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WHAT PROBLEM DOES THE SALE OF FIFTH GENERATING UNIT SOLVE?
Hakob Badalyan
Lragir.am
21 June 06
How can a man selling his furniture or fridge to support his family be
described, even if that man is the only man in the family? The sale
of the fifth generating unit of the Thermal Power Plant of Hrazdan
was but a global model of this example. Therefore, a description is
necessary. However, the public does not have enough information to
give a description, a description of the deal. Serge Sargsyan promised
to give this information. He said there are details, and on learning
these details the public will become convinced that the state property
was sold successfully. But these details have not been presented
yet. Either because of being busy, or having forgotten or hoping that
the public will forget about the promise to announce the details.
It is also possible that there are no details at all. In this case,
the deal and its authors must be described relying on what there is.
And what is there? The generating unit was sold to solve the problem
of gas for people for three years. Roughly speaking, these 250 million
dollars from the sale of the generating unit will be spent on buying
gas, in other words, we deal with a "generating unit for gas or gas
for generating unit" deal. Surprisingly, the government of Armenia
and the international financial organizations evaluated this deal as
positive. From the point of view of the price and the conditions of
contract may, in fact, quite good. It is necessary, however, to find
out the purpose of the deal. Was it to sell the generating unit or
was it to compensate for the rising price of gas? If the purpose was
to sell the generating unit, why did not they put it out to tender,
why no bids were made? After all, the Iranians also had a proposal
regarding the block; of course, they bid a lower price, but instead
the generating unit would remain the property of Armenia. The Iranian
proposal was a loan, but it is more logical than irretrievable
spending of the money from the sale within three years and losing
the property. In other words, the Armenian government does not and
will not benefit from the deal.
The explanation that by subsidizing gas the Armenian production
becomes more competitive is almost as far from being logical as the
deal itself. In fact, they can similarly sell whatever the state has
and cover all the expenses on energy instead of subsidizing. Hence,
our economy will become competitive not only in the region but also in
the European Union. The situation is total absurdity. Over the next
three years, when the government will be subsidizing our economy,
the economies of Georgia and Azerbaijan will simply adapt to the high
price of gas. And when the government stops subsidizing businesses
in three years, it is impossible to imagine the state of Armenian
businesses against Georgian and Azerbaijani businessmen.
Besides, people who think that the economies of Armenia, Georgia and
Azerbaijan compete are badly mistaken. These are so tiny that the
notion of competition does not even occur, because the economies of
the three countries have an insignificant presence on foreign markets.
In other words, it is obvious that the arguments of the government are
excuse rather than explanation. Besides, it is difficult to believe
that the Armenian government agreed to sell the generating unit for
the sake of the Armenian producers and population, because the same
government does not make any efforts to relieve the revaluation of
the Armenian dram, which raises the costs of local production and
empties the pockets of the population.
In the meantime, the revaluation of the dram affects the fifth
generating unit as well. The 250 million dollars that the government
of Armenia receives must be paid to Armrusgasard. It is clear that it
must be paid in drams, because the currency in Armenia is the dram,
as the "witnesses of revaluation of the dram" like to repeat.
Whereas Russia is going to pay 250 million in dollars. The dram is
being revaluated, and 250 million dollars in a dram amount is less now
than at the moment of the deal. Besides, the revaluation may continue,
whereas the price of gas does not change. In fact, 250 million dollars
may not make the necessary dram amount for subsidies in the upcoming
three years. In other words, the sale of the generating unit does
not appear to solve even the problem of subsidizing gas. And it is
becoming more urgent to find out what problem it solves.
Hakob Badalyan
Lragir.am
21 June 06
How can a man selling his furniture or fridge to support his family be
described, even if that man is the only man in the family? The sale
of the fifth generating unit of the Thermal Power Plant of Hrazdan
was but a global model of this example. Therefore, a description is
necessary. However, the public does not have enough information to
give a description, a description of the deal. Serge Sargsyan promised
to give this information. He said there are details, and on learning
these details the public will become convinced that the state property
was sold successfully. But these details have not been presented
yet. Either because of being busy, or having forgotten or hoping that
the public will forget about the promise to announce the details.
It is also possible that there are no details at all. In this case,
the deal and its authors must be described relying on what there is.
And what is there? The generating unit was sold to solve the problem
of gas for people for three years. Roughly speaking, these 250 million
dollars from the sale of the generating unit will be spent on buying
gas, in other words, we deal with a "generating unit for gas or gas
for generating unit" deal. Surprisingly, the government of Armenia
and the international financial organizations evaluated this deal as
positive. From the point of view of the price and the conditions of
contract may, in fact, quite good. It is necessary, however, to find
out the purpose of the deal. Was it to sell the generating unit or
was it to compensate for the rising price of gas? If the purpose was
to sell the generating unit, why did not they put it out to tender,
why no bids were made? After all, the Iranians also had a proposal
regarding the block; of course, they bid a lower price, but instead
the generating unit would remain the property of Armenia. The Iranian
proposal was a loan, but it is more logical than irretrievable
spending of the money from the sale within three years and losing
the property. In other words, the Armenian government does not and
will not benefit from the deal.
The explanation that by subsidizing gas the Armenian production
becomes more competitive is almost as far from being logical as the
deal itself. In fact, they can similarly sell whatever the state has
and cover all the expenses on energy instead of subsidizing. Hence,
our economy will become competitive not only in the region but also in
the European Union. The situation is total absurdity. Over the next
three years, when the government will be subsidizing our economy,
the economies of Georgia and Azerbaijan will simply adapt to the high
price of gas. And when the government stops subsidizing businesses
in three years, it is impossible to imagine the state of Armenian
businesses against Georgian and Azerbaijani businessmen.
Besides, people who think that the economies of Armenia, Georgia and
Azerbaijan compete are badly mistaken. These are so tiny that the
notion of competition does not even occur, because the economies of
the three countries have an insignificant presence on foreign markets.
In other words, it is obvious that the arguments of the government are
excuse rather than explanation. Besides, it is difficult to believe
that the Armenian government agreed to sell the generating unit for
the sake of the Armenian producers and population, because the same
government does not make any efforts to relieve the revaluation of
the Armenian dram, which raises the costs of local production and
empties the pockets of the population.
In the meantime, the revaluation of the dram affects the fifth
generating unit as well. The 250 million dollars that the government
of Armenia receives must be paid to Armrusgasard. It is clear that it
must be paid in drams, because the currency in Armenia is the dram,
as the "witnesses of revaluation of the dram" like to repeat.
Whereas Russia is going to pay 250 million in dollars. The dram is
being revaluated, and 250 million dollars in a dram amount is less now
than at the moment of the deal. Besides, the revaluation may continue,
whereas the price of gas does not change. In fact, 250 million dollars
may not make the necessary dram amount for subsidies in the upcoming
three years. In other words, the sale of the generating unit does
not appear to solve even the problem of subsidizing gas. And it is
becoming more urgent to find out what problem it solves.