The Armenian government has wasted millions of dollars in budgetary funds as a result of selecting a private supplier of government-subsidized fertilizers to farmers without a tender, according to anti-trust regulators.
The government has long been subsidizing the prices of fertilizers as well as diesel fuel bought by many farmers across Armenia. It purchases those commodities from private firms chosen by the Agriculture Ministry.
The State Commission on the Protection of Economic Competition (SCPEC) alleged a gross misuse of taxpayers’ money set aside for the fertilizer scheme in a detailed study released on Wednesday. It pointed out that since 2012 the Agriculture Ministry has contracted only one company to supply fertilizers distributed in rural areas at cut-down prices.
According to the SCPEC, the company called Berriutyun faced no competition in the selection process and set disproportionately high prices. In 2015 alone, the government could have saved 1.5 billion drams ($3.2 million) had it paid a market-based price for the fertilizers, concluded the regulatory body.And the farmers could have paid 36 percent less for them, it said.
The Yerevan newspaper “Haykakan Zhamanak” claimed that Berriutyun is owned by a relative of Gagik Khachatrian, a former finance minister who has long been dogged by opposition and media allegations of corruption.
Armenia -- Minister of Agriculture Sergo Karapetian (L) and Prime Minister Hovik Abrahamian (second from left) visit a wheat field in Shirak region, 9 July, 2014
Commenting on the SCPEC report on Thursday, Agriculture Minister Ignati Arakelian pledged to revise the process of fertilizer supplies. But he was careful not to criticize his predecessor Sergo Karapetian who served as minister during the period covered by the report.
“In previous years there was a government decision on how to handle [the fertilizer scheme,]” Arakelian told reporters. “We are now thinking about what are going to do next year and how.”
“We are now negotiating with all interested [suppliers] to understand what impact on prices there can be in the market,” he said. “Accordingly, we will develop a subsidy mechanism that will be more transparent and targeted.”
The SCPEC report will raise more questions about the integrity of broader state procurements in Armenia. The Anti-Corruption Center (ACC), the Armenian affiliate of Transparency International, said earlier this year that the process remains rife with serious “corruption risks.”
The watchdog claimed that various Armenian government agencies purchased many goods and services at artificially high prices last year. The government awarded 70 percent of its procurement contracts to private firms without any competitive tenders, it said.