Russian gas monopolist Gazprom’s subsidiary in Armenia has asked the local regulators to lower tariffs for consumers as well as approve new ones for certain groups of citizens and corporate bodies after an apparent request from the country’s authorities.
Last week the possibility of lowering gas prices for Armenian consumers was addressed during a meeting of Armenian President Serzh Sarkisian and visiting Gazprom chief Alexey Miller.
Gazprom, which provides the bulk of Armenia’s natural gas, already lowered its price by 9 percent, to $150 per thousand cubic meters, as recently as in April, which resulted in a 6-percent reduction of the retail price for households and small businesses in the country from July 1.
Armenia - President Serzh Sarkisian (L) meets with Russian Gazprom chief Alexey Miller, Yerevan,25Oct,2016
Speculation about a possible further cut in the gas price began in September shortly after former Gazprom executive Karen Karapetian was appointed Armenia’s new prime minister.
During the first meeting of his cabinet later that month Karapetian, in particular, told the Armenian ministries of energy and labor as well as state utility regulators to explore ways of making electricity and gas cheaper for low-income households and some businesses.
“This must be done at the expense of economic entities that provide such services, rather than the state budget,” Karapetian said in a clear reference to energy suppliers.
In a statement released on Tuesday, Gazprom Armenia said that in its application to the Public Services Regulatory Commission (PSRC) it seeks the approval of lower prices for both individual consumers using less than 10,000 cubic meters of natural gas a month as well as corporate consumers using higher amounts.
The decrease sought by the company for households is expected to make over 5 percent – from current 146.4 to 139 drams per cubic meter (the current exchange rate of the U.S. dollar in Armenia on average is 473 drams).
Corporate users, meanwhile, are offered to pay an equivalent of $242.1 per thousand cubic meters instead of current $257.
Besides, the company offers some differentiation in its tariffs. Thus, for consumers that are entitled to family or social benefits Gazprom Armenia offers a 100-dram-per-cubic-meter tariff for 600 cubic meters consumed during a year.
For farmers keeping greenhouses from November 1 to March 31 the company offers a tariff of an equivalent of $212 per thousand cubic meters and for processing companies it offers the same tariff all year round.
Payments, according to Gazprom Armenia, will be accepted in drams in accordance with the average price of the U.S. dollar formed on the Armenian currency market following the publication by the Central Bank of Armenia of the exchange rate for the 25th day of the preceding month.
“To encourage corporate consumers in Armenia’s market to increase the volumes of gas consumption and expand their activities, all consumers using 10,000 cubic meters of gas and more per month, except liquefied natural gas filling stations, state budget-funded organizations and electricity generators using natural gas at thermal stations for supplying electric power to the domestic market, for every 1,000 cubic meters of gas consumed above 10,000 will be asked to pay only an equivalent of $212,” the company announced.
“For newly established gas consuming companies, whose monthly gas consumption will make 10,000 cubic meters or more, gas supply conditions and tariffs will be determined additionally, as a result of discussions between Gazprom Armenia and PSRC.”
A PSRC official told RFE/RL’s Armenian Service (Azatutyun.am) later today that if approved, the new tariffs are likely to become effective from January 1, 2017.
Vahagn Khachatrian, an economist affiliated with an opposition party, described the possible reduction of gas tariffs in Armenia as “predictable” since, according to him, gas prices offered to the country’s consumers by the Russian monopolist are “inflated”. He further claimed that Gazprom Armenia receives excessive profits.
Gazprom Armenia has not yet explained at what expense it is going to reduce the tariffs. But Khachatrian fears that it may again come “at a price” for Armenia. He, in particular, pointed out the 2013 gas deal as a result of which the Armenian government ceded its remaining 20-percent stake in the gas distribution network to Gazprom on account of accumulated debts.