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Still No Clarity On Armenian Gas Subsidy


Armenia -- The flags of the ARG national gas operator and its dominant Russian shareholder, Gazprom.

Armenia -- The flags of the ARG national gas operator and its dominant Russian shareholder, Gazprom.

The Armenian government has still not announced sources of funding for subsidizing new, significantly higher prices of natural gas and electricity in Armenia that entered into force on Sunday.

The state Public Services Regulatory Commission (PSRC) raised them by 18 percent and 27 percent respectively last month, citing a 50 percent surge in the price of gas imported from Russia. The price hikes would have been even sharper had the government not pledged to subsidy the gas tariff for households by 30 percent.

The government made clear that the subsidy, worth an estimated $150 million per annum, will not be financed from the state budget. It has been negotiating with Russia’s Gazprom gas monopoly in the hope of raising that sum.

Gazprom late last month expressed readiness to offer a price discount in return for gaining full control over Armenia’s ARG gas distribution network. The Russian giant currently owns 80 percent of ARG, with the remaining 20 percent stake held by the Armenian government. The latter has not ruled out the possibility of such an arrangement.

Energy and Natural Resources Minister Armen Movsisian said on June 19 that no agreement with the Russians has been reached so far. He has made no fresh announcements since then. Movsisian’s press office could not be reached for comment on Monday, a non-working day in Armenia.

The uncertainty left local analysts wondering who is now subsidizing the gas price. “There is no official word yet on the subsidy,” said Armenak Chatinian, an economic commentator for the Yerevan daily “Orakarg.”
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