No Agreement Was Signed But Price Of Gas Went Up

NO AGREEMENT WAS SIGNED BUT PRICE OF GAS WENT UP

Lragir/am
21 March 06

On March 21 the question of the soaring price of gas was discussed at
the Hayeli Club. MP Manuk Gasparyan debated with Nikolay Grigoryan,
Deputy Chairman of the Commission of Public Utilities. Manuk Gasparyan
said the decision of the commission to sell gas to people at 90 drams
per cubic meter was illegitimate, groundless.

“If the commission made a decision, it means there was ground,”
says the deputy chairman of the Public Utilities Commission Nikolay
Grigoryan, who decided to accept the bid of Armrusgasard with his
other four colleagues on March 10 and to increase the price of the
gas supplied to the population up to 90 thousand drams and 146.5
thousand drams for enterprises.

Manuk Gasparyan thinks it was a groundless decision, and if the
commission had imposed a reduction of estimated losses of 5.37 per cent
by at least 1 per cent and had not allowed Armrusgasard to increase
the margin from 12 to 18, the price of gas would not be that high. “If
they extract the margin and losses and charge the VAT at the border,
the price of gas would grow up to 73 drams with 450 drams exchange rate
of the dollar, but if calculated on 420 drams as set in the budget,
the price of gas would grow up to 69 drams,” says Manuk Gasparyan.

“The commission did not have the right to consider the bid of
Armrusgasard until there is a deal that since April 1 Russia will
sell gas to Armenia at 110 dollars,” says Manuk Gasparyan. Nikolay
Grigoryan confirms that they could not consider the bid of Armrusgasard
without having signed a contract, but there is a contract, signed
by Armrusgasard and Gasexport, one of the companies of Gasprom, on
December 28. Manuk Gasparyan says it is merely a document, postponing
the supply of gas at 110 dollars until April 1, and negotiations
were to be held until April 1. Manuk Gasparyan announced that the
negotiations are not over, and the final price of gas has not been
fixed yet. “The contract will be signed by Armrusgasard and Gasprom
on March 28 and 29. I expect and I believe that the price of gas will
be below 110 dollars. What will the commission do with its decision
on increasing the price?” says Manuk Gasparyan.

Nikolay Grigoryan thinks it would be a miracle if the price of gas
were set below 110 dollars. He says the commission would not be
guided by unreal things, and the decision was based on the deal
signed on December 28. “We are not guided by mays and ifs,” said
Nikolay Grigoryan in answer to the argument that after April 1 the
price of gas may be lower than 110 dollars, whereas the commission
had decided to double the price of gas supplied to the population
starting from this number.

However, the negotiations for the price of gas are going on, and
the Public Utilities Commission might not be convinced that 110
dollars underlying its decision will be the final price. If it is
the final price, the minister of energy, the prime minister and other
representatives of the executive are doing populism when they say that
negotiations for the price of gas continue. Or if they are right,
it means the commission hurried to accept the bid of Armrusgasard,
and the company is facing a real possibility of extra profit.

The point is that if Russia reaches an agreement with Armenia, and
the gas price is set lower, or a mechanism of compensation is found,
Armrusgasard will have, in fact, extra profit, because people will
have to pay 90 drams per one cubic meter for at least six months. Such
is the law, for the price set by the Public Utilities Commission will
work for at least six months.

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