Another Electricity Price Hike Still Possible
19.06.2015
11:00
The electricity price hike will plunge the country into difficult socioeconomic conditions. The ensuing price increases will hit consumers hard in the pocket and discourage the competitiveness of businesses, economist Artak Manukyan believes.

Although the PSRC only partially satisfied the request of the ENA, deciding to raise the electricity tariff by 6.93 drams with the increase to become effective August 1, nevertheless the public protests do not subside.

The Media Center held a discussion on the economic consequences of the electricity price hike. The speakers included: Artak Manukyan, Procurement Expert of Transparency International Anticorruption Center; Hayk Gevorgyan, Economic Analyst at Haykakan Zhamanak; and Armen Petrosyan, Head of KhoranARD Intellectual Center (via skype).

“In 2014, when the electricity tariff increased by 11 percentage points, it led to an inflation of about 0.4%. In this case we have a 16% price increase, which will lead to a further inflation of around 1%. As a result, we will have a total annual inflation of 5.5%,” Hayk Gevorgyan said.

The price hike, Gevorgyan said, will first of all affect the consumption. “Each family in the country allocates some amount of money for purchases and now every year about 40-50 thousand drams of this sum will be cut and spent on paying for electricity,” he said.

Artak Manukyan spoke on the measures taken by the Government to mitigate the impact of the electricity price hike. “The Government’s support cannot save the situation because it covers only the electricity price increase. Meanwhile, the utility price increase will affect all other sectors,” Manukyan said.

The increased electricity price stirred discontent in Gyumri, too. Armen Petrosyan said via a video call that the price hike will first of all have its negative impact on students from rural areas who rent flats in Gyumri and those living on benefits.

The speakers believe the main reason for the price increase is the wrong management in the ENA and as long as there are these problems, the electricity tariff may constantly increase. If the ENA keeps operating without positive changes in the future, citizens will face another price hike. Perhaps it will happen in 2017 because next year Armenia’s Nuclear Power Plant, the cheapest source of electricity production, will be renovated. “The renovation will take some six months, during which electricity will be purchased from more expensive sources.  It will lead to a new debt and subsequent risks,” Hayk Gevorgyan said.

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