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FUEL FURY: ARMENIA PETROL PRICE HIKE SAID TO STEM FROM LOCAL TAX PRESSURES
By Gohar Abrahamyan
ArmeniaNow
06.04.12 | 11:09
Some Armenian experts suggest the unprecedented surge in petrol
prices in Armenia in the past two months reflects the international
price pattern only partly, while being more the result of domestic
tax pressures.
Petrol stations in capital Yerevan and across the country these days
have been selling petrol for between 500 and 550 drams ($1.25-1.40)
per liter amid concerns among local motorists that fuel prices will
climb further.
(Filling stations sell "Regular", "Premium" and "Super" types of petrol
at a price of 500, 520 and 550 drams per liter, respectively, while
diesel fuel is for sale at a price of 460 drams ($1.20) per liter.)
This constitutes a general rise in petrol prices by 50-70 drams
(about 12-17 cents) since January.
Armenian fuel importing companies explain this surge by rising
international oil prices. (The current international price of oil
fluctuates between $100-$120 dollars per barrel. The wholesale price
of a ton of petrol in Western Europe is $1,230, which is the highest
price ever, while a retail petrol price in some European countries
reaches 2 euros ($2.60) per liter).
Still, management expert Harutyun Mesropyan believes that the petrol
price hike in Armenia is disproportionate to the existing international
pattern.
"Whenever international prices go up a little, we get a much higher
rise, but when international prices go down, ours stay on the same
level, or at best get lower a little bit, very symbolically. In other
words, the tendencies on the international market and on our domestic
market do not match and, naturally, this mismatch is in favor of our
importers," Mesropyan told journalists on Thursday.
According to the expert, any such disproportional price rise in
Armenia, as compared to international market trends, results in
pressures on other branches of the economy, and generally "gives a
negative economic effect for the whole of Armenia."
"If the importers in Armenia followed the surges in international
prices and raised prices in Armenia proportionately, then today's
price of petrol would be around 4,000 drams (about $10) per 10 liters,
while today it is about 5,000 drams (about $12)," Mesropyan argued.
Domestic Producers' Union head Vazgen Safaryan thinks that Armenia's
petrol market needs to be seriously examined, and the tax policy
pertaining to gasoline imports should be reviewed.
According to Safaryan, in 1997-1998, Armenia sold 26,000-27,000 tons
of petrol a year, and now that the number of cars has increased at
least three times, to some 450,000, only 7,000-8,000 tons of petrol
are sold, as some 80-85 percent of motorists prefer to use liquefied
petroleum gas, a much cheaper option, for fuel.
"We deem that taxes in this market need to be reduced, due to which
the volumes will increase, and sales will increase, which will also
result in increased tax revenues," said the Domestic Producers'
Union chairman, adding that state taxes account for 40 percent of
the petrol price in Armenia.
Some economists also suggest that expectations of the depreciation
of the national currency, the dram, might play a role in the recent
rise of petrol prices in Armenia. They, in particular, link it to
the lower-than-expected flow of tourists from neighboring Iran during
the Nowruz period in March.
Meanwhile, fuel importers and some economists do not see much of a
"social" problem in the rising cost of petrol and downplay its effect
on other branches of the economy, considering that only a smaller part
of motorists in Armenia use petrol for fuel and that these car owners
mostly represent the middle class with higher-than-average incomes.
By Gohar Abrahamyan
ArmeniaNow
06.04.12 | 11:09
Some Armenian experts suggest the unprecedented surge in petrol
prices in Armenia in the past two months reflects the international
price pattern only partly, while being more the result of domestic
tax pressures.
Petrol stations in capital Yerevan and across the country these days
have been selling petrol for between 500 and 550 drams ($1.25-1.40)
per liter amid concerns among local motorists that fuel prices will
climb further.
(Filling stations sell "Regular", "Premium" and "Super" types of petrol
at a price of 500, 520 and 550 drams per liter, respectively, while
diesel fuel is for sale at a price of 460 drams ($1.20) per liter.)
This constitutes a general rise in petrol prices by 50-70 drams
(about 12-17 cents) since January.
Armenian fuel importing companies explain this surge by rising
international oil prices. (The current international price of oil
fluctuates between $100-$120 dollars per barrel. The wholesale price
of a ton of petrol in Western Europe is $1,230, which is the highest
price ever, while a retail petrol price in some European countries
reaches 2 euros ($2.60) per liter).
Still, management expert Harutyun Mesropyan believes that the petrol
price hike in Armenia is disproportionate to the existing international
pattern.
"Whenever international prices go up a little, we get a much higher
rise, but when international prices go down, ours stay on the same
level, or at best get lower a little bit, very symbolically. In other
words, the tendencies on the international market and on our domestic
market do not match and, naturally, this mismatch is in favor of our
importers," Mesropyan told journalists on Thursday.
According to the expert, any such disproportional price rise in
Armenia, as compared to international market trends, results in
pressures on other branches of the economy, and generally "gives a
negative economic effect for the whole of Armenia."
"If the importers in Armenia followed the surges in international
prices and raised prices in Armenia proportionately, then today's
price of petrol would be around 4,000 drams (about $10) per 10 liters,
while today it is about 5,000 drams (about $12)," Mesropyan argued.
Domestic Producers' Union head Vazgen Safaryan thinks that Armenia's
petrol market needs to be seriously examined, and the tax policy
pertaining to gasoline imports should be reviewed.
According to Safaryan, in 1997-1998, Armenia sold 26,000-27,000 tons
of petrol a year, and now that the number of cars has increased at
least three times, to some 450,000, only 7,000-8,000 tons of petrol
are sold, as some 80-85 percent of motorists prefer to use liquefied
petroleum gas, a much cheaper option, for fuel.
"We deem that taxes in this market need to be reduced, due to which
the volumes will increase, and sales will increase, which will also
result in increased tax revenues," said the Domestic Producers'
Union chairman, adding that state taxes account for 40 percent of
the petrol price in Armenia.
Some economists also suggest that expectations of the depreciation
of the national currency, the dram, might play a role in the recent
rise of petrol prices in Armenia. They, in particular, link it to
the lower-than-expected flow of tourists from neighboring Iran during
the Nowruz period in March.
Meanwhile, fuel importers and some economists do not see much of a
"social" problem in the rising cost of petrol and downplay its effect
on other branches of the economy, considering that only a smaller part
of motorists in Armenia use petrol for fuel and that these car owners
mostly represent the middle class with higher-than-average incomes.