New Years’ 2007 differed from the rest of the New Years of Armenia’s independence in that the prices for services of the natural monopoly sector did not go up, rather they went down. During the past couple of years, Armenians had gotten used to start the New Year off by paying high prices for services.
Starting from January 1 of each year, Armenians used to pay more for telephone, electricity, gas and water than the previous year. The new prices were fixed at the end of the year and went into effect at the start of the New Year, or consumers simply found out that the price for the given service would go up. The opposite happened this year-the price for gas went down.
Last fall, the only gas provider in Armenia-“ArmRusGazard”-applied to the Public Services Regulatory Commission of Armenia and suggested leaving the price for 1 cubic meter of gas at 65 drams for citizen-subscribers and 146 dollars for 1000 cubic meters of gas for large consumers. Director of “ArmRusGazard” Karen Karapetyan explains that large consumers buy gas with dollars and since the dollar is devaluating more and more, they pay for gas with the cheap dollar and get major profits. Large consumers also get huge profits from gas sales as a result of subsidization on the part of the Armenian government. Since last spring, the Armenian government has been paying 25,000 of the 90,000 drams for 1000 cubic meters of gas for the citizen/subscribers and 52 dollars of the 146 dollars for large consumers. However, in November 2006 the tariffs’ commission made a decision and reduced the gas price for both subscriber groups. The commission lowered the price for 1000 cubic meters by 6,000 drams. Although the commission increased the price for large consumers by 7 dollars, however this was much cheaper than in March when the gas price was fixed. The commission also explained that the reason for the “reduction” was the dollar devaluation. So, Armenia purchases the gas from Russia in dollars but sells it to Armenian citizens in Armenian drams. But since the dollar has devaluated in Armenia, thus gas must also be cheaper despite the fact that the dollar started devaluating in 2004 and there had always been an issue to lower the price for gas and other imported products. On the other hand, it’s illogical to lower the gas price in Armenia because gas prices are going up internationally. Currently, Belarus, Georgia, Azerbaijan and Ukraine are in a gas war with Russia. Russia wants to increase the price for gas supplied to these countries. With all this going on, it seems as though the decision of the Public Services Regulatory Commission to reduce gas prices for citizens is an order from the Armenian authorities so that they’ll get on the good side of the voters before the Armenian parliamentary elections.
Last fall, “ArmenTel” also applied to the Public Services Regulatory Commission for the increase of prices for fixed communication and certain services. The commission rejected the application of the communications operator and left the application without discussion, reasoning that the offer to increase the prices was baseless. The commission suggested “ArmenTel” to present an offer with enough grounds. At the present, it’s hard to say whether “ArmenTel” will come up with a new offer before spring or wait until after the parliamentary elections. The press department of “ArmenTel” responded that the company is working on the new offer. The elections will be over by the time the commission makes a decision and fixes prices even if “ArmenTel” presents an offer in the spring. However, “ArmenTel” subscribers were waiting for the reduction of prices after the new Russian “VimpelCom” company entered the communications field of Armenia and the second operator in Armenia “Viva Cell” would lower its prices. After all, in summer 2005 when “Viva Cell” became the second mobile phone operator in Armenia, “ArmenTel” lowered its prices. As a result of competition, both companies lowered their mobile phone service prices by a couple of times. However, it seems as though the Russians aren’t rushing and it’s good that “ArmenTel” delayed the discussion of the commission. So, telephone bills won’t increase this year or at least until the first half of the year, at least not before the parliamentary elections.
The next service of the natural monopoly sector is water and the last time that water prices went up was in May. The new French company in charge of the water supply system of Yerevan signaled its entrance with the increase of water prices and has the right to review pricing once every year. However, it seems as though the “Yerevan Water” company isn’t thinking about presenting such an offer yet. Usually, the water company used to send in its application at the beginning of the spring but discussions were held at the beginning of the year. There still aren’t any discussions this year and apparently “Yerevan Water” is also waiting for the parliamentary elections.
As for energy prices, they’re not going to go down; meanwhile, it was expected to lower the price for electricity as a result of the dollar devaluation. In response to the question regarding energy prices, the commission representatives commented that the energy suppliers had made so many large contributions throughout the past couple of years that there was no room for price reduction. It’s possible, but would be logical to improve the level of quality of energy, but the citizen-subscribers don’t feel the change. During the cold winter and especially the holiday season when the network is full, often accidents happen just like with “ArmenTel” and the water supply system and the discharge of water. In fact, it is expected to see an increase of the price for electricity, but not in 2007 or 2008.
In a word, the Public Services Regulatory Commission doesn’t have much to do in 2007 with these four products/services because it has done most of the work in 2006. The press department correspondents of the commission told “168 Hours” that there still hasn’t been any offer for the change in prices. The commission will most probably be busy with using the hydro-electric stations and authorizing the provision of Internet Service and/or other services. But after the 2008 Armenian presidential elections when it will no longer be necessary to get on the good side of citizen/subscribers, the commission will once again start to change prices, better yet, increase them.