Utility Price Hikes Take Effect in Armenia

YEREVAN (RFE/RL)–The prices of the key utility services in Armenia rose significantly on Wednesday, putting an additional strain on the modest budgets of many of its residents already grappling with the effects of the global economic crisis.

The price hikes came into effect just over one month after being approved by the Public Services Regulatory Commission (PSRC). The state regulatory body acted on requests lodged by the country’s gas, electricity and water distribution companies. Its decisions came just days before a nearly 20 percent devaluation of the national currency, the dram.

In particular, the PSRC allowed the Electricity Networks of Armenia (ENA), the national power utility, to raise its basic tariff by 20 percent to 30 drams (8 U.S. cents) per kilowatt/hour. The electricity fee rise, the first in 11 years, is thought to be connected to a 40 percent surge, also effective from April 1, in the price of natural gas imported from Russia. Russian gas is used for generating about one-third of Armenia’s electricity.

The ArmRosGazprom (ARG) national gas distribution company will now charge Armenian households 96 drams for every cubic meter of the gas, up by 14 percent from the previous price. The price hike for corporate gas consumers is much steeper: from $154 to $215 per thousand cubic meters.

The price of drinking water grew by a more modest 4 percent to 180 drams per cubic meter. The PSRC had rejected water utilities’ request to raise the tariff to that level two years ago.

Artsvik Minasian, an economist and parliament deputy from Armenian Revolutionary Federation, said the price increases will add to an “expected substantial fall in living standards.”

“I think the government should review its social policy and make more allocations to socially vulnerable groups,” he told RFE/RL.

The government is having increasingly serious trouble executing its budget for this year which envisages a sizable increase in social spending. Citing a shortfall in tax revenues, it delayed last week 14 percent of projected budgetary expenditures until the fourth quarter of this year. Government officials insist that social programs will not be affected by the measure.

Ordinary Armenia’s, meanwhile, braced themselves for further belt-tightening. “The people’s plight will certainly become more difficult,” said one woman. “[The authorities] are supposed to think about us, aren’t they? If there is not other way out, we can only respect their decisions.”

“Everyone will be affected,” said another, male resident of Yerevan. “But what we can do? Who would listen to our voice?”


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