Natural gas prices will rise to 84 dram per cubic meter

The price of natural gas for the population will sharply rise to 84,000 AMD per 1000 cubic meters, from the current price of 59,000 AMD per 1000 cubic meters.

In 2006, the price of gas rose to $ 110 US per 1000 cubic meters and at that point the Armenian government made a decision to subsidize the price of gas in the country by the amount of 188 million dollar equivalient AMD. In the prices set back in 2001, that meant, that the population would have to pay 59,000 AMD, instead of 84,000 AMD per 1000 cubic meters, and that the government would be subsidizing 25,000 AMD per 1000 cubic meters for the population. However, as Prime minister Tigran Sargsyan informed the public yesterday, the 188 million dollar worth subsidy has run out, and from May 1, new prices will come into effect.

There are however, some very big questions, which need to be addressed in ragards to the gas prices. The prices of gas are defined by the US dollars. The average exchange rate per 1 USD was 420 drams in 2006, and in April-May 2006, when, if I recall correctly, the deal was struck, the rate was 450 AMD. So that meant, that at that point, the price of 1000 cubic meters of gas was equal to 49500 AMD ($110 US), and the price was set for resale to the population was defined at 84000 AMD ($ 186). Today, as the US exchange rate has dropped to 309 AMD, the price of 1000 cubic meters of gas is in fact 33990 AMD ($110), and the price for population remains at 84000 AMD – which is $ 270 US. So the price of gas per 1000 cubic meters has in fact shot up $90! In today’s prices, $90 makes 27810 AMD, which is 2810 drams more, then the amount of subsidy (25,000), Armenian government says it was paying for the gas sold to the population. This means, that not only there is no reason for the gas price increase, but, that the claims made by the RA government, that the 188 million dollar subsidy has been spent is also ridiculous, because with the current exchange rates, the ArmRusGazArd have actually been saving the government subsidy money and making extra profits. In fact, the government needs to ask – why isn’t price for gas decreasing, instead of standing in front of public with most ridiculous explanations about the price rises. Needless to say, that this new price rise will soon be felt on the prices of all other consumer goods. Excellent start for the new Prime Minister!

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