“ArmRosgasprom” does not seek superprofit from gas tariff increase

YEREVAN, January 28. /ARKA/. Armenia’s national gas operator ArmRosGasprom has submitted an application to Armenian Public Services Regulatory Commission (RSRC) asking it to revise upwards the current natural gas prices as a follow up to Russian Gazprom’s decision to raise the price of 1000 cubic meters of gas from current $154 to $180 from April, 2010.

Under the appropriate agreement, the price of gas will rise gradually in accordance with international prices. Unlike other countries where fuel prices rise abruptly, provision of smooth increase of prices for imported gas allows Armenia to have guarantees from price changes s and maintain a relatively stable situation in economy.

In accordance with an import agreement, Armenia was to pay $200 for 1000 cubic meter instead of current $154 from April 1, 2010 to March 31, 2011 inclusive. Due to the efforts of the President of Armenia the mentioned price was reduced to $180. In 2010 the average purchase price of natural gas will be $170 for 1000 cubic meter whereas in Belarus today it is $186-190.

At present 600,000 families are subscribers of “ArmRosgasprom”. Due to financial-economic crisis the company registered a 20% reduction of gas consumption losing as a result a significant part of planned income and closed the year with losses.

“Currently average price is 246.9 US dollars in dram equivalent and the proposed tariff is – 293.5 US dollars in dram equivalent. It means a 19% increase given that the purchase price is to grow by 17%. A 2% difference is not a “superprofit”. It is for compensation of necessary expenses.

The difference in prices for households and large consumers is conditioned by operational and service expenses of subscribers and the volume of sold gas. “Particularly, 65% of total maintenance and other cost is spent on households who consume only 36% of total gas volume. This gas tariff exists in many countries of the world. Having large tax-payers and investment portfolio in Armenia, “ArmRosgasprom” has always been interested in socio-economic development of the country, particularly in energy sector and change of tariffs was not the goal of company.

“ArmRosgasprom” suggests that the price for consumers that use up 10,000 cubic meter of gas monthly, starting from 96 thousand drams for each 1 thousand cubic meter up to 136 thousand drams (including VAT). The price for services of gas supply operator will increase from current 15.58 drams for transportation of each thousand cubic meter of natural gas up to 47 drams. Tariff for distribution of natural gas will increase from about 9.9 thousand drams for each thousand cubic meter of natural gas up to more than 15.6 thousand drams. Tariff for transportation of each thousand cubic meter of natural gas from the current 5.3 thousand drams will increase up to 6.5 thousand drams. CJSC “ArmRosgasprom” is a monopolist in the internal market of Armenia. Gas enters Armenia by transit through Georgia. The company was established in 1997. The share of Open JSC “Gasprom” is 80% in the charter capital of the company, the share of the Government of Armenia is 20%. G.K. --0—