Expert: Rise in energy prices in Armenia is a consequence of wrong,  uncalculated decisions of the authorities

ArmInfo.The expected next increase in tariffs for gas consumed by subscribers is by no means due only to the need to bring the calorie content of gas into the  norm stipulated by the agreements. Expert on energy security, doctor  of political sciences Vahe Davtyan expressed a similar opinion to  ArmInfo.

"This calorie content is a 7900 kcal, while the gas imported to  Armenia from Russia, according to Gazprom Armenia, has a calorie  content of 8300-8500 kcal. But according to all this, the same  agreement of 2013, there is a second factor, which is the need to  ensure the profitability of this company at 9%. This explains the  periodic appeals of "Gazprom Armenia" to PSRC with a request to  increase domestic tariffs, which were only partially satisfied by the  regulator. "It is clear that in such conditions the company has to  apply to the PSRC with the same request, which, in fact, it is doing  now, proposing to increase the tariff by 6%," he said.

Thus, according to Davtyan, the root of the problem lies in the  unwillingness of the Armenian authorities to raise the issue of the  need to revise this rate of return in the gas negotiations of all  recent years. According to him, Yerevan has never raised this issue.  Moreover, in the expert's opinion, the current situation is a  consequence of the absence, in fact, of negotiations between Moscow  and Yerevan, which have always been replaced by communication, in  which the second one always accepted the proposals of the first one.

Given the domino effect of the expected 6% increase in gas tariffs  for electricity generated by thermal power plants, which accounts for  40% to 56% of the country's total electricity generation, Davtyan  forecasts periodic increases in tariffs for both gas and electricity.  The situation was not improved by the decision of the Armenian  government on the annual payment of $31.79 million to Gazprom Armenia  as a payment for the capacity of the 5th power unit of the Hrazdan  TPP, although it was expected that this decision would allow to  restrain gas tariffs for Armenia. In the expert's opinion, The latter   is evidence of the complete failure of Armenia's energy policy as a  whole.

In the expert's opinion, the same expected from February 1 next, the  second in a row for the last year, growth in electricity tariffs is a  reflection of the crisis and serious systemic risks in the country's  energy system. Based on the current situation in the country's  economy and energy system, Davtyan considers the increase in tariffs  reasonable and therefore justified. Moreover, according to his  forecasts, this process will continue in the near future. The reasons  are the same rise in gas prices, surpluses in the electricity system  of Armenia in the conditions of its exposure to an impressive debt  burden. The latter, according to various estimates, has collectively  reached a billion dollars and continues to grow. According to  Davtyan, the surplus of generated electricity  is a consequence of  the lack of real opportunities for its export, which is accompanied  by negative trends in domestic consumption.

"Under such conditions, it is possible to pay off the debts formed as  a result of all this only through such unpopular measures in the form  of another increase in tariffs. Here I would like to remind you that  as a justification for the increase, PSRC, among other things,  mentioned the payment of the debt formed as a result of the  modernization of the Armenian NPP, which is largely due to its long  downtime since January 2021. So what is happening is the result of a  chain of incorrect, uncalculated decisions and steps taken by the  authorities. Not to mention the macroeconomic consequences of the  expected rise in gas and electricity prices in the form of rising  consumer prices and the forced curtailment of some sectors, first of  all, in the field of small and medium-sized businesses," the expert  summed up.