YEREVAN (RFE/RL)—A French-run company managing Yerevan’s water distribution network has abandoned attempts to slightly raise the price of its drinking water, according to a statement by Armenia’s Public Services Regulatory Commission (PSRC). Meanwhile, the Russian owner of Armenia’s power distribution network has blamed Armenian state regulators for its massive financial losses, saying that electricity prices in the country should have risen faster over the past decade.
The decision not to raise the price of drinking water comes after a much sharper rise in energy tariffs that sparked angry protests in the Armenian capital.
The “No To Plunder” youth movement, which launched the protests, linked Yerevan Jur’s decision with the ongoing campaign against the electricity price hike. “I’m sure that they would have made water more expensive had there been no processes going on in the city,” one of protest leaders, Maxim Sargsian, told RFE/RL’s Armenian service.
Earlier this year, the operator of Yerevan Jur, France’s Veolia Water, asked Armenia’s Public Services Regulatory Commission (PSRC) to approve a 1.4 percent increase in the cost of water supplied to households. It cited consumer price inflation and a sizable depreciation late last year of the Armenian dram.
A PSRC spokeswoman, Mariam Stepanian, told RFE/RL’s Armenian service on Wednesday that the company withdrew the request two days ago. She said its director, Gor Grigorian, informed the regulators in a letter that Yerevan Jur has increased the efficiency of its operations by significantly cutting back on the use of electricity in water distribution.
The company now thinks that the water tariff can remain unchanged at 170.3 drams (36 US cents) per cubic meter.
“They also took into account the need to ease the burden on their consumers amid increases in the prices of public services,” Stepanian added in an apparent reference to the PSRC’s controversial decision on June 17 to raise electricity prices by over 17 percent.
Now, the Inter RAO Group, a Moscow-based Russian energy holding company which owns Armenia’s power distribution network, is blaming the existing system of energy tariff regulation and rules for the functioning of the energy market in Armenia for the losses incurred by the Electric Networks of Armenia (ENA).
Boris Kovalchuk, chairman of the Inter RAO Group, claimed that the ENA has paid Armenian power plants more for their electricity than it was supposed to without receiving corresponding “compensation from consumers.” He said the “insufficient increase in tariffs in the past 11 years” was compounded by last year’s longer-than-anticipated stoppage of the Metsamor nuclear plant and decreased output by Armenian hydroelectric facilities.
All this has translated into an ENA revenue shortfall of 37 billion drams ($78 million), Kovalchuk said, adding that Inter RAO’s Armenian subsidiary is no longer able to cover its losses with borrowing and is now teetering on the brink of financial collapse.
The ENA owes over $225 million to Armenian commercial banks and power plants. Its Russian chief executive, Yevgeny Bibin, similarly blamed Armenia’s Public Services Regulatory Commission (PRSC) for the company’s troubles last month after asking it to raise the electricity prices by as much as 40 percent.
PSRC Chairman, Robert Nazarian, angrily rejected Bibin’s claims, saying that the company’s debts have resulted, in large measure, from poor management. A senior PSRC official, Garegin Baghramian, on Wednesday dismissed Kovalchuk’s “subjective opinion.” He faulted the Inter RAO boss for not acknowledging that the ENA’s operational losses have been disproportionately high.