Prime Minister Hovik Abrahamian said on Tuesday that the Armenian government will use “extrabudgetary” funds to subsidize electricity supplies and thereby offset, for now, their increased cost for consumers, which has sparked angry street protests in Yerevan.
Abrahamian did not specify the precise source of the subsidy, saying only that it will not be financed from the state budget. “What funds? We will explain [later on,]” he told reporters.
Energy and Natural Resources Minister Yervand Zakharian also declined to give details. “I can’t name a concrete source because I myself don’t know it,” he said. “The prime minister probably knows what he says.”
President Serzh Sarkisian announced the subsidy on Saturday five days after thousands of mostly young people occupied a section of a central Yerevan avenue leading to his residence. To that end, he said, the government will divert “funds that were set aside for strengthening our security.”
This fueled speculation that the government will tap a $200 million Russian government loan meant to underwrite the purchase of more Russian-made weapons for the Armenian army. The release of the Russian loan was announced on Friday.
Sarkisian made clear that the subsidy will run until the completion of a “meticulous” international audit of Armenia’s Russian-owned power distribution network widely blamed for the more than 17 percent price rise. He said the audit will determine whether the price hike was economically justified or resulted from corruption and mismanagement in the network.
The loss-making Electric Networks of Armenia (ENA) will be held accountable if it is found guilty of forcing households and corporate consumers to bear the financial burden of fraud among its senior executives, Sarkisian said. Conversely, the Armenian government will stop covering the extra cost of power supplies if the ENA is cleared of major wrongdoing, added the president.
Organizers of the continuing protests in Yerevan have dismissed this concession, arguing that it means Armenian taxpayers would continue foot the extra energy bill in one way or another.
Zakharian said that the ENA’s auditor will likely be chosen in July. But he could not say how long the financial inspection will take. Other Armenian officials have suggested that it will be completed by the end of November.