Expert: Electricity tariff containment in Armenia is only temporary

ArmInfo.  According to  energy security expert and political scientist Vahe Davtyan, the  containment of electricity tariff in Armenia is only temporary.

In his Facebook post, the expert notes that in recent years, due to  the strengthening of the Armenian dram, Armenia has accumulated  approximately 20 billion drams in free funds from natural gas  purchases annually. "As of August of this year, this surplus,  according to my information, reaches 40 billion drams.  Obviously,  these funds can become the basis for reducing gas tariffs in the  country. However, the authorities decided to take a different path.  In 2024, a decision was made not to reduce gas tariffs, and the  aforementioned accumulated funds are directed to the construction of  new gas infrastructure in Yerevan, while this should have been done  through the payments for  connecting new subscribers. These funds,  naturally, continue to accumulate, and in July 2024, the PSRC decides  to allocate part of these funds to the construction of a new gas  pipeline in Kirants, which also finds no solution. And so in December  2024, by a decision of the PSRC, about 13 billion drams from this  accumulated amount were allocated to cover the deficit in the  electricity tariff. By the same decision, the gas tariff for thermal  power plants is set at an illogically low level of $46  per 1000  cubic meters, and the remaining difference is subsidized from  the  above-mentioned amount. The question arises: where did this tariff  deficit come from and how did it arise?" Davtyan questions.

The problem, he says, lies in external energy policy. In 2024,  Armenia imported less gas from Iran than was stipulated in the  contract, resulting in a deficit of 13 billion drams in the 2025  tariff. And, as in all other cases, instead of directly addressing  the issue and seeking solutions, the authorities are keeping silent  about it, preferring to subsidize electricity tariffs without any  economic justification. The situation is further complicated by the  current rules of the liberalized electricity market. In particular,  consumers who entered the market as a result of liberalization pay  less for electricity than before, while producers who entered the  market sell it at a higher price. This situation is truly absurd, but  the resulting difference is actually compensated by ordinary  consumers: 1.1 million consumers pay more so that about 300 consumers  can enjoy cheap electricity.

 "I have repeatedly stated that market liberalization poses a direct  risk to Armenia's energy security. The data provided confirms this  "on the ground". In the current situation, it is becoming obvious  that the containment of electricity tariffs in Armenia is purely  temporary. They will likely remain in place next year under the same  schemes, which is logical, given the expected electoral processes.  However, artificial support for maintaining tariffs cannot be  sustainable. The 'tariff bubble' will eventually burst, leading to  numerous socioeconomic risks. By the way, I would also like to hear  the position of the former management of ENA on this matter. The  issue, as we can see, is not new and has become an important tool for  implementing tariff policy. Personally, I have not heard of ENA  raising this issue in any format, which would obviously create  obstacles for the company  itself," the expert concluded.