During the government’s session on November 24 there was an interesting incident between prime-minister Tigran Sargsyan and the head of the statistics service, Stepan Mnatsakanyan.
During the session the government also changed land categories in a number of communities for the purpose of issuing permissions for constructing hydro power plants. The communities that were subject to change of land category for the mentioned purpose are Lori’s Meghvahovit, Ararat’s Surenavan, Stepanavan city, Small Vedi, Goravan and Burastan, Armavir’s Artamed and Vanand villages and Sevaberd. As the topic was about small hydro power plants, the PM asked to the head of the statistics service, “We are building dozens of power plants, does that information reach you?” In answer to this question Stepan Mnatsakanyan said that the mentioned information was included in the construction section of their reports. Journalists noticed that this question that seemed to be a normal question was expressing the prime-minister’s discontent concerning the work of the statistics department. Specifically, the reason was the construction sector, which had been declining. The problem is the fact that the construction sector, which used to be the main sector providing double-digit growth of the economy, has not come out of the crisis yet. In January of this year the construction sector’s decline compared to the same period of last year was 11.7%. During the next two months the growth rate was reduced and was ranging around 5%. In April there was growth in this sector by 16.9%, however later it started to decline again. In June and July the production of the construction sector was less by 31.3 and 32.2% accordingly. In August, September and October the reduction in this sector was about 25%. The decline in the sector of construction is changing the entire picture of the economy and if there was even a small development in constructions sector, the picture of the entire economy would be different.
It is not clear how much the information about power plants can change the statistics because there is no separate section about it.
This category includes not only hydro power plants, but the works done for electricity, gas and steam processing. The chart above shows that during the nine months of this year the work done in this sector was equal to 20.6 billion drams (54 million dollars).
Id this number real or fake? In the beginning of 2011 there were over 100 small hydro power plants in Armenia. In July the number of such small power plants was 110. The director of the investment management department of the committee on regulation of public services Abgar Budaghyan said to the media in July that 65 other small hydro power plants were being constructed. He also said that in 2011 there would be approximately 165 hydro power plants in Armenia.
Experts say that it is very expensive to build small power plants. In order to build one small power plant with 1 megawatt power, they have to spend one million dollars. This means that in order to build 65 small power plants in Armenia, they have to invest minimum 78 million dollars. As the year has not finished yet, they must have invested ¾ of this amount, i.e. 58 million dollars, which is more than the amount invested in all sectors as reported by the statistics services. Even if it is a rough calculation, the information about the construction of small power plants is not adequate with the real processes going on. Definitely the prime-minister knows about these calculations and he is asking a good question.
How can this difference be explained? In Armenia people do not want to show their expenses in order not to pay taxes. For example, if one imports equipments for 100k dollars from a third country for using in the power plant construction, he will show that he has paid less in order to pay less tax. Of course it is also partly the failure of the statistics service because there are businesses that are not willing to provide information about their financial affairs.
The problem is different here. Those who know Mr. Mnatsakanyan say that he is a good professional in his work. However, in his job during many years he had to report exaggerated information and numbers about the statistics on GDP and incomes. Now there are suspects that this institution is reporting information that shows another picture, i.e. it spoils the shiny macroeconomic picture of the country. The government does not want this happen, thus in the coming month we may see that there has been double digit growth in this sector. They have to close the year with positive and optimistic information.