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Russia Agrees To Deeper Gas Price Discount For Armenia


Armenia - Gazprom Chairman Alexei Miller speaks at a ceremony in Yerevan, 16Apr2015.

Armenia - Gazprom Chairman Alexei Miller speaks at a ceremony in Yerevan, 16Apr2015.

Gazprom has agreed to cut the price of its natural gas delivered to Armenia, the chief executive of the state-owned Russian gas monopoly announced on Tuesday following negotiations with the Armenian government.

“The gas price for the Republic of Armenian, given its accession to the EEU (Eurasian Economic Union), will be lowered to $165 per thousand cubic meters,” Alexei Miller told the Rossiya-24 TV channel. “It stood at $190 until now.”

“This price will allows us, among other things, to make investments in the reconstruction and modernization of the gas distribution system,” Miller said, referring to the Armenian national gas company fully owned by Gazprom.

Miller announced the move less than two weeks after visiting Yerevan and meeting with President Serzh Sarkisian. The latter gave the Gazprom chief an Armenian state medal in recognition of his “remarkable contribution” to Russian-Armenian economic ties.

Earlier in April, Energy and Natural Resources Minister Yervand Zakharian said the Armenian government is negotiating with Gazprom in hopes of securing a greater price discount.

Gazprom, clearly acting on Russian government orders, already cut the gas tariff in 2013 after Armenia agreed to join the Russian-led EEU. The Russian giant currently charges European countries more than $300 per thousand cubic meters.

The 13 percent price reduction announced by Miller is unlikely to lower the cost of Russian gas for Armenian households and corporate consumers. It seems to be primarily aimed at enabling Gazprom-Armenia, the national gas distribution network, to reverse losses incurred as a result of last year’s 17 percent depreciation of the Armenian dram.

In Miller’s words, a larger profit margin will also allow for more capital investments in the Armenian network. “We have set an objective: to raise the country’s rate of gasification to 100 percent,” he said.

Some 95 percent of the households across Armenia already have access to centralized gas supplies.

The existing retail gas tariffs were the subject of three-day heated debates held in the Armenian parliament early this month. Opposition lawmakers questioned the veracity of financial losses posted by Gazprom- Armenia and said the company is already making disproportionate profits at the expense of the struggling population. The government and lawmakers loyal to it denied that.

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