Russia & CIS Energy Newswire
November 30, 2007 Friday 2:39 PM MSK
World Bank expects gas prices in Armenia to grow in 2008
YEREVAN Nov 30
The cost of natural gas in Armenia could grow in 2008 and not in 2009
as previously expected, Aristomene Varoudakis, director of the World
Bank’s office in Yerevan, said at a press conference on Friday.
Natural gas prices are subsidized due to Gazprom’s (RTS: GAZP) sale
of the fifth power unit of the Razdansky Thermal Power Plant for
$248.8 million. Of this amount, $188 million was spent on subsidies
for domestic gas consumers until December 31, 2008.
With the steady growth in gas consumption rates in the country, funds
>From a special funds set up to subsidize domestic gas consumers could
run out before the scheduled period, he said. A rise in gas prices
will strengthen inflationary pressure, he said.
Inflation will also grow in Armenia in 2008 because of growth in
global food and oil prices, Varoudakis said. "Inflation will have the
biggest impact on the poorer parts of the population, and it needs to
be controlled based on these social factors," he said.
The government needs to continue institutional reforms to raise the
economy’s competitiveness, he said. "The government must take
measures to lower the cost of some goods and services in order to
compensate for the growth in food and energy prices," he said.
The number of natural gas consumers in Armenia has grown to 500,000
>From 100,000 over the last four years. Tariffs on natural gas for the
population total 84,000 dram per 1,000 cubic meters, or 59,000 dram
taking into account the government’s subsidies.
In accordance with Russian-Armenian agreements, Armenia will buy gas
>From Russia at a price of $100 per 1,000 cubic meters until the end
of 2008. Experts say gas prices will then double for Armenia.