How much may the Gas Price Drop for the Population?
08.04.2016
12:00
Though Russia reduced the gas price for Armenia by 15USD, now it costs 150USD for 1000 cubic meters, the price for the “blue fuel” may reduce by 24-40USD for ordinary consumers. Experts said that it may be possible at the expense of margins of subsidiary Gazprom Armenia of Russian Gazprom. It bought gas on the border by 165USD up to now and sold to RA customers by 320USD.

After the meeting of Russian Prime Minister Dmitri Medvedev and Hovik Abrahamyan in Yerevan, it was announced that the gas price supplied from Armenia would drop by 15USD. Months ago RA Government applied to the Russian Executive

Body with the following proposal: to discuss the issue of reducing the gas price supplied to Armenia in the context of energy resources price reduction in the world market. A year ago Russia reduced the gas price for Armenia from 189USD to 165USD but it was not changed for ordinary consumers.  The reduction of gas price in the dollar currency was officially explained by the overvalued currency of USD over Dram. 

Russia, in fact, accepted the Government’s proposal and reduced the gas price by 9% on the border. But how much it will comprise for ordinary consumers is not clear yet. The Government should make calculations and soon present the situation. Experts assure that in case of the desire RA Government, mainly RA Pubic Services Regulatory Commission, can review the gas price and reduce it even by 40USD.

Mikayel Melkumyan, NA Economic Affairs Committee Deputy Chair, Member of the “Prosperous Armenia Party” Faction, Economist Artak Manukyan and Vazgen Safaryan, President of the “Domestic Producers Union” participated in the discussion on this issue at Media Center.

Mikayel Melkumyan said that some factors should be taken into account while accounting the gas price for consumers- planned investments of “Gazprom Armenia” and expenses of salary increases. 

“I think the company will not make much investment in the development of infrastructures as the gasification level is rather high in Armenia. There will hardly be lots of expenses for salaries as during the last year and a half more than 1500 people were employed, and the salaries increased from 119 thousand AMD to 227 thousand AMD. The gas users in the regions, mainly in small villages, are few because it is expensive,” he said.  

Melkumyan said that logically the price should drop as much as it was reduced on the border.

It is significant that some price will be defined if gas will become cheaper by 15USD, and quite another price will be defined if it will be reduced by 9%. 

Melkumyan also proposed to make four consumer groups instead of two for the flexibility of gas price accounting.

Vazgen Safaryan said that annually Armenia imported about 2 billion cubic meters gas and paid 330 million USD for that. 

"Now we will pay 30 USD less. It will be beneficial for us to pay in rubbles but as Russia has an issue of completing foreign reserves, it will not agree. Though Armenian Government had such a proposal," Safaryan said and added that the drop of gas price will result in the reduction of the electricity price.

Economist Artak Manukyan thinks that the gas price can reduce more than 9% for ordinary consumers at the expense of “Gazprom Armenia” margin. Net profit of that company comprises 46USD for 1000 cubic meters. The speakers noted that this amount is a result of expert calculations taking into account the gas price in the region of Orenburg which is 55-60USD at average, and 200USD is necessary for transfer and allocation.

Manukyan proposed to define also seasonal prices.

"During the winter months when the population uses much more gas, lower price can be defined. In warm season, the price can increase. This is important for the households," Manukyan said. 

The economist said that the gas price can reduce by 40USD for the population.

 

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