ASSOCIATION: PACKAGE OF MEASURES SHOULD BE DEVELOPED FOR PROTECTION OF CONSUMER RIGHTS IN ARMENIA

ARKA
Feb 25, 2009

YEREVAN, February 25. /ARKA/. Under conditions of periodic increase
in prices in Armenia effective measures should be taken and a social
protection package should be developed for mitigating impact on family
budgets, says the Association of Consumers of Armenia.

Armenia’s Public Services Regulatory Commission is to consider three
price increase issues at its meeting on February 27 – increase in
prices for water supply, electricity and gas, says the statement of
the Association.

In particular, ArmRosgasprom company has applied to the Commission
for raising the gas price from the current monthly of 84,000Drams per
1,000 cubic meters including VAT to 99,000Drams per 1,000 cubic meters
including VAT for consumers of up to 10,000 cubic meters per month,
whereas the Commission suggests it to be 96,000 Drams per 1,000 cubic
meters including VAT. The price review is expected to come into force
as from April 1 2009.

The Association is surprised at the Commission’s decision to hold
a hasty meeting as, according to Armenian law about energy sector,
the regulating body is to review prices in the sector within 90 days
after the receipt of an application, whereas in this case it is only
20-25 days. The statement also stresses that the Commission has the
right to establish prices for electricity under its own in itiative.

It is difficult to imagine what would be the impact of the price
increase on modest family budgets of citizens with foodstuffs
constituting 52% of their consumer basket public services making 29%
of the basket, says the statement.

The Association reminds that the state share has reduced from 45%
down to 37% and then down to 20% in the authorized stock of the
biggest enterprise in Armenia – ArmRosgasprom.

ArmRosgasprom closed joint stock company holds the monopoly for
supply and distribution of the Russian gas on the domestic market
of Armenia. The company was founded in 1997 with Gasprom ojsc and
Armenian Ministry of Energy owning 45% of the shares each and with
the remaining 10% belonging to Itera.

While implementing two out of three planned stages of investments
(after purchase of additional shares of ArmRosgasprom cjsc in 2006
and 2008), the share of Gasprom went up to 75.55%. The government
share is 20% and Itera owns 4.44% now.

Similar process was under way in ArmenTel company, where the state
share went down from 10% to 0% making Armenia lose the opportunity
to participate in the management of the company and get dividends.

ArmenTel cjsc is a daughter enterprise of VimpelCom (Beeline trademark)
that obtained 100% of the company’s shares in April 2007. ArmenTel is
providing fixe-line telephone services to about 650,000 subscribers
and mobile services to over 784,000 subscribers.

The statement of the Association also draws the attention of the
country’s president and the premier to Armenia’s exclusive advantage
in terms of regional competition – great potential for exporting
electricity.