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Russia Comes To Armenian Shadow

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  • 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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