The Subsidies for the Increased Electricity Price Don’t Cover Big Businesses and SMEs
20.08.2015
12:00
Armenia’s Government cannot ensure the long-term subsidization of the increased electricity price since the country has a constant budget deficit and it lacks financial resources to subsidize all sectors.

Gagik Makaryan, Head of the Employers’ Association, and Daniel Ioannisyan, Project Coordinator at the Union of Informed Citizens, shared thoughts on how the increased electricity price will be subsidized and what impact it will have on big business.

The hike in electricity rates saw prices rise more than 7 drams from August 1, 2015.

Earlier on August 2, in Gyumri Prime Minister Hovik Abrahamyan said that the Armenian Government will use funds received from the deal of Vorotan Cascade Hydro Power Plants to subsidize electricity supplies.

On August 13 the Prime Minister announced the Government will help only common citizens with the increased electricity tariffs until the audit is conducted in ENA. The subsidization does not cover big business.

The authorities, according to the Prime Minister, are looking for ways to assist the small and medium-sized enterprises which consume about 250 kWh.

“The Government could never vow more funds because there is a constant budget deficit, with a bunch of social issues. Thus, the fact that the Government initially set 250 kWh per month is normal and it will cover the electricity consumption of an average household in the country. Both big and small and medium-sized enterprises are left out,” Makaryan said and added that the Government will spend USD 24 million per month as estimated.

“Consequently, the subsidization will make USD 50-70 million per 2-3 months but the process cannot last long. And as soon as the audit is over and given the price hike is justified, the Government will cut subsidies to the whole society and small enterprises. It will support only some 50-60 thousand families with low income and have done with it,” Makaryan said.

Gagik Makaryan pointed out three main big business fields: alcoholic beverages, mining and telecommunications.

“As for alcoholic beverages, enterprises have to cover the spending through their profit. Mining companies cannot change prices since there are market-fixed prices and telecommunications sector has to adopt a more flexible policy of services. The business somehow connected with oligarchs will come up with better ways to evade taxes.”

The increase of seven drams will make 36 billion drams annually, Daniel Ioannisyan said.

“The Government, thus, will annually pay the ENA 36 billion drams more: 12 billion drams – citizens and 23-24 billion drams – different legal entities,” said Ioannisyan, adding given the price increase is not subsidized and followed by an inflation, an average family in the country will pay 100 thousand drams more per year.

“So far the exact sale price of Vorotan Cascade has not been announced. Some say it is USD 180 million. In any case only one part of the sum has been transferred to Vorotan Hydro Cascade, with the rest to be transferred next year. And that money has to get to the budget of Armenia,” Ioannisyan said.

The possible price growths, Makaryan believes, will reduce the profitability of businesses and exporters since people, in the majority of cases, are not financially solvent.

“Many of enterprises can’t increase prices as they will be forced out of the market and it will evolve into a disaster for small business. Secondly, those 100 thousand drams per month will reduce a citizen’s participation in the maintenance of purchasing power in the economy,” said Makaryan.

Lilit Arakelyan, Editor-Coordinator

Please contact the author at lilitarakelyan@pjc.am.

Videos
Print Friendly and PDF
More Press Releases
“Environmental Disaster in Lori: The Consequences of Akhtala Mountain Enrich Combinat”
29.01.2018
12:00
The media regularly reportes that the old mine dumps of Akhtala Mountain Enrich Combinat, situated between Chochkan and Mets Ayrum communities in Lori region, poses a danger to the environment and the population.
“The 4th President of Armenia: a Ceremonial Position or a Weighty Political Figure?”
24.01.2018
12:00
On March 2, 2018, the RA National Assembly will elect the 4th President of Armenia. On January 18, Armen Sargsyan, Ambassador Extraordinary and Plenipotentiary of the Republic of Armenia to the United Kingdom of Great Britain and Northern Ireland, Former Prime Minister of the Republic of Armenia, was nominated as the candidate for the presidency of the Republic of Armenia during the meeting of the executive body of the Republican Party of Armenia (RPA).
“Does the State Refuse its Obligations? Donation Call by the RA Minister of Defense for the Treatment of the Military Serviceman”
17.01.2018
12:00
On January 13, RA Defense Minister Vigen Sargsyan posted on his Facebook page about the treatment expenses of military serviceman Albert Dallakyan, who was wounded as a result of violating the rules for safe handling with a weapon by the platoon commander. The minister urged to donate for surgery of the wounded soldier abroad. The required amount is 46,000 USD.
“Report on Violations of Conscripts’ Rights during the Conscriptions in 2016-2017”
25.12.2017
12:00
The most urgent issue for conscripts involves the health issues and medical conclusions during conscriptions. In 2016-2017, 50 out of 59 applications filed by the Helsinki Citizens' Assembly-Vanadzor Office referred to the health issues of conscripts.
“Is Forgiving Heads of Communities a Recovery of Local Self - Government System or Promotion of Corruption? Response to Serj Sargsyan’s Speech”
19.12.2017
11:00
On December 9, 2017, during the meeting dedicated to local self-government and territorial administration bodies RA President Serzh Sargsyan stated in particular:
Follow us on social networks
Registration of events
Services
Today at Media Center
Videos
Press Releases
Armenia-Turkey Events