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Russian-Armenian Deal On Gas Price Subsidy ‘Agreed’


Armenia -- Energy Minister Armen Movsisian speaks with journalists.

Armenia -- Energy Minister Armen Movsisian speaks with journalists.

Russia has agreed to help Armenia subsidize the recently increased price of Russian natural gas supplied to the South Caucasus state, Energy and Natural Resources Minister Armen Movsisian announced on Thursday.

Movsisian refused to give any details of the Russian assistance, saying that the two sides are making “final adjustments” to the deal and will make it public in the coming days.

Russia’s Gazprom monopoly officially raised the gas price by 50 percent in April. The gas tariffs for Armenian households rose by only 18 percent last month seeing as the Armenian government pledged to subsidize the rest of the price hike. 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 Gazprom in the hope of raising that sum.

Movsisian, who personally negotiated with Gazprom chief Alexei Miller in Moscow in June, said that those talks are essentially over. But he would not say whether the Russian assistance will take the form of a loan or a handover of more Armenian energy assets to Gazprom.

“We will make final adjustments and publish [all the details],” he told reporters after a weekly cabinet meeting in Yerevan.

The Armenian press has been rife with speculation in recent months that the government could cede to Gazprom its remaining 20 percent share in the ARG national gas distribution network or even Armenia’s largest cascade of hydroelectric stations.

Gazprom expressed readiness in June to offer a price discount in return for gaining full control over ARG. The Russian giant currently owns 80 percent of ARG.

Movsisian insisted that Armenia’s forthcoming Association Agreement with the European Union, which seems to be opposed by Russia, will not scuttle the new gas deal with Moscow. “They [the Russians] will definitely give the money,” he said.

The Kremlin is playing the gas card to discourage another ex-Soviet state, Ukraine, from signing a similar agreement with the EU. Russian leaders say that the gas price for Ukraine will be lowered significantly if Kiev pledges to join instead a Russian-led Eurasian Union.
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