Government Announces Imminent End to Gas Subsidy

YEREVAN (RFE/RL)–Armenian authorities on Tuesday announced plans to terminate the state subsidy on supplies of natural gas to households and enterprises across Armenia beginning next month.
In his first press briefing in the government building, Armenia’s newly appointed Prime Minister Tigran Sargsyan said the decision would become effective already on May 1.
Beginning on April 1, 2006, prices for gas supplied to Armenia were raised from $56 to $110 per a thousand cubic meters. To alleviate the burden for households and enterprises the same year the government decided to allocate a subsidy. A total of about $188 million were transferred to ArmRosGazprom as a partial compensation for the tariff. As a result, households could pay only 59 drams (about 20 cents) per cubic meter instead of 84 drams they were supposed to. The government said the amount of compensation had been exhausted and beginning on May 1 they will have to return to the original payment scheme for the population and companies.
“By subsidizing [gas] prices since 2006, the government has done everything possible for Armenia’s population and enterprises not to feel the sharp increase in the price for fuel,” Sarkisian explained.
He also announced government plans to work out a program of complex measures targeting about 130,000 beneficiary families to alleviate their financial burden in the 2008-2009 winter heating season.
“It is not a secret that consumption of electricity and gas sharply increases in wintertime. And it will be our goal to protect socially vulnerable strata from the rise in tariffs,” the premier said.
Sargsyan reminded that increased gas tariffs in Armenia are connected with the ongoing processes on the global market and the policy of liberalization of this market being carried out by Russia, which aims at achieving a gradual increase in gas prices up to the level of world prices.
Sargsyan also revealed his plans to meet Gazprom’s Alexey Miller next month to discuss a joint strategy of cooperation for the next three years.
He also said that the government has set itself the task of informing the population and enterprises about any planned tariff changes in advance and at the same time carry out a favorable policy for regional competition.


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