The Public Services Regulatory Commission put on a show once again: the members confirmed the new prices for gas. Consumers using 10,000 cubic meters of gas, citizens will have to pay 200 dollars instead of the current $130 dollars. For those consumers who use 10,000 or more cubic meters of gas, they will have to pay 146.5 dollars instead of the current 79.1 dollars. The average price for gas was fixed to be 162.95 dollars instead of the original 168.4 dollars. The new prices will be in effect starting from April 10.
Let’s go back a couple of weeks when, on February 28, “ArmRusGazard” had appealed to the public services regulatory commission, suggesting raising the price to $240 dollars and 145 for large consumers. The committee, in turn, partly went along with that. The committee has always done things this way, take for example, last year when it was fixing the price for water. It seems as though it is trying to show that it is an independent company and the authorities can’t do anything. However, the average consumer knows that all companies first fix a high price so then they can get something out of it. So, there’s no doubt that all of that is decided with the committee beforehand.
During the session yesterday, both sides talked about the reasons why they had raised the price. “ArmRusGazard’ brought up three reasons:
1. Change in gas price on the border
2. Increase in the expenses for use and maintenance
3. Return of investments made in 2004-2005
The committee partly went along with that. But the committee didn’t accept the 1,800,000 dollars for expenses for use and maintenance. The committee only confirmed the 1,425,500 dollars in expenses, in other words, 374,500 less than what “ArmRusGazard” had suggested. The average monthly salary of the “ArmRusGazard” workers was also included in the gas price increase proposal. The company had proposed turning the 130 dollars salary into 190 dollars. The committee has already confirmed this.
So, the committee partly confirmed the gas provider’s appeal in just 10 days when, according to the law, it was supposed to confirm it within 90 days. Why all the rush? It turns out that “ArmRusGazard” had signed a contract with “GasExport” back in December 2005, according to which the price for importing gas was supposed to be 110 dollars. This contract was sent with the appeal. So, in contrast to the consumer, the committee knew about the contract beforehand and planned out everything step by step. This means that there was not much to calculate after February 28. Now the vice-director of “ArmRusGazard” says that they hope that the fixed price in the contract-110 dollars-will be reduced. That was the reason why the contract with “GasExport” was kept a secret from society.
Director of “ArmRusGazard” left for Moscow yesterday once again to participate in the negotiations led on the gas price.
But the new gas prices are confirmed. This means that Armenia was not able to lead negotiations on the gas price. We weren’t able to lower the proposed 110 dollars just a little, just like Ukraine did when it lowered the 230 to 95 and how Moldova lowered it from 160 to 110. Armenian authorities were supposed to at least lower it from 110 to 70-80 dollars, which is a logical price. “GasProm” pays 60 dollars out of its pocket for every 1000 cubic meters of gas provided to Armenia. Another 10 or 20 dollars would bring more income to that company yearly. Basically, Armenia had to try to buy the gas from Russia for at least 80 dollars, especially since Armenia is considered to be Russia’s strategic ally. After all this, we are left with the promise that the government made last year to provide citizens with the country’s resources in case the gas price goes up. However, they haven’t said anything until now. In fact, since the government is a 45% shareholder of “ArmRusGazard”, it has obviously agreed with the gas price. This means that the government was also well aware of the contract signed between “ArmRusGazard” and “GasExport” back in December and didn’t let the people know for the past three months. This also means that the government plays its role here too. We will see just how the government will stand up for its people when the people fight for the gas price to go down alone. Meanwhile, the gas providing company and the committee members believe that Armenian authorities can help ameliorate the situation, for example, giving up 45% of the shareholding and handing that money over to the needy as compensation.
MP Manuk Gasparyan and economist Edward Aghajanov presented the committee with their calculations and proposals. They were suggesting that “ArmRusGazard’ reduce the losses by 5.37%, not charge the value added tax (VAT) after adding the losses and other expenses up and raising the price, but rather charge the VAT from the 110 dollars. They had calculated that by doing this, the average gas price would go down from 163 to 156 dollars. They were proposing not to fix this high price for the people because producers can come up with other technologies, while the citizen will save money and freeze.
Later on, our authorities will calculate and see how much our economy will lose and how high will the Central Bank’s fixed 3% go. Did the government really stay true to its word when it said that it would overcome poverty with its strategic plan? Is it actually worth producing electricity through the nuclear plant? Only this time, let’s hope things don’t go wrong.