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Armenian Gas Operator Plans No Retail Price Cut


Armenia - The Gazprom Armenia headquarters in Yerevan, 31Oct2014.
Armenia - The Gazprom Armenia headquarters in Yerevan, 31Oct2014.

Armenia’s national gas distribution company said on Wednesday that it will not lower the cost of Russian natural gas supplied to households despite a 13 percent reduction in its wholesale price set by Gazprom.

Gazprom’s chairman, Alexei Miller, announced the price cut on Tuesday following negotiations held with the Armenian government.

The Gazprom-Armenia operator, which is fully owned by the Russian energy giant, made clear that the decision will not affect its retail tariffs for households and corporate consumers. It spokeswoman, Shushan Sardarian, said the discount will only allow the gas operator to reverse losses incurred as a result of a recent 17 percent depreciation of the Armenian dram.

Sardarian argued that the dram traded at 416 per U.S. dollar when the existing retail price was set by Armenian utility regulators in 2013. One dollar is now worth 476 drams.

“The reduction in the gas price at the border will enable us not to ask the Public Services Regulatory Commission to revise the tariff,” Sardarian told RFE/RL’s Armenian service (Azatutyun.am). “That means the tariff for domestic consumption will remain unchanged.”

The household tariff currently stands at 156 drams (33 U.S. cents) per cubic meter. Gazprom-Armenia will now pay its parent company twice as less: $165 per thousand cubic meters, down from almost $190 charged by Gazprom until now.

Critics in Armenia have long claimed that this profit margin is disproportionately large. The gas operator has denied that, citing transportation and distribution costs involved.

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