.)