Armenian Power Utility Seeks Another Price Hike

Armenia - An electricity distribution facility, undated

Armenia’s loss-making power distribution network said on Thursday that will ask public utility regulators next month to raise the prices of its electricity for a third time in less than two years.

The Russian-owned company, Electricity Networks of Armenia (ENA), did not disclose the scale of the price hike which it hopes will be approved by the Public Services Regulatory Commission (PSRC). “The matter is still under discussion,” Natalia Sarjanian, an ENA spokeswoman, told RFE/RL’s Armenian service (Azatutyun.am).

Sarjanian said the unpopular measure is essential for helping the company end its financial losses which she estimated at 10 billion drams ($21 million) per annum. The ENA, which is owned by Russia’s national power utility RAO UES, has not made profits for three consecutive years, she said.

The ENA also owes a total of over $250 million to Armenian power plants and commercial banks. Energy and Natural Resources Minister Yervand Zakharian emphasized this fact in January when he hinted that a price hike is imminent.

“A political decision has already been made,” said Hayk Gevorgian, an economics editor for the “Haykakan Zhamanak” daily. He claimed that the PSRC will raise the daytime energy tariff for households by 14 percent to 48 drams (10 U.S. cents) per kilowatt/hour.

The tariff went up 27 percent rose by in July 2013 because of the increased cost of Russian natural gas, which generates more than one-third of Armenia’s electricity. The PSRC raised it by another 10 percent in July 2014, citing the need to end the company’s mounting losses.

Critics, among them Gevorgian, believe that the ENA’s financial troubles result from poor management, rather than the ostensibly low prices of electricity. They will also point out that Russia’s Gazprom monopoly lowered this month the price of its natural gas for Armenia by over 13 percent.

The ENA reported additional losses following a 17 percent depreciation of the Armenian currency, the dram, late last year. Vartan Ayvazian, the chairman of an Armenian parliament committee on economic issues, said on Thursday that this alone warrants an energy price rise.