Gas prices going up in Armenia.

Experts call this one more blow against the people of Armenia.

From April 1, gas prices in Armenia will rise from 96 drams (25 U.S. cents) to 132 drams for one cubic meter, an increase of 37.5%. The cost of one cubic meter for large enterprises which use more than 10 thousand of cubic meters per month will rise 13% to 243 drams instead of the current 215 drams per one cubic meter.

The decision to raise prices was made by the commission for public utilities as a result of the consideration of a request by the supplier of Russian gas to Armenia - ArmRusGazprom. The increase is explained by the 17% rise in the cost of imported gas (from $154 dollars to $180 dollars per thousand cubic meters), the sharp increase of the exchange rate of the dram to dollar, the 20% reduction of the use of natural gas and the necessity of indemnity of investments realized by the company, as well as the increase of maintenance charges and upkeep charges made necessary by the expansion of the gas system.

At the same time, the head of the public utilities commission Robert Nazaryan stressed: “The prime minister has declared that government will undertake proper measures for those sections of the population that need help. This isn’t the commission’s problem. We have shown a professional approach to the declaration of “ArmRusGasprom””.

Meanwhile, according to the director-general of ArmRusGazprom, Karen Karapetyan, the company has no choice but to raise prices: “If there is any company which can import gas cheaper than we can, then we are ready to let them use our system. As an expert who understands something about this business I can say – such a company doesn’t exist”.

Prime Minister Tigran Sargsyan explained that taking into account the rise of prices for Russian gas from April 1, the government has developed measures for the control of the rise of prices. The government is preparing a complex of measures intended for the control of inflation and a return to the lower level of inflation.

Nevertheless the coming price rise has caused increasing tension in society. According to observers, the increase will cause the rise of prices practically for all goods and services from transport to bread.

“The explanation of the company ArmRusGaZprom that it has invested and for this reason sees the necessity to raise gas rates is groundless because these the company should have carried out these investments with its profits. And today they want to return these investments in one year,” Vazgen Safaryan, the head of the presidential commission on budget issues, said.

Today in Armenia not only the social and financial aspect of the gas rise is being discussed, but also its political element. In the opinion of the deputy head of the ruling Republican Party of Armenia, Galust Saakyan, Armenia is importing gas from other countries and so “the country is dependent on the tariff policy of these countries”. Some politicians consider the rise of gas as a way of putting pressure on Armenian in issues of foreign policy. 

At the same time former prime minister, Grant Bagratyan, mentioned that Russia has only put the price up by $26, whereas the Armenian side has increased it by $103.

“The increase in gas prices is put on the people as an additional tax, and this is a way of forcing people into poverty. ArmRosGazprom, 20% of whose shares belong to the state, that is to the people, has in hands of the authorities turned into a political instrument,” Bagratyan said.

According to some experts, the decision to raise prices breaks laws of profit regulation. In any case, the price increase will become one more, additional blow to the people of Armenia, already suffering due to the economic crisis. According to official data, during the last year the number of people below the poverty line increased by 90,000 to 850,000 – or 29% of the population.

The opposition Armenian National Congress is about to go to court to dispute the legal and economic basis of the decision. Other measures include the collection of signatures for a petition against the increase.

Susanna Petrosyan, Yerevan. Exclusively for VC.