PSRC ADMITS THE ARMRUSGAZARD AGGRESSIVE
Hrayr Manukyan

March 2, 2010

As it was expected, the Public Services Regulatory Commission (PSRC)
has approved the price suggested by the ArmRusGazArd company with
minor changes.

The ArmRusGazArd company suggested to increase the price from 96
dram to 136 dram for the users consuming up to 10,000 cubic meters a
month, and the PSRC approved the rate at 132 dram per cubic meter. In
addition, for the users consuming more than 10,000 cubic meters of
gas the company suggested to increase the price from 215 dollars to
256 dollars per 1,000 cubic meters, and the PSRC approved the price
at 243.13 dollars. The reason why the PSRC approved lower rate was
connected with the calculations of the ArmRusGazArd company. For
example, the plan submitted by the company writes that it has 5200
employees, but the PSRC finds that this company can work with 4500
employees as well. The company writes that the median wage was defined
at 130 thousand dram, but the commission finds that they can pay
100 thousand dram. Of course it does not mean that the company will
fire employees or will cut down salary expenses, but it means that
these expenses envisaged by the company will not be calculated in the
company’s incomes and will be covered by the company profits. During
yesterday’s session the representative of the ArmRusGazArd company
presented the reasons why the price should be increased, and such
reasons are the raised price of gas import, currency exchange rate
growth, investments in the gas sector and reduction of natural gas
use capacity. The representatives of non-governmental organizations
in charge of the protection of consumers’ rights, as well as some
members of the Public Chamber, in fact did not have objections about
the increase of the gas prices after the explanations given to them by
the board chairman of the ArmRusGazArd company Karen Karapetyan. They
were mostly speaking of the impacts resulting from the increase
of the price. In the end everyone thanked for such "open and public
discussion" and said they hoped the other upcoming sessions of the PSRC
would proceed in such transparent conditions as well. "The process of
the price increase during the recent years shows that this process has
not reached the final point. We don’t know how much it will be, but we
know for sure that the price is going to be increased in the future as
well. We understand that most of the reasons are objective, but the
economy does not grow in our country, salaries are not indexed even
in the state sector, and generally there is no social justice," said
the head of the Consumers’ Rights Protection NGO Abgar Yeghoyan. "Next
year the price of imported gas on the border will be 270-300 dollar,
and if the prices are calculated according to this methodology, the
price will be more than 400 dollars. This policy of the government is
crossing the permitted limits, after which there are issues connected
with national security. A little has remained till the collapse of
the economy and if it happens, it will be nonsense to speak of the
ArmRusGazArd’s incomes," said Hakob Gharabekyan, a representative of
another organization involved in protection of consumers’ rights. The
chairman of the PSRC Robert Nazaryan and Karen Karapetyan answered
journalists’ questions.

Robert Nazaryan assured that the price of electricity would not grow
because our country will produce electricity and will not export a
part of it to Iran but will use this electricity to meet the demands
of the society. Former prime minister Hrant Bagratyan has raised
this question too and he asks how is the price for citizens twice
more expensive than the import price. "The rate of 340 dollars is
the equivalent of the price in dollar for the citizens. The median
rate of the gas sold to citizens and large consumers is 283 dollars,
VAT included. If we deduct the VAT from this amount (47 USD) and the
losses and current costs during transportation and supply of gas, it
becomes 225. Accordingly, the margin that remains for the ArmRusGazArd
becomes 45 dollars (about the 16% of the selling price), which includes
the current and maintenance costs for the gas supply system, as well
as the amortization and profit," said Karen Karapetyan. In answer to
Hrant Bagratyan’s observation that in the entire world gas is provided
to citizens for cheaper prices than large consumers the head of the
PSRC and ArmRusAGazArd brought a contradiction together and said that
in all places businesses buy gas for cheaper prices. In answer to this
observation Karen Karapetyan said that ordinary consumers use only 38%
of the gas supply but for providing this supply the company spends 60%
of the gas supply expenses on them. In answer to the question when
the ArmRusGazArd will apply for the next raise in the gas prices
Karen Karapetyan said that it depends on the future changes in the
market. However, he said that in case of drastic devaluation of the
national currency they would not apply for price increase as they
did last year as a result of the exchange rate drastic changes. In
answer to the question whether he is sufficed with the price set by
the PSRC Karen Karapetyan said, "As a manager I have been very passive
on lobbying for and pushing forward the rate we want," said Karen
Karapetyan. We asked whether the owners of the company might think
that the chairman does not work well and decide to fire him. After
thinking for awhile he said, "Maybe".