GAS MIRRORS CONTRADICTION WITHIN GOVERNMENT

Lragir.am
03 April 06

The expensive Russian gas will not impact the economy of Armenia
as it would seem. Despite the pessimistic feelings before the New
Year, over the recent weeks the government has been making optimistic
statements. Another optimist is the president of Mika Limited Mikhail
Baghdasarov, it “slipped out” during his press conference on April
1 that at the border of Armenia the price of Russian gas will be
68 dollars instead of 110 dollars per 1000 cubic meters. “It will
be even favorable for us, because Armenia will buy cheaper gas than
the other South Caucasian countries, and our production will be more
competitive,” says Mikhail Baghdasarov.

When later the news reporters wondered why Baghdasarov mentioned this
definite price of 68 dollars, the president of Mika Limited said simply
he had heard that the price would not go above 70 dollars. Of course,
if nothing changes, adds Mikhail Baghdasarov. “You know that anything
may happen,” says Mikhail Baghdasarov.

He also refutes the forecasts that the increase of the price of
gas will result in a higher price of such an important material as
cement. The owner of the factory of cement in Hrazdan says if the
price of gas is much lower than 110 dollars, naturally it will have
a little influence on industry.

Mikhail Baghdasarov says the cheapest cement in the region is in
Armenia, and since it is so, Armenia cannot keep the price of cement
too low, for they will come from our neighbor countries and buy all
the cement, and nothing will remain for our construction, since the
capacity of our factories cannot supply such a great demand. “In Iran,
for instance, cement costs higher, and they can come and buy all our
production, and nothing will remain for Armenia. Presently, Georgia
buys as much cement as the demand of the domestic market of Armenia
is,” says Mikhail Baghdasarov. According to him, the entire amount
of cement produced in Georgia goes to Azerbaijan, where the volume
of construction is very big, and Georgians buy cement from Armenia.

“We will export 30 per cent more cement to Georgia,” says Mikhail
Baghdasarov, adding that even if the price were 110 dollars, it would
not impact the export of cement, for the price of gas is going high
not only for Armenia, but also Georgia and Azerbaijan.

Baghdasarov’s statement actually contradicts to the forecasts of
the officials of the Ministry of Trade and Industry that the growth
of the price of gas will impact the volume of production of cement,
because the high cost will cause the exports to drop. However, in
the recent months there is a good deal of contradiction in Armenia,
and the problem of gas actually mirrors this state of things.

OIL INVESTMENTS IN ARMENIA

Investments in the oil sector are foreseen in Armenia. This became
known during the April 1 news conference, when the president of Mika
Limited Mikhail Baghdasarov spoke about his plans. “Yes, I am eager
to invest money in a new branch of the Armenian economy. In the
oil sector,” stated Mikhail Baghdasarov. He explained to the news
reporters, who were a little surprised, that oil sector does not
necessarily imply production of oil. “I mean chemistry,” mentioned
Mikhail Baghdasarov, telling about his plans to found a new chemical
company.

Mikhail Baghdasarov assures that the turnover of his companies counts
hundreds of millions, but the profit is much lower than it seems to
be. “For instance, my petrol company’s turnover is 87 million dollar,
but the profit is 1-2 per cent. A higher percentage of profit is in
markets and shops,” says the president of Mika Limited.

According to him, the turnover of Armavia owned by Baghdasarov is 108
million dollars, but the company still requires great investments,
and it has not reached the level of profitability. He refutes the
information that he is going to sell Armavia, although there is
already a buyer. “There is a buyer, a foreign company, but we are
not selling the shares of Armavia. It is to be done when the company
starts generating profit. Generally, there are buyers for all my
companies but I am not selling them,” says Mikhail Baghdasarov.

He thinks the company should be sold when it generates profit.

“For this one has to think and be creative,” says Mikhail
Baghdasarov. He brings the example of Kirk Kirkoryan, who buys
companies, which are in a bad condition, rehabilitates them and sells
them at a higher price.