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RUSSIA FOCUSES ON GAS
Vestnik Kavkaza
July 27 2012
Russia
by Susanna Petrosyan, Yerevan. Exclusively for VK
Armenian and Russian media have been spreading rumours this month about
Gazprom (Russia) and the Armenian Ministry for Energy and Natural
Resources planning to increase prices for Russian gas supplies to
Armenia. Gazprom plans to set new gas prices on October 1. The price
for 1000 cubic meters of gas will increase from $180 to $280. It may
further increase to $320 on January 1, 2013.
Minister for Energy and Natural Resources Armen Movsisyan confirmed
the talks, but gave no details: "Negotiations will end soon. Details
will be published after their conclusion". Commenting on the rumours
that gas prices increased to $220, the minister said that the public
would have been informed if it were true.
The Russian monopolist owns 80% of shares in the joint Armenian-Russian
enterprise ArmRosgazprom, the rest belongs to the Armenian
government. The last time the gas prices in Armenia increased was on
April 1, 2010. The price rose from 96 drams per cubic meters to 132
drams. The price for large consumers using over 10,000 cubic meters
increased from 215 drams per cubic meter to 243.13 drams.
The increasing gas prices were caused by attempts to develop and
implement new beneficial schemes of gas payments for poor families
by the Armenian government. It was usually done after April 1, not
at the upcoming winter. The prices are expected to rise twice.
Gazprom seems to have a harsh price policy. The company requested the
Russian government to make a dramatic rise of prices for Russian gas in
CIS states on October 1. It is a result of increased taxes for resource
extraction. The company lost $2 billion. Gazprom provides gas for
Europe at an average price of $415 per 1000 cubic meters. Ukraine buys
it at about the same price. Other CIS states purchase it for $200-300.
Russia warned Armenia about a new increase of prices. Russian steps
are quite reasonable, because gas has own price to be sold for all
around the world. But this reason does not explain why ArmRosgazprom
is such state. The company gasified over 90% of residential areas in
Armenia in the last 10 years. The goals of Rosgazprom are unclear,
its subsidiary has made enormous investments in gasification projects
of Armenia.
Higher prices for gas may cause the poor part of the population to
quit purchasing it. The number of poor families in the country has
increased by 35% in the last years.
Moreover, ArmRosgazprom said that it had a loss of 15.4 billion drams
($1 = 408 drams). Losses were caused by strengthening dollars. It
means that the company with deficit is making steps contrary to
expanding the range of its consumers.
"If we are strategic partners and set issues at a political level,
than the gas price should not be higher than it is in any other
Russian region, because 80% of ArmRosgazprom belong to Gazprom. If
it is a non-political issue, then we should ask why the enterprises
Armenia gave Russia within the deal of "property for debt" are still
idle? They need to open workplaces so that our citizens could pay
such high prices", as stated by MP Artsvik Minasyan, a member of the
authorities of Dashnaktsutyun. He insists that Russia is trying to
run a "slavery policy" in Armenia.
Expert Ayk Balanyan believes that Russia uses its monopoly positions
at the gas market to achieve certain political preferences: "This
policy is not only realized in Armenia, the same happened in Belarus,
Ukraine and other neighbor states", Balanyan explains.
Many Armenian analysts say that the gas tool has become a tested
and an efficient means of Russian influence in neighbor states. The
political context in Russia's decision to increase gas prices for
the upcoming winter and presidential polls set for February 2013
is obvious. Electoral campaigns in Armenia always focus on social
programs. The elections in February 2013 are peculiar for President
Serzh Sargsyan's run for the second term. Thus, the social situation
Is of great importance for the ruling party.
Such dramatic rise of prices would no doubt cause a chain reaction.
Increase of energy and transport expenses would cause higher prices
for goods and services. it would become a heavy burden for economy,
which is in grave condition. The hard social situation will be
the first target. Neither the state economy, nor the population are
ready for such boost of prices. Presidential elections put additional
pressure on the socio-economic situation. Tensions within the state
may escalate in such conditions.
Armenian authorities would most likely do their best to ease the
situation and convince Russia not to increase gas prices until the
presidential polls to avoid social grievances.
It is hard to explain why Russia wants to treat its strategic partner
that way. Some Armenian experts believe that Moscow wants to be secure
about whether the president would be reelected or not. But it is only
an assumption. The answer would most likely be given at the end of the
"dead political season".
Vestnik Kavkaza
July 27 2012
Russia
by Susanna Petrosyan, Yerevan. Exclusively for VK
Armenian and Russian media have been spreading rumours this month about
Gazprom (Russia) and the Armenian Ministry for Energy and Natural
Resources planning to increase prices for Russian gas supplies to
Armenia. Gazprom plans to set new gas prices on October 1. The price
for 1000 cubic meters of gas will increase from $180 to $280. It may
further increase to $320 on January 1, 2013.
Minister for Energy and Natural Resources Armen Movsisyan confirmed
the talks, but gave no details: "Negotiations will end soon. Details
will be published after their conclusion". Commenting on the rumours
that gas prices increased to $220, the minister said that the public
would have been informed if it were true.
The Russian monopolist owns 80% of shares in the joint Armenian-Russian
enterprise ArmRosgazprom, the rest belongs to the Armenian
government. The last time the gas prices in Armenia increased was on
April 1, 2010. The price rose from 96 drams per cubic meters to 132
drams. The price for large consumers using over 10,000 cubic meters
increased from 215 drams per cubic meter to 243.13 drams.
The increasing gas prices were caused by attempts to develop and
implement new beneficial schemes of gas payments for poor families
by the Armenian government. It was usually done after April 1, not
at the upcoming winter. The prices are expected to rise twice.
Gazprom seems to have a harsh price policy. The company requested the
Russian government to make a dramatic rise of prices for Russian gas in
CIS states on October 1. It is a result of increased taxes for resource
extraction. The company lost $2 billion. Gazprom provides gas for
Europe at an average price of $415 per 1000 cubic meters. Ukraine buys
it at about the same price. Other CIS states purchase it for $200-300.
Russia warned Armenia about a new increase of prices. Russian steps
are quite reasonable, because gas has own price to be sold for all
around the world. But this reason does not explain why ArmRosgazprom
is such state. The company gasified over 90% of residential areas in
Armenia in the last 10 years. The goals of Rosgazprom are unclear,
its subsidiary has made enormous investments in gasification projects
of Armenia.
Higher prices for gas may cause the poor part of the population to
quit purchasing it. The number of poor families in the country has
increased by 35% in the last years.
Moreover, ArmRosgazprom said that it had a loss of 15.4 billion drams
($1 = 408 drams). Losses were caused by strengthening dollars. It
means that the company with deficit is making steps contrary to
expanding the range of its consumers.
"If we are strategic partners and set issues at a political level,
than the gas price should not be higher than it is in any other
Russian region, because 80% of ArmRosgazprom belong to Gazprom. If
it is a non-political issue, then we should ask why the enterprises
Armenia gave Russia within the deal of "property for debt" are still
idle? They need to open workplaces so that our citizens could pay
such high prices", as stated by MP Artsvik Minasyan, a member of the
authorities of Dashnaktsutyun. He insists that Russia is trying to
run a "slavery policy" in Armenia.
Expert Ayk Balanyan believes that Russia uses its monopoly positions
at the gas market to achieve certain political preferences: "This
policy is not only realized in Armenia, the same happened in Belarus,
Ukraine and other neighbor states", Balanyan explains.
Many Armenian analysts say that the gas tool has become a tested
and an efficient means of Russian influence in neighbor states. The
political context in Russia's decision to increase gas prices for
the upcoming winter and presidential polls set for February 2013
is obvious. Electoral campaigns in Armenia always focus on social
programs. The elections in February 2013 are peculiar for President
Serzh Sargsyan's run for the second term. Thus, the social situation
Is of great importance for the ruling party.
Such dramatic rise of prices would no doubt cause a chain reaction.
Increase of energy and transport expenses would cause higher prices
for goods and services. it would become a heavy burden for economy,
which is in grave condition. The hard social situation will be
the first target. Neither the state economy, nor the population are
ready for such boost of prices. Presidential elections put additional
pressure on the socio-economic situation. Tensions within the state
may escalate in such conditions.
Armenian authorities would most likely do their best to ease the
situation and convince Russia not to increase gas prices until the
presidential polls to avoid social grievances.
It is hard to explain why Russia wants to treat its strategic partner
that way. Some Armenian experts believe that Moscow wants to be secure
about whether the president would be reelected or not. But it is only
an assumption. The answer would most likely be given at the end of the
"dead political season".