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Gas Prices Set For Sharp Rise In Armenia


Armenia - An underground gas storage facility near Yerevan.

Armenia - An underground gas storage facility near Yerevan.

Armenia’s national gas distribution company on Tuesday acknowledged a significant increase in the cost of Russian natural gas imported to the country and asked regulatory authorities to approve corresponding price rises for domestic consumers.

The ArmRosGazprom operator formally requested that the Public Services Regulatory Commission (PSRC) allow it to raise the gas price for households from 132,000 to 221,000 drams ($532) per thousand cubic meters. It said the tariff for industrial enterprises and other corporate consumers should also go up accordingly.

“Our application submitted to the commission is based on serious economic calculations and proposes reasonable tariffs,” ARG spokeswoman Shushan Sardarian told RFE/RL’s Armenian service (Azatutyun.am). Sardarian attributed the measure to the increased cost of Russian gas.

The officially declared price of the gas delivered to Armenia by Russia’s Gazprom giant stood at $180 per thousand cubic meters until now. Its real price appears to have risen substantially last year, however.

The Armenian customs service said in October that ARG, 80 percent of which is owned by Gazprom, imported 304.6 million cubic meters of Russian gas worth $74.4 million in the third quarter of 2012. This translated into a gas price of roughly $244 per thousand cubic meters.

Citing this data, some observers speculated that the Armenian government sold its 20 percent stake in ARG to Gazprom to ensure that Armenian consumers are unaffected by the price rise until the February 2013 presidential election. Energy Minister Armen Movsisian and his deputies denied that, saying that the government is continuing to negotiate with Gazprom over a new gas tariff.

Sardarian denied that the gas operator had agreed with the government to wait until the presidential ballot as well as the May 5 mayoral elections in Yerevan to raise its prices.

In any case, the price hikes sought by ARG would hit hard many Armenians who have already struggled to pay their gas bills. With natural gas used for generating about one-third of Armenia’s electricity, they could also push up electricity prices. In addition, the unpopular measure could affect the cost of public transportation as virtually all commuter buses and minibuses in the country run on liquefied gas.

Sardarian admitted that higher prices may reduce domestic gas consumption. But she argued that the existing prices have remained unchanged for the past three years despite inflation and a depreciation of the Armenian dram.

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