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Energy Prices Set For Another Rise


Armenia -- Minister of Energy Yervand Zakharian at a press conference in Yerevan, 14 Jan, 2015

Armenia -- Minister of Energy Yervand Zakharian at a press conference in Yerevan, 14 Jan, 2015

Utility regulators will likely sanction another increase in the prices of electricity in Armenia because of continuing losses incurred by the Russian-owned national power distribution company, Energy Minister Yervand Zakharian said on Wednesday.

Zakharian claimed that the existing tariffs do not allow the Electricity Networks of Armenia (ENA) to repay its huge debts to power plants and commercial banks. He admitted that the losses result in large measure from poor management of the company owned by Russia’s Unified Energy Systems (UES) giant. The weakening of the Armenian dram is another factor, he said.

According to Zakharian, the ENA owes 15.8 billion drams ($33 million) to state-owned electricity producers in addition to its outstanding bank debts totaling $220 million.

“In the last six or seven years the Electricity Networks of Armenia has made no efforts to cut the losses,” the minister told a news conference. “And so we have had no reduction in losses.”

“Tariff changes are inevitable in Armenia and other countries,” he said.

Zakharian would not say just when the ENA will ask the Public Services Regulatory Commission (PSRC) to raise the energy prices. Nor did he shed light on the scale of the expected price hike.

The PSRC raised the tariff 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. It went up by another 10 percent in July 2014. The PSRC cited the need to end the company’s mounting losses.

Zakharian revealed that the Armenian government and the UES have set up a joint working group tasked with making the power utility more efficient. “We have drawn up measures to reduce the losses and submitted them to the company,” he said, adding that they will be taken in the coming years.

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