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ARMENIA TO SOLVE FINANCIAL PROBLEMS AT THE EXPENSE OF THE PEOPLE
Vestnik Kavkaza, Russia
June 11 2014
11 June 2014 - 1:58pm
Susanna Petrosyan, Yerevan. Exclusively to VK
The Armenian authorities have recently published a statement saying
that prices for electricity are going to be increased by 3.8-4.3
drams or by 10 percent. The authorities explain that the increase
is necessary in order to secure the financial stability of energy
companies and a stable power supply.
Within the last two or three days various energy companies, including
the Armenian atomic power plant, the Yerevan thermal electric power
station and the Sevano-Razdansky hydro-electric power station have
been saying that they are facing financial problems, as they have to
pay back loans and modernize their facilities. The companies have been
saying that the only way to solve these problems is to increase tarifs
for power. In such a case the companies will be able to overcome the
deficit. Experts believe, however, that in future the companies will
face the same problems.
Some media reported that the Armenian authorities are negotiating
the sale of the Electricity Network of Armenia private corporation,
which now belongs to RAO YeES, to Gazprom. So in order to make the deal
more favourable to Gazprom the authorities are trying to increase the
company's efficiency. The fact that at the moment the company does not
operate efficiently has been confirmed by its chief executive Yevgeni
Bibin. According to him, in 2012 the company functioned at a loss,
while in 2011 its profits decreased by 75 percent.
This means that the company is a bankrupt. Its assets constitute around
$250 million and it has loans worth $240 million. In other words,
the company cannot pay its loans back and needs further investment.
According to the official data, in first quarter of 2014 the
consumption of energy decreased by 4-5 percent. "The demand for energy
depends on prices. That is why the population and businesses are
trying to consume less power. The decrease is already quite tangible
and production costs more for the energy companies," lawmaker from the
Flourishing Armenia party Mikael Melkumyan says. According to him,
the production of bread, vegetables and construction materials will
also be affected by the issues, since these kinds of products demand
a lot of power.
Some experts believe that the reason for this is the cabinet's
inability to draft an adequate development programme for business.
They say the government should develop a scheme, in the framework of
which all the loans should be paid back within 25 years.
Another reason is that the authorities conduct an unwise policy towards
energy production. The authorities have launched the construction of
new energy facilities, while the demand for power is on the decrease.
One more reason is that the cabinet does not control the operation
of the Electricity Network of Armenia, which is in fact a foreign
company. The firm has the unique right to deliver energy to the
country, which is acquired on the condition that all the necessary
investment will be provided. How can one explain how a company,
which was profitable 10 years ago, is now facing bankruptcy?
Some experts point out that it is unacceptable to solve the problems
the company is facing at the expense of the population and businesses
while the social and economic situation is very difficult. In addition
to that, prices for energy already increased 30 percent last year
for daytime use and by 40 percent for nighttime. Experts believe the
state should find other ways to cope with the matter.
http://vestnikkavkaza.net/analysis/economy/56302.html
Vestnik Kavkaza, Russia
June 11 2014
11 June 2014 - 1:58pm
Susanna Petrosyan, Yerevan. Exclusively to VK
The Armenian authorities have recently published a statement saying
that prices for electricity are going to be increased by 3.8-4.3
drams or by 10 percent. The authorities explain that the increase
is necessary in order to secure the financial stability of energy
companies and a stable power supply.
Within the last two or three days various energy companies, including
the Armenian atomic power plant, the Yerevan thermal electric power
station and the Sevano-Razdansky hydro-electric power station have
been saying that they are facing financial problems, as they have to
pay back loans and modernize their facilities. The companies have been
saying that the only way to solve these problems is to increase tarifs
for power. In such a case the companies will be able to overcome the
deficit. Experts believe, however, that in future the companies will
face the same problems.
Some media reported that the Armenian authorities are negotiating
the sale of the Electricity Network of Armenia private corporation,
which now belongs to RAO YeES, to Gazprom. So in order to make the deal
more favourable to Gazprom the authorities are trying to increase the
company's efficiency. The fact that at the moment the company does not
operate efficiently has been confirmed by its chief executive Yevgeni
Bibin. According to him, in 2012 the company functioned at a loss,
while in 2011 its profits decreased by 75 percent.
This means that the company is a bankrupt. Its assets constitute around
$250 million and it has loans worth $240 million. In other words,
the company cannot pay its loans back and needs further investment.
According to the official data, in first quarter of 2014 the
consumption of energy decreased by 4-5 percent. "The demand for energy
depends on prices. That is why the population and businesses are
trying to consume less power. The decrease is already quite tangible
and production costs more for the energy companies," lawmaker from the
Flourishing Armenia party Mikael Melkumyan says. According to him,
the production of bread, vegetables and construction materials will
also be affected by the issues, since these kinds of products demand
a lot of power.
Some experts believe that the reason for this is the cabinet's
inability to draft an adequate development programme for business.
They say the government should develop a scheme, in the framework of
which all the loans should be paid back within 25 years.
Another reason is that the authorities conduct an unwise policy towards
energy production. The authorities have launched the construction of
new energy facilities, while the demand for power is on the decrease.
One more reason is that the cabinet does not control the operation
of the Electricity Network of Armenia, which is in fact a foreign
company. The firm has the unique right to deliver energy to the
country, which is acquired on the condition that all the necessary
investment will be provided. How can one explain how a company,
which was profitable 10 years ago, is now facing bankruptcy?
Some experts point out that it is unacceptable to solve the problems
the company is facing at the expense of the population and businesses
while the social and economic situation is very difficult. In addition
to that, prices for energy already increased 30 percent last year
for daytime use and by 40 percent for nighttime. Experts believe the
state should find other ways to cope with the matter.
http://vestnikkavkaza.net/analysis/economy/56302.html