Gas  supplies tariff possible reduction in Armenia - empty talks or real prospective? PSRC comments

ArmInfo. The actual tariff for Russian natural gas supplied to Armenia is not a subject for review, Garegin  Baghramyan, the PSRC tariff policy department head stated to ArmInfo  reporter.

According to Baghramyan, there is no option possible  for tariff decrease  at the present stage - at least because there is no legal basis existing  for that. " Based on the results of gas tariff latest review, new terms became valid from January 1 this year, and from the point of law, the process of another tariff review could be initiated not earlier than  after 6 months. But even after the expiration of 6 month term, the expert sees no resources to decrease it.

The PSRC representative reminded that Gazprom Armenia JSC, while submitting its claim for tariff review on November 1, 2016, considered the possible decrease of transit  cost for gas supplies, and the expectations related to the consumption volumes increase at the cost of  reduction of tariffs for natural gas sold to Armenia.  The claim considered also the funding expected from Gazprom Armenia JSC  sole shareholder - Gazprom (Russia), which should be allocated within the purpose  to increase the gas consumption and to settle this high level at a sustainable mark in Armenia.  Considering all these factors, and first the prospective of  costs for  natural gas transit  through the territory of Georgia, as well as while studying the structure of  gas and expenditures related to the system maintenance and operation, it becomes clear that  company's margin forms about USD 50. In this context also there is no option to decrease  gas tariff.

Garegin Baghramyan calls those who  forces the circulation of whispers regarding possible reduction of gas tariffs, to get closer first with the order of such tariffs capsulation - at least at the website of PSRC.  In such case. All these empty talks would become more realistic. "In such case opponents could come out with objections and voice their disagreement with certain item of expenditure, or could offer their vision of tariff capsulation and to justify their position  in a stronger way," Garegin Baghramyan said.  According to Baghramyan, peculating  the figures, certain people forget the fact that the last claim of Gazprom JSC assumed also the diversification of subscribers and  tariffs per 6 groups. In this case, calculating the margin between the exported and sales price of the natural gas, it is necessary to proceed from the average value, and not the tariff for any certain group of consumers." The average price forms USD 255, about USD 40-42 of which is the share of VAT, and USD 150 is  the export  price of gas exported. Hence, the price of gas for company makes about  USD 200. Such components are not subject for review, it is impossible. We could talk only about system  operation, maintenance and amortization expenditures reduction," Baghramyan mentioned. But even these reductions are unable to lead to desired price reductions, and it is impossible to imagine something over norm in the USD 50 margin.  According to Gazprom JSC expectations in respect to gas consumption volumes increase, it could be said that the weather also supported the plans of the company. According to PSRC, in December 2016 gas consumption formed  97,3  mln cubic meters (583,316 subscribers).  And in December 2015 the consumption stood at the mark of 92 mln cubic meters (589,389 subscribers). In January 2017 gas consumption formed 128,5 mln cubic meters by 587 thousand subscribers, and in January 2016, having more subscribers (593 thousand) the consumption volume was less - 111,9 mln cubic meters. The power energy consumption volumes show growth as well: in December 2016 the consumption formed 226,4 mln kWh,  versus 209.3 in December 2016. The consumption for January only formed 239,22 mln kWh versus 209,3 mln kWh in January 2016.

To remind, new gas tariffs are implemented in Armenia   from January 1, 2017, after the Gazprom-Armenia suggested to decrease basic tariffs for 5,2-6% The subscribers having a 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 212 conventional units per 1 thsd cu m from November 1 till March 31; 3.  processing enterprises will pay 212 conventional units 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 242.1 conventional units 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.