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U.S. Firm To Probe Armenian Energy Price Hike


Armenia - Armenians demonstrate on Yerevan's Marshal Bagramian Avenue against a controversial electricity price hike, 26Jun2015.

Armenia - Armenians demonstrate on Yerevan's Marshal Bagramian Avenue against a controversial electricity price hike, 26Jun2015.

The Armenian government announced on Thursday that it will hire a leading U.S. financial services firm to determine whether a recent rise in electricity prices in Armenia, which sparked dramatic street protests, was economically justified.

The company, Deloitte & Touche, will be paid $230,000 to look into financial operations of the Armenian energy sector and assess its tariffs set by the Public Services Regulatory Commission (PSRC), a nominally independent state body.

“Deloitte and Touche is an internationally renowned company, and I think that after their conclusions we will have sufficient grounds to move forward,” Prime Minister Hovik Abrahamian said at a weekly cabinet meeting in Yerevan.

The inquiry was one of the concessions made by the government in late June to thousands of mostly young Armenians holding nonstop rallies in Yerevan in protest against the PSRC’s decision to raise the energy tariffs by more than 17 percent.

More importantly, President Serzh Sarkisian also promised at the time a special audit of the Electric Networks of Armenia (ENA), the Russian-owned national power utility. The audit is supposed to determine whether the ENA’s mounting losses in recent years have resulted from its mismanagement or insufficiently high electricity prices. Sarkisian said the government will subsidize those prices until the release of the audit’s findings.

The government has yet to select a foreign consulting firm that will conduct the audit. Abrahamian said on Thursday that it is still negotiating with “the Russian side” on the matter.

Headquartered in New York, Deloitte is the world’s largest company providing audit, tax, consulting and other financial services. It has a small subsidiary in Armenia.

Robert Nazarian, the PSRC chairman, told RFE/RL’s Armenian service (Azatutyun.am) that Deloitte specialists will have about four months to look into the “supply chain” in the energy sector and decisions made by his regulatory commission. He said it will conclude whether the PSRC was right to raise the tariffs in June for a third time in almost two years.

Artak Manukian, an economist monitoring the sector, played down the significance of the Deloitte inquiry, saying that it cannot expose what many in Armenia see as widespread fraud and corruption within the ENA. “They cannot address the concerns voiced by the public,” he said.

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