After a long while the theme of the gas price increase has become a top one. Recently the newly appointed Prime Minister of Armenia Tigran Sargsyan announced that the subsidization of the gas price will be ceased from May 1 and the consumers will have to pay more. This is no news and even three years ago everyone knew that it was going to happen. The problem is that this date matched with the serious problem period of the RA government. People have been complaining about the elections and now the new complaint topic is the gas price.
The executive director of the ArmRosGazProm Karen Karapetyan adverted to this issue in his yesterday’s press conference. Karapetyan reported Armenian consumers will start feeling the gas price increase already in winter. As from May, the government will stop the state subsidy on fees for natural gas supplies for households and enterprises, according to Karapetyan. From May 1, 2008, households and enterprises will pay over $200 and $153 per thousand cubic meters (against current $200 and $109). Karapetyan assured the journalists that the gas price in Armenia is lower than in other countries. In Georgia, for example, the gas price is $356 and about $283 per thousand cubic meters for households and public entities respectively. Karapetyan approved of the government decision on stopping the state subsidy on natural gas fees. He pointed out that over 45% of the country’s total gas is consumed in winter time. Consumers will feel the heavy burden of gas fees only in the heating season, according to the ArmRosGasProm Executive. The Government will support 130,000 socially vulnerable families to pay gas fees. According to Karapetyan, as from May 1, about 89,000 of consumers who annually use less than 300,000 cubic meters of gas will pay additional AMD 7,500 a year (about AMD 700 a month). Those 83,000 users who consume 300,000-600,000 cubic meters of gas, will pay extra AMD 83,000 annually (about AMD 1,200 a month). Karapetyan believes the increase of the gas price cannot cut gas consumption in Armenia, as the resource is economically sound in the country. According to him, ArmRosGasProm plans to develop a gas consumption program. He said the gas price rise will not affect the local business, as ArmRosGasProm has no rivals in the region. On April 1, 2006, the gas price in Armenia boosted from $56 to $110 per thousand cubic meters. To relieve the burden for households and enterprises, the RA Government decided to grant subsidies on gas fees. Some $188.8mln was allocated for ArmRosGasProm as compensation. As from May 1, 2008, consumers are to pay AMD 90,000 (VAT inclusive) per thousand cubic meters of natural gas and those who monthly consume over 10,000 cubic meters of gas, are to pay some $146.51 (VAT inclusive). Armenia is expected to consume over 2.1bln cubic meters of gas this year. Director General of the ArmRosgasprom Company Karen Karapetyan reported that the country’s energy sector is expected to consume about 500mln cubic meters. He pointed out that the energy sector used to consume 67% of the total gas consumption volume, this figure will decreased to 25% this year due to the consumption of gas by the country’s population. Karapetyan also pointed out an uptrend in the consumption of gas by the population – 7% in 2000 to 28% in 2007. A total of 1.869bln cubic meters of gas were sold in Armenia last year against 1.586bln cubic meter in 2006 – a 17.9% increase. The population consumed a total of 532mln cubic meters of gas – a 32.5%, and the industrial sector 405mln cubic meters – a 17.5% increase. Last year, the number of ArmRosgasprom’s prospective customers increased by 66,267 (a 10.1% increase), and that of actual customers by 77,479 (a 17.6% increase). By January 1, 2008, gas had been supplied to 472 settlements in Armenia, with 428 of them being rural settlements. A total of 128,244 or 45.5% of gas users are registered in Armenia’s rural areas and 388,028 or 91.6% in the country’s cities. A 19.7% increase in gas imports to Armenia was recorded last year – 2.054bln cubic meters against 1.716bln cubic meters in 2006. The ArmRosgasprom holds a monopoly of supply and distribution of Russian gas in Armenia. The company was founded in 1997. Its current capital is $580mln. The Gasprom Company holds 57.59% of the company’s stock, the RA Ministry of Energy 34.7% and the ITERA oil and gas company 7.71%. The Government decided to provide subsidies for moderating the prices established by the Public Services Regulatory Commission. Therefore, with the purpose of alleviating the burden of the population and the industry, a sum equivalent to USD 188.8 million was allocated to “ArmRussGazprom” company as a partial compensation for the established prices on natural gas. In case of consuming up to 10 thousand and more cubic meters per month, a subsidy was provided in the amount of 25 thousand Drams out of the established price of 84 thousand Drams per 1000 cubic meters, and in case of consuming 10 thousand and more cubic meters per month, a sum equivalent to USD 52.01 was granted as a subsidy out of the sum of USD 153.26 per 1000 cubic meters. As a result of the unprecedented growth of the volumes of gas consumption, the subsidy equivalent to USD 188.8 expired at the end of January, 2008. Besides that, the increase of gas price will also cause inflation of prices of other services. And everyone will suffer as a result, including the average citizens and the destitute ones. Businessmen are worried about the issue because they know that they are going to face serious problems from 2009 with the new gas price for them. In these conditions how can we demand from the businessmen to be active, invest more and have more long-term projects? The number of subscribers of gas network was 530,000 in Armenia as of April 15, the Press Service of ArmRosgasprom reported. According to the report, 529,231 were connected to the gas network as of April 1. The number of actual gas consumers increased by 2,872 in March only. In 2007 increase in potential subscribers of ArmRosgasprom was 10.1% and increase in real gas consumers – 17.6% in Armenia. “ArmRosgasprom” enjoys the monopoly for supply and distribution of the Russian natural gas on the domestic market of Armenia. The company was established in 1997. Its capital is $580mln currently. The shareholders are “Gasprom” open joint stock company (57.59%), Armenia’s Ministry of Energy (34.7%) and “Itera” oil and gas company (7.71%).The ArmRusGazArd company is planning to buy the four operating energy blocks of the HES of Hrazdan from Russia and unite it with the 5th block that is still being built. By doing this they are planning to establish a joint complex. This information was provided by the director General of the ArmRusGazArd Company Karen Karapetyan. “It is going to become a gas-energetic company. If we succeed in building an oil processing factory it will also be included in that structure and we will soon become a serious company,” said Karapetyan. The latter also spoke about the cessation of the subsidy of the gas price. The problem is that the questions, which the journalists were asking Karapetyan should have been addressed to the government. The ArmRosGazProm is a company, which strives for business and therefore must take care of the needs of socially vulnerable citizens. The government should take care of this. Maybe Karapetyan was asked to give explanations and console people because as a rule people don’t trust the government. The problem is that people believe only their eyes. And only time will show what people will see.