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Accession To Russia-Led Union ‘Settles’ Gas Subsidy Problem For Armenia


Armenia -- Minister Armen Movsisian with journalists, undated.

Armenia -- Minister Armen Movsisian with journalists, undated.


The issue of providing a government subsidy for the recently increased price of Russian natural gas is no longer “on the agenda” after Armenia’s decision to join the Moscow-led Customs Union, the country’s energy minister said today.

Russia’s Gazprom monopoly raised the gas price by 50 percent in April. The gas tariffs for Armenian households rose by only 18 percent last month 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, would not be financed from the state budget.

Energy and Natural Resources Minister Armen Movsisian told reporters on Tuesday that the export taxes levied in Russia will no longer be applied to the natural gas supplies to Armenia, as a result of which the gas price at the border will make $189 per 1,000 cubic meters -- 30 percent less than the earlier negotiated price.

“In other words, the natural gas imported to Armenia will have the same price as the natural gas in Russia plus transportation costs,” explained Movsisian.

Negotiations between the governments of Armenia and Russia, however, continue, the official told RFE/RL’s Armenian service (Azatutyun.am). He explained that there is the issue of settling the debt for the gas delivered to Armenia at an increased price before September 3, the day when Armenian President Serzh Sarkisian announced, following talks with his Russian counterpart Vladimir Putin in Moscow, that Yerevan will join the Customs Union of Russia, Belarus and Kazakhstan.

Minister Movsisian did not specify in exchange for what the Russian side had agreed to provide the subsidy for the natural gas supplied to Armenia.

The Armenian media have speculated in recent months that the government could cede to Russia’s state-run gas monopoly Gazprom its remaining 20-percent share in the ARG national gas distribution network. Gazprom, which currently owns 80 percent of ARG, expressed readiness in June to offer a price discount in return for gaining full control over the gas distributing company in Armenia.

Citing the continuing talks as the reason, the Armenian energy minister refused to divulge details, saying only that the natural gas price for Armenia will be neither increased nor decreased.

“Earlier we conducted negotiations for the natural gas price to remain unchanged for a period of five years, but now that Armenia has decided to join the Customs Union this time restriction does not apply any longer as Armenia’s natural gas price will depend on domestic gas prices in Russia,” said Movsisian.

The minister also confirmed that there is no agreement on the new gas price between Armenia and Russia, while such an agreement does exist between Gazprom and ARG.

In reply to a question from an opposition lawmaker in the National Assembly last week Prime Minister Tigran Sarkisian said that there was no Russian-Armenian interstate agreement regarding the gas price and, therefore, its text could not be published as requested by the opposition.

The remarks fueled speculations in Armenia about the grounds for raising the gas tariff last summer without having an agreement on the price.

Leader of the ruling Republican Party’s parliamentary faction Galust Sahakian, earlier, too, explained that the tariff was raised on the basis of an agreement between the Russian gas monopoly and its Armenian subsidiary.
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