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Government Signals Another Electricity Price Rise


Armenia - A newly refurbished energy distribution facility in Gyumri, 13Sep2014.

Armenia - A newly refurbished energy distribution facility in Gyumri, 13Sep2014.

A senior Armenian government official indicated on Wednesday that the continuing significant weakening of the dram will likely push up the electricity prices in Armenia.

“It will definitely have an impact on our calculations and approaches,” Deputy Energy and Natural Resources Minister Areg Galstian told reporters, commenting on electricity-related implications of the weaker dram. He declined to specify the possible extent of a tariff increase, saying only that the government and utility regulators are now monitoring the situation.

The Public Services Regulatory Commission (PSRC) raised the energy price by 27 percent in July 2013, pointing to the increased cost of Russian natural gas, which generates more than one-third of Armenia’s electricity. The price went up by another 10 percent in July 2014. The PSRC cited the need to end mounting financial losses incurred by the Electricity Networks of Armenia (ENA), the Russian-owned national power utility.

A spokeswoman for the ENA, Natalia Sarjanian, told RFE/RL’s Armenian service (Azatutyun.am) that the company is currently assessing its financial situation in the light of the dram depreciation. She said it has not yet decided to ask the PSRC to approve another tariff hike.

The ENA’s moves will clearly depend on the price of natural gas supplied to thermal-power stations by Gazprom Armenia, the national gas distribution network. The latter buys the bulk of the gas from its parent company, Gazprom, at a price set in U.S. dollars.

A Gazprom Armenia spokeswoman, Shushan Sardarian, indicated that the gas operator may request a tariff rise if the dram continues to fall. She noted that the existing gas prices were calculated on the basis of an exchange rate of 416 drams per dollar. The Armenian currency traded at more than 570 drams per dollar on Wednesday.

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