Gas Prices In Armenia Also Set To Rise

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

Armenia’s Russian-owned gas distribution network said on Thursday that it will ask utility regulators to raise the retail prices of natural gas in the country.

The Gazprom Armenia operator did not specify the extent of the price increases sought by it.

The Public Services Regulatory Commission (PSRC) hinted at such rises in a statement released last month. It said that gas mostly imported from Russia could become more expensive for Armenian households on April 1.

Suren Parsian, an economic analyst, said that in recent years the heat value of gas sold to Armenia by Russia’s Gazprom giant has exceeded the minimum level set in Russian-Armenian supply contracts. This fact alone should push up the gas price for households by at least 4 percent, Parsian told RFE/RL’s Armenian Service.

“But calorific value is not the only factor that determines gas tariffs,” he said.

The vast majority of individual consumers in Armenia currently pay 139 drams (29 U.S. cents) per cubic meter of gas. The price is set at 100 drams for low-income families.

International gas prices have skyrocketed over the past year. They are currently much higher than Gazprom’s existing wholesale tariff for Armenia that stands at $165 per thousand cubic meters.

Electricity prices in Armenia already went up by an average of about 10 percent on January 1.

Rationalizing that price hike, the PSRC cited last month the need to repay $270 million in loans used for the recently completed modernization of the Metsamor nuclear plant. It also pointed to Armenia’s contractual obligation to enable Gazprom to recoup investments made in a large thermal-power plant located in the central town of Hrazdan.

The regulatory body revealed that the Armenian and Russian governments have reached an agreement that commits Yerevan to providing the Hrazdan plant with $31.8 million annually for the next ten years.