Download Ar6- There Is No Decrease in Price for Gas and Neither Is It Privileged

There Is No Decrease in Price for Gas and Neither Is It
Privileged
By Daniel Ioannisyan,
“Union of Informed Citizens” - Lragir.am – 1/6/2016
Yesterday the Public Services Regulatory Commission of the Republic of
Armenia decreased the tariffs for natural gas. In particular, the price for
one cubic meter of natural gas became 146.7 AMD instead of the previous 156
AMD. And for industrial enterprises and gas stations (those that consume
more than 10 thousand m3), the price dropped to 257.5 USD from the previous
price of 277 USD per 1000 cubic meters.
These tariffs are due to enter into force starting from July 1. They have
been presented as “the lowest possible” and “privileged” and related to
Russian-Armenian ally relations. Hence, let us try to understand the extent
to which gas prices are favorable and privileged.
The Price Has Even Increased
Before we often used to discuss whether PSRC should include this or that
expense of the operator in the tariff. Currently, that discussion is de
facto useless because the agreement signed during the famous Yerevan visit
of Russian Prime Minister Dmitri Medvedev on April 7 has in fact stipulated
the minimum margin of “Gasprom Armenia”.
Hence, the issue of tariff for gas is hereinafter in the political field
and depends exclusively on Russian-Armenian relations.
As it has already been mentioned, the gas price for large consumers has
been 277 USD per 1000 m3 since July 2016 and now it will form 257,5 USD. It
means that 2-3 years ago large consumers used to pay 110-115 thousand AMD
per 1000m3 and now that price has increased and become 123 thousand AMD due
to appreciation of the US dollar.
It means that even after the so called decrease, the natural gas price for
large consumers (factories, gas stations, and etc.) is going to be higher
than 2 or 3 years ago.
Special “Ally” Conditions?
It is also worth noting that during the last 2.5 years the international
price for gas has dropped by three times on average. Meanwhile, in its
turn, Gasprom Armenia has decreased the gas price only by a few percent
(counted by US dollars).
Ironically, even the price for gas supplied to European states by “Gasprom”
has decreased by 2.7 times during the last 3 years… And this becomes even
more curious if we consider the fact that Russia does not have supply
competitors in many European countries.
Meanwhile, Armenia has neighbors who export gas (Iran, for instance). If
common sense prevailed, Iran should have competed with Russia by suggesting
gas with more favorable terms.
And while European countries adopt energy-related antimonopoly regulations
(depriving “Gasprom” of the opportunities to misapply the monopoly),
Yerevan has decided to grant a monopoly to Russia and reject the benefits
provided by its favorable geographic position.
We should add here that while Armenian consumers will be paying 147 AMD for
gas, the residents of Ukraine, Russia’s military enemy, will be paying the
amount of 6.8 Ukrainian hryvnia equal to 130 AMD.
The residents of Moldova, another country that has rejected friendship with
Russia and taken the path towards association with Europe, pay 5.9 Moldovan
leu equal to 140 AMD. And Russian gas in Moldova does not have competitors
either and the expenses for bringing the gas to the country are quite high
(Moldova is much farther than Armenia).
And the residents of Belarus are the ones who are really going to enjoy the
fruits of being Russia’s ally. They will be paying 770-2800 Belarusian
rubles (depending on the season) equal to 18-68 AMD.
http://www.lragir.am/index/eng/0/country/view/35848