Prime Minister: Armenian state budget will not subsidize reduced tariffs of natural gas

ArmInfo. The state budget of Armenia will not subsidize the reduced tariffs of natural gas, Armenian Prime Minister Karen Karapetyan said at the Government's sitting on November 3.  

The Prime Minister instructed the Ministry of Labor and Social Issues to prepare a list of vulnerable social groups jointly with Gazprom Armenia CJSC and to submit it to the Government by January 1. The specified groups will enjoy a 100 AMD discount for 1 cu m of gas. "It is important to determine who belongs to the vulnerable social groups; otherwise, the list may considerably grow," Karapetyan said. He added that the tariff for the greenhouse facilities will also tangibly decline, enabling them to save more than $45. "This will contribute to expansion and development of the greenhouse facilities," he stressed. There are four sources for the tariff reduction. The contract with Georgia on the Russian gas transit to Armenia expires on January 1. This will allow reducing the transit price. Gazprom Armenia intends to expand the market, which will reduce the margin. The financial flows will be optimized and the loan amounts will be reduced. Gazprom will assume all risks of its subsidiary Gazprom Armenia.

To note, Gazprom Armenia has presented the key goals and factors of gas tariff revision. 

"Gazprom Armenia has requested the Public Services Regulatory Commission (PSRC) of Armenia to revise the gas tariffs to prevent a decline in gas consumption, create favorable conditions for stabilization of the gas consumption market, growth of gas consumption, as well as for stimulation of the gas consuming companies' activities," Gazprom Armenia says in a statement.    

The statement says that Gazprom Armenia CJSC has taken into account the decline in the price of natural gas transit via Georgia. The company recalls that the contract on transit of natural gas to Armenia expires in late 2016 and that a new contract should be signed between Gazprom Export LLC (the gas supplier to Armenia) and Georgian Gas Transportation Company LLC. "The Armenian Government has initiated negotiations involving Gazprom Armenia CJSC, Gazprom Export LLC and the Georgian side for possible reduction of the transit prices," the statement says. 

Gazprom Armenia has also taken into account that consumption is expected to grow due to the reduction in natural gas tariffs for the consumers of Armenia. The statement says that Gazprom - the sole shareholder of Gazprom Armenia CJSC - is expected to provide funding for stabilizing the gas consumption market in Armenia and stimulating growth. 

It was reported earlier that Gazprom Armenia CJSC submitted a request on a new gas tariff to the PSRC on 1 November 2016. The PSRC has told ArmInfo that the request will be reviewed in the shortest time possible. The decision on the new gas tariff will come into effect on 1 Jan 2017, because the latest decision on tariff revision came into force on 1 July 2016.    

To remind, the company previously reported that its request implies diversification of subscribers and tariffs: 1. the subscribers having the right to social allowances and consuming less than 600 cu m of gas per annum will pay 100 thsd AMD per 1 thsd cu m; 2. greenhouse facilities will pay USD 212 per 1 thsd cu m from November 1 till March 31; 3. processing enterprises will pay USD 212 per 1 thsd cu m; 4.  subscribers consuming less than 10 thsd cu m per month will pay 139 thsd AMD per 1 thsd cu m; 5.  subscribers consuming more than 10 thsd cu m of gas per month will pay USD 242.1 per 1 thsd cu m.  For every consequent thousand of cu m they will be charged USD 212.  Along with that, there are no bonuses set out for gas filling stations, budget funded entities and TPPs generating electric power for domestic consumption.