No significant effect expected from electricity price cut - economists say
20.06.2016,
10:50
The decision of Armenia’s Public Services Regulatory Commission to allow the national power distribution operator - Electricity Networks of Armenia - to cut the prices of electricity will have no meaningful effect on the economy and households’ budget, economist Vahagn Khachatryan said last Friday at a public discussion convened to look into possible effects of the decision.
YEREVAN, June 20. /ARKA/. The decision of Armenia’s Public Services Regulatory Commission to allow the national power distribution operator - Electricity Networks of Armenia - to cut the prices of electricity will have no meaningful effect on the economy and households’ budget, economist Vahagn Khachatryan said last Friday at a public discussion convened to look into possible effects of the decision.
According to him, the measure will allow all corporate and private consumers to save collectively 8 billion drams a month. As for an average household, it will save about 680-700 drams (less than $2).
On June 13 the Public Services Regulatory Commission unveiled its calculations for new electricity price for households, prompted by the decline in the price of natural gas sold to thermal power plants by Gazprom Armenia gas distribution company.
According to these calculations, the daytime rate for households from 7.00 AM to 23.00 PM is to be reduced from current 48.78 drams to 46.2 drams per one KWh (5.3% decline), and the nighttime rate will be downed from 38.78 drams to 36.2 drams (6.7% decline) per kWh.
In Khachatryan’s words, against the background of last year's 15% price growth, the proposed cut of 5% will not have significant impact on the Armenian economy.
Another economist, Vilen Khachatryan, reminded that the deadline for electricity subsidies provided by the government to vulnerable families expires on August 1, 2016, which means that the electircty will become more expensive for this segment as well.
"Overall, the revision of electricity tariffs for households will bring about certain benefits, but they will have no significant impact on the level of economic activity and the well-being of the population," he said.
In his opinion, Armenia’s direct dependence on the Russian economy, inefficient management, imperfect price calculation methodology are the main challenges to setting adequate level of electricity prices for local consumers.
Both men agreed also that a further lowering of tariffs in the near future is unlikely.
On May 31, the commission ruled to allow the national gas distribution company Gazprom Armenia to cut the price of gas for households, which consume less than 10,000 cubic meters a month, from the current 156 drams per one cubic meter to 146.7 drams, a decrease of 6%.
The price for companies, which consume more than 10 thousand cubic meters a month, has been reduced from $276.98 to $257.56 for one thousand cubic meters in dram equivalent (including VAT) at the rate of Central Bank on the 25th of each previous month.
The price revision is prompted by Russia’s decision to cut the price of gas for Armenia from $165 to $150 per thousand cubic meters.
Russia is the main supplier of natural gas to Armenia, delivered by transit through the territory of Georgia. The new prices are to come into force from July 1. ($1 – AMD 477.06). --0---
According to him, the measure will allow all corporate and private consumers to save collectively 8 billion drams a month. As for an average household, it will save about 680-700 drams (less than $2).
On June 13 the Public Services Regulatory Commission unveiled its calculations for new electricity price for households, prompted by the decline in the price of natural gas sold to thermal power plants by Gazprom Armenia gas distribution company.
According to these calculations, the daytime rate for households from 7.00 AM to 23.00 PM is to be reduced from current 48.78 drams to 46.2 drams per one KWh (5.3% decline), and the nighttime rate will be downed from 38.78 drams to 36.2 drams (6.7% decline) per kWh.
In Khachatryan’s words, against the background of last year's 15% price growth, the proposed cut of 5% will not have significant impact on the Armenian economy.
Another economist, Vilen Khachatryan, reminded that the deadline for electricity subsidies provided by the government to vulnerable families expires on August 1, 2016, which means that the electircty will become more expensive for this segment as well.
"Overall, the revision of electricity tariffs for households will bring about certain benefits, but they will have no significant impact on the level of economic activity and the well-being of the population," he said.
In his opinion, Armenia’s direct dependence on the Russian economy, inefficient management, imperfect price calculation methodology are the main challenges to setting adequate level of electricity prices for local consumers.
Both men agreed also that a further lowering of tariffs in the near future is unlikely.
On May 31, the commission ruled to allow the national gas distribution company Gazprom Armenia to cut the price of gas for households, which consume less than 10,000 cubic meters a month, from the current 156 drams per one cubic meter to 146.7 drams, a decrease of 6%.
The price for companies, which consume more than 10 thousand cubic meters a month, has been reduced from $276.98 to $257.56 for one thousand cubic meters in dram equivalent (including VAT) at the rate of Central Bank on the 25th of each previous month.
The price revision is prompted by Russia’s decision to cut the price of gas for Armenia from $165 to $150 per thousand cubic meters.
Russia is the main supplier of natural gas to Armenia, delivered by transit through the territory of Georgia. The new prices are to come into force from July 1. ($1 – AMD 477.06). --0---
