INSTANT COMPENSATION – CEMENTO MORE
10-11-2006
LRAGIR.AM

The Armenian government sold the fifth generating unit of the thermal power
plant of Hrazdan to direct 250 million dollars at subsidizing gas for
producers and the population. It is clear that thereby the government tried
to relieve the consequences of expensive gas and appear to the public as a
committed government. Perhaps the government had better spend this money on
plastic surgery and had at least a pair of angel’s wings attached to each of
the ministers. It would be at least interesting and amusing for the public,
and people would appreciate the sense of humor of the government. In the
meantime, subsidizing gas is not only uninteresting but also useless,
pointless and ineffective. Several days ago Prime Minister Andranik
Margaryan announced that the mechanism of subsidizing needs to be revised.
Yet several days before Karen Karapetyan, CEO of ARG, had announced about
the ineffectiveness of this subsidy. The culmination was Michael
Baghdasarov, who described a situation which made it clear that the
government does not subsidize but gives about 20 million dollars to some
companies.
The owner of the factory of cement said the cement factories of Armenia
hardly manage to supply the foreign demand. Baghdasarov said the demand
caused the price of the cement to go up. Nevertheless, the Armenian cement
is cheaper than the cement produced in other countries. It appears that
there are almost perfect conditions for the Armenian cement factories:
demand they hardly manage to supply, a cheap price. In this case, it is
strange that the government susidizes Ararat Cement owned by Tsarukyan and
Hrazdan Cement owned by Baghdasarov, and the subsidy totals 20 million
dollars. They may say that the subsidy keeps the price low, which causes
demand to go up. However, Michael Baghdasarov the cement producer says they
increased the price because the demand is high. In other words, it is
pointless to subsidize these companies because the cement producers could
increase the price and the price of gas would not affect the production of
cement. Only the profit of these companies would be concerned. It would
decline, of course. But if the government can say that they gave immense
subsidies to these companies to sustain their profit, it is not clear where
this profit goes. Of course, to the state budget. Let us suppose, the amount
set down legally. How about the rest? The owners, in fact, put the profit in
their pockets. Meanwhile, it is not the government who should think about
the profit of these companies but their owners.
If one of them, Michael Baghdasarov states that they hardly manage to supply
the demand, it means these companies do not boost their capacity and
production. Meanwhile, a factory which produces a competitive product, which
is highly demanded, should think about boosting production to get more
profit. However, why should Michael Baghdasaryan and Gagik Tsarukyan think
about increasing their profit if the government has assumed this function
and sells the state property to subsidize private giants for them not to
disturb themselves and display management skills to boost their profits.
In this respect, the action of the government is far from logic but is
closer to morality. It does not want to load its faithful and committed
businessmen who have more serious problems to tackle. Only
economist-theorists think that a businessman should invest profits in
production. There are countries where the goal of the businessman is far
from production, although it is defined by the same root – reproduction. Not
that of cement, of course, but power.
JAMES HAKOBYAN