GAS PRICES TO REMAIN UNCHANGED IN EVENT OF MILD WINTER IN ARMENIA

ARKA News Agency, Armenia
Dec 24 2007

YEREVAN, December 24. /ARKA/. Gas prices will remain unchanged in
Armenia if the winter is mild, Armenia’s Minister of Energy Armen
Movsisian reported.

He reminded that the issue of private financing of the prices occurred
due to sudden increase in gas prices that made it necessary to give
the population and the economy enough time to adapt themselves to
the expected prise increase.

"The main consumption occurs in the winter period, and everything
will depend on the winter consumption", the Minister said.

He pointed out the limited nature of the means to subsidize the
prices and said that, yet, if the current temperature is maintained,
the possibility of keeping the current gas prices will be possible for
a quite long period of time. At the same time, the Minister reported
that preliminary estimates have been already made on possible options
for price increase.

On April 6 2006 "Gasprom" open joint stock company and the Government
of Armenia signed an agreement setting strategic principles of
cooperation in gas and energy projects on the territory of Armenia
for 25 years. Under the agreement, the price for Russian natural gas
supplied to Armenia is to rise from $56 to $110 for every 1,000 cubic
meters, but "Gasprom" undertook obligation not to increase the price
before 2009.

Under the agreement, the Armenian Government is to sell the fifth
energy unit of Hrazdan thermal power plant (Hrazdan-5) and the
country’s gas infrastructures to "ArmRosgasprom".

Part of the funds from the sale is to be allocated as subsidies to the
population and enterprises of Armenia. The government subsidizes 25,000
Drams for 1,000 cubic meters for citizens with monthly consumption
of up to 10,000 cubic meters and $52.01 of the $146.51 price for
industrial enterprises consuming over 10,000 cubic meters of gas
monthly.