The assessments experts, that there are monopolies in different
fields in RA economy, are not prooved yet in the fields we have
examined till now. Anyhow, this in accordance with the official
information and the marks viewed by those businessmen. While there are
also fields, which are not monopolized, but are ruled by duopolies,
i.e. the markets are devided into two parts between two participants.
Nowadays this kind of status has the market of liquefied gas.
There are no conflicts in liquefied gas field
With its significance the market of liquefied gas is not worse than the
market of gasoline. As in the field of gasoline, here, in the field of
gas, the market is devided into two parts too: liquefied gas and
natural gas markets. In difference with the market of gasoline, here
there is clear classification: importer of liquefied gas and importer
of natural gas.
Technical and economical
First of all we should mention the technical difference of liquefied
gas and natural gas: from the origin source point of view. In case the
first one, its source is natural, and consists of either ethane or
methane, and the second one is reproduced from oil and consists of
either propane or butane. Accordingly the prices for liquefied gas
depends on the world rates for oil.
The second difference is connected with transportation. The natural gas
transportation fees depend on the investments made on the pipe-line,
the fees of the pipe-line services and the transit countries fees. In
case the liquefied gas is imported by special carriers, and in the
prices of this they calculate also the transportation rates like in
case of the other products, with only one difference: the gas carriers
service is more expensive in connection with its other technical things
and security measures.
The next difference of these two types is connected with security.
According to experts, liquefied gas is several times more dangerous
than the natural one. At the same time, according to technical
literature, liquefied gas is 7-8 times more secure than diesel oil. As
for the difference between liquefied gas and gasoline, liquefied gas
contains half more octane, due to which its efficiency is half more
when using it for cars. Natural gas is cheaper than gasoline for three
times, and liquefied gas – twice.
The differense of the prices resulted the fact, that these types are
more used for cars, which brought to decreasing the percentage of
buying gasoline for 40 %. The use and demand for alternate oil created
a new business field, which we called the field of gas.
International monopoly
Of course, the market of gas is too small than the market of gasoline
and diesel oil. But before refering to private market we will pay
attention to a factor, which is also stipulated by private businesses
activities. The import of natural gas is state monopoly. Nowadays this
import is realized by “ARG” joint company, which was founded in 1997 in
the result of a contract made between the government of RA and russian
“Gazprom” company, 49 % of which is owned by the russian party. Of
course, “ARG” is a company founded with political purposes, and it is
not worthy to speak about economical effectiveness here (the activities
of ARG as a danger for armenian energy and economy is out of this
subject). Only it is worth to mention, that “Gazprom” made its
investments in “ARG” capital not with money, but with gas, taking the
responsibility to provide Armenia with gas for 148 mln USD. This gas
was supplied, the payments were taken from the public, but this money
didn’t reach the state budget. Even more, no actions were taken to find
out where this money was lost and to find the people who are
responsible for this (we will try to discuss this later).
In a word, ARG has a status of monopolist in the field of gas, which
was fixed by the committee of economical competition protection (CECP)
by its act about ten days ago, considering ARG as “the only imprter and
distributor of natural gas”, which, according to the law, means to
place a dominated role in the market. As in the reporting period ARG
hasn’t used its positions to increase the prices for gas, CECP hasn’t
made any sаnctions. As for the marks of ARG activities, our efforst to
get information from this orgonization had no success: in the result of
bureaucratic delays we were offered to delay the publication of this
article. Anyway, here are some questions to which wanted to ask them:
1. how much gas do they annualy import? 2. how much does ARG pay for
each 100 cubic metre annually? 3. how many subscribers do they have
among the public? 4. how many and which companies buy gas from them for
cars using and being using? 5. what is the price ARG asks for gas from
these companies? Of course, we have found out all this information from
different sources of information. But in order to have more clear
information we wanted to get this information from a company having a
dominant role in this field.
Rating
As it was mentoined, the gas market was formed after 1997. Before that
liquefied gas almost wasn’t imported, and the natural gas was imported
by the government. The import of gas before 1977 is a different subject
for discussion, especially during the war period, the explosure of the
pipe line, and the way the government cooperated with unformal groups
to privide import of gas. During those years there was only one private
gas station in Armenia, and this was in Abovyan city, which used to
belong to businessman Gagik Tsarukyan, who is the owner of of the
biggest share holder company of this field: “Multi Leon” (ML).
According to our information, currently the director of ARG has stocks
in gas import with Gagik Tsarukyan. But we couldn’t find out whether it
is true or not, because we could meet neither with Gagik Tsarukyan nor
with K.Karapetyan.
In 1997 the situation in gas market changed. New big and small
participants were coming up. But during the time their number came down
because of both objective reasons (the market) and private reasons
(sponsorship). For example, in 2004 in the market of gas whole sale
nine companies operated, three of which (just like in case of gasoline
and diesel oil) covered most of the 50 % of the market. ML was in the
first place-20 %, and only “Gosh Gas” (GG) and “Arthur Anahit” (AA)
companies cover 28 % of the market. These companies are discussed,
because these are connected with each other, i.e. the owners are
relatives. And the third biggest participant of liquefied gas whole
sale market was “Didi group” (DG) company, which covered 17 % of the
market in 2004.
When talking to the owners of these companies, generally it seemed,
that there is competition in the market. But this can not be considered
true. Even more, the president of GG company Hajkaz Hovasapyan agreed
with our opinion, that actually there is duopoly in liquefied gas whole
sale market, i.e. the main participants are GG and ML companies.
According to Mr Hovasapyan, they import 600-650 tonnes of gas each
year, which covers the half of the whole market. The rest is imported
by ML, but he excludes the possibility of agreed competition. He also
approved the information, that A&A company used to belong to him.
He founded A&A for gas import, but it is nearly one year, that it
doesn’t operate. Till 2003 liquefied gas didn’t meet customs
examination and A&A imported gas, but after the tax code changes
A&A had to pay 1% of the total turnover, which didn’t comply with
their interests. Currently liquefied gas stations work with standard
taxation regime: one gas station pays 1,5 mln AMD each month, and in
case of selling more than some particular capacity, they pay more 20
AMD for each cm. For example, GG has 11 gas stations and pays 16,5 mln
drams standard tax each month, and more taxes for more sale and other
activities. At the same time, according to Mr. Hovasapyan, they need
about 15.000 USD for one gas station construction, i.e. the main
capital of GG in this field covers 200.000 USD. And what about the
roots of liquefied gas, Mr Hovasapyan assures, that there is no russian
gas in Armenia now, as it is said in some advertisements. Mr Hovasapyan
says, that russian gas was imported till 2004 November, at the same
time the gas was coming from Omsk by railway and then to Armenia
through Azerbaijan (the georgian partner company afformed as for
Georgia, and the gas was transported to Armenia from Georgia by
armenian companies after it was already in Georgia). According to his
words, one tone of the gas, brought through Azerbaijan, was cheaper for
30-40 USD than the iranian or turkmenian gas that is imported now.
Thought the liquefied gas prices are connected with the oil world
rates, which are not predictable today, Mr Hovasapyan assures, that
anyway their company will not increase the prices in the nearest
future, because they have gas for one more month. It is worth
mentioning, that Hajkaz Hovasapyan is the brother of taxation State
body operative investigation department head Shahen Hovasapyan, with
whose name the good will and the success of GG is connected. Shahen
Hovasapyan approved, that he is connected with GG, and that the owner
is his brother, who got educated in Rostov and was granted а title of a
candidate of economical science in Germany, and the finansial
management of the company is made by his wife. Shahen Hovasapyan
declines the information, that the head of the president security
service Grigory Sarkisyan has share in this business.Mr Hovasapyan says
that Sarkisian is his old friend, but has no relations with GG. It is
worth mentioning, that the Hovasapyans owe businesses in other two
fields too. “Gor&Nune” company, which belongs to them, is ocupated
in cargo transportation, and “Xizax Gor” LTD is ocupated in carbonated
water production. Their monthly income, according to Mr Shahen
Hovasapyan, covers 25.000 USD, and their all capital covers a little
bit more than 1 mln USD.
In difference with DG, the names of the owners of “Didi group” company
Garnik and Gagik Khalatyans are not well-known in the public. The
presidnet of DG Garnik Khalatyan had political positions in the state
bodies of Leninyan district till 90s. And the Khalatyans started to
make business after 1994. Currently their annual financial turnover is
more than 1 mln USD. Garnik Khalatyan says, that they always pay the
taxes (they pay each month more than 16 mln AMD taxes) and don’t need
in “sponsoprs”.
As for small gas stations, they are many both in Yerevan and in the
country. At the same time small gas stations owners are different:
starting from regional heads and ending up with generals. For example
these people have one gas station each in Yerevan: the minicipality
heads of Yerevan centre and Erebuni district, the ex National Assembly
speaker Khosrov Harutyunyan, MP Hakob Hakobyan (he is from Echmiadzin).
Nearly all the heads of regions and generals have gas stations.
As in the fields of diesel oil and gasoline, the gas market is very
profitable too. At the same time, in difference with the abovesaid
market, the market of gas is more prospective because of the higher
level of security. There are more factors and relations in this market
too, which are impossible to state in this small article.
And the next publication of the articles “The difficult way of making
the national bourgeoisie” will be about sugar importing and
realization. This field is very interesrting with the fact, that here
we deal with a monopoly classic model example.