The Armenian government will use the money received through the sale of one of the country’s largest electric power generating facilities to subsidize the rise in electricity prices, it emerged over the weekend.
Armenia - Prime Minister Hovik Abrahamian addresses an economic forum in Yerevan, 30Jun2015.
During his working visit to Armenia’s northwestern city of Gyumri on Saturday, Prime Minister Hovik Abrahamian said that the 16-percent rise in electricity prices effective from August 1 would be offset from the recent deal on the Vorotan Hydro Cascade, which has been sold to private U.S. energy company ContourGlobal for $180 million. Under the deal completed in May the New York-based firm is also to invest another $70 million in the modernization of the facility.
After days of large-scale protests in Yerevan President Serzh Sarkisian said in late June that the government would take upon itself the whole burden of the rate hike until an international audit was conducted at the Russian-owned Electric Networks of Armenia that runs Armenia’s power grid. He said the public would start paying the difference only if the audit confirmed that the rise was justifiable. Otherwise, he said, the government would find a way to recover the sums paid as subsidy.
A large number of activists as well as opposition politicians in Armenia did not accept the government’s “compromise solution”. They said that the subsidy would still be paid from taxpayer money.
Later Prime Minister Abrahamian promised that the subsidy would be from “extra-budgetary” means, but he did not elaborate on that.
Rise Armenia, one of the civil groups campaigning against electricity price hikes, held more smaller-scale street protests last week and one of the demands of its members was that the government reveal the source of funding for the subsidy.
Talking to media on Saturday, Abrahamian described the funds received through the sale of the Vorotan Cascade as “extra-budgetary”. He also spoke about the planned audit, stressing that everything will be done for it to be held “in a transparent manner.”
“We will try to give answers to all questions that exist in society today. Our goal is that the society will know the reality,” he said.
Armenia’s leading civil groups have rejected the government’s approaches to the electricity price subsidy as they believe that the money received from the sale of the Vorotan Cascade are “budgetary funds”.
Sofia Hovsepian, of the No To Plunder movement, described the Vorotan Cascade as a “national wealth”. “It turns out that again they pay from the people’s pocket,” she said.
In its Saturday statement on the general situation around the rate hikes issue, Rise Armenia demanded the nationalization of Armenia’s power distribution network so that it could become a public company later. It also called for the resignation of the tariff-setting commission that controversially partially approved the electricity tariff rise in June.