Russia Comes To Armenian Shadow

RUSSIA COMES TO ARMENIAN SHADOW

Head of Rosneft Igor Sechin’s visit to Armenia was marked by an
arrangement to set up a new Armenian-Russian oil company. Oil Techno
and Rosneft signed an agreement. The company will import jet fuel,
petrol and diesel fuel.

There is a lot of shadow on this market. A lot of economists
troubleshoot this. The market has been divided to quotas so far,
and economic entities close to the government owned those quotas.

A few months ago something unprecedented happened. City Petrol
Service was fined 100 million drams because the State Commission for
the Protection of Economic Competition found unfair competition by
this company.

No other big fines or revelations took place on this market. This
market is one of the most “solid” ones. Here the prices of different
companies rise and sink with the same synchronicity like girls in
synchronized swimming. Instead, these prices are not synchronized
with the world market. When the price of oil rises in the world, a
few days later the price of petrol rises in Armenia. When the world
price drops, synchronicity with the world disappears.

No doubt the new Armenian-Russian enterprise will be a major player,
especially considering that Russia is an oil exporting country.

What will the consequences of entry of this big actor to the Armenian
market be? Is it a sign of reshuffle in the car, jet and diesel fuel
market? Will competition strengthen and cause prices to fall? Or will
Russia gain monopoly and set the rules? Will tax avoidance decrease?

In fact, the Russian interest in the Armenian market is interesting.

The Armenian market could not be attractive. In Armenia more and more
drivers prefer autogas to petrol because it is several times cheaper.

The main consumer of petrol is the public administration system.

Perhaps therefore this system did not try to save on office cars
because otherwise income of their friend oligarchs importing car fuel
would shrink. In other words, taxpayers buy petrol for officials to
enrich oligarchs. The government ensures the work of this mechanism.

Actually, there is no room for boosting sales of jet fuel.

If there is limited possibility for boosting jet fuel sales, and
Rosneft is nevertheless interested, it is on the one hand positive,
on the other hand, it is full of risks because the only motivation
is to control all.

If it results in improvement of the quality of fuel or transparency
or prices drop, the new tendency will be welcome. But if it is a
political issue of controlling another branch of the Armenian economy
without making any efforts for the economic effect, then it will be
another act against the sovereignty of Armenia.

It would be interesting if Russia were interested in the economic
effect with a view to gaining political influence. Recently, the West
has expressed interest in investing in Armenia. Russia may encounter
competition. And if Moscow retains its traditional methods based on
control, not mutual benefit based on economic effect, it will soon
drop out of the competition, as well as from the historical memory
of the Armenian people.

There are visible tendencies of understanding the new situation and
efforts for adjustments of behavior in Moscow which allows thinking
that in order to survive the competition with the West Moscow will
try to build up its economic policy on business efficiency, not on
the security warden service principle.

Hakob Badalyan 15:54 05/04/2013 Story from Lragir.am News:

http://www.lragir.am/index.php/eng/0/comments/view/29522

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