ARG formally asked the Public Services Regulatory Commission (PRSC) last month to allow it to significantly raise tariffs, arguing that the cost of Russian gas imported to Armenia will increase by almost 17 percent to $180 per thousand cubic meters from this April.
The PRSC accepted this justification, raising the gas price for individual consumers by 37.5 percent, to 132 drams (34 U.S. cents) per cubic meter. The price rise for thermal-power plants and industrial enterprises will be les drastic: 17 percent.
“We have displayed a professional approach to the ARG application within the framework of our functions,” the PRSC chairman, Robert Nazarian, said after he and other members of the regulatory body unanimously voted for the unpopular measure.
Armenia -- The Public Services Regulatory Commission votes to allow a sharp increase in the domestic prices of natural gas on February 26, 2010.
ARG, 80 percent of which is owned by Russia’s Gazprom monopoly, says the gas tariffs should be raised also because of a more than 25 percent depreciation of the Armenian currency, the dram, against the U.S. dollar over the past year. Critics counter that the dram had gained more than 80 percent in nominal value against the dollar in the years leading up to the 2009 economic crisis and that ARG failed to adjust its tariffs accordingly.
Karen Karapetian, the company’s chief executive, again defended the measure after the PSRC meeting. “If there is another, more efficient structure that can bring in cheaper gas, we can put our whole system at their disposal,” he said. “But I’m sure there isn’t.”
Speaking to RFE/RL, Karapetian claimed that Iranian natural gas, which Armenia began importing last May in modest amounts, is even more expensive. Iranian gas is due to be converted into electricity that will in turn be supplied to Iran. Its monetary cost is not yet known.
Karapetian also downplayed the socioeconomic impact of the gas price rise. He said low-income households will see their monthly gas bills rise by only between 1,000 and 2,000 drams. He again suggested that the Armenian government compensate for that with “targeted subsidies.”
The gas tariffs already rose by 14 percent in April 2009, resulting in a 20 percent increase in the retail prices of electricity sanctioned by the PSRC. It is not yet clear whether the electricity fees will again go up this time around. Natural gas is used for generating roughly one third of Armenia’s electricity output.