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!
your logic makes sense to me. Has anyone asked this very question to PM? You should try to ask him that.
You think keeping a tight grip on the population is cheap?
Well, SOMEONE’s got to pay for Kocharyan’s new job.
Well, that there are losses, infrastructure investments, etc. however, these costs were considered by the State Commission for Natural Monopolies when approving prices in 2006. Contracts on prices were also signed then, and today the new PM has to pay the price by taking this highly unpopular move. Note, that the ex-head of Central Bank is in the best position to argue the case against price rises – considering USD exchange rate changes, but…
[…] Armenian Observer questions why prices for natural gas will rise. In particular, the blog examines the end of a government subsidy based on the dollar-dram exchange rate despite fluctuations…. Posted by Onnik Krikorian Share […]
Mucho dineros aj aj aj
To add that to subsidise the gas Armenian State sold the people’s property , the 5th block of Hrazdan power station to Russians. They also sold the Iran-Armenia pipeline to Russians which was partially paid by the Armenian people ( the rest was paid by Iran).
Now all the people’s property is sold out among other things, the railway, telecom, 98% of power grid, the atomic power plant (de facto), a bunch of factories( which dont run) . We can now say that the bankruptcy of Armenia and therefore the people of Armenia is concluded, Serje inherited a bankrupt country from Kocharyan.
Forgot to say that all the above public property was sold /given to Russia.
Also forgot to add that the Central Bank sold the gold rserves a couple years ago.
All of those resources belonged to the public, but nobody asked people for permission. Wasn’t this a theft from the public?
HaikN, you wish that the gold reserves were sold a couple of years ago.
They were sold at the moment when gold had started appreciating, and the dollar had started depreciating. It was the worst time possible to sell the gold reserves!
How can anyone after that kind of a decision call the avazakapet banker a smart, or professional, person?
I guess he is called smart or professional because he serves well to the mafia. You think who is laundering the avazakapets’ (stolen from people) money and siphoning them out of Armenia?
Where is that gold money? Was it spent on Enron shares, in casinos or on building a hotel in tsakhkadzor?
Enough is enough.
i always see other bloggers posting comments that refer people back to their blogs on the same topic. is there some sort of html code that goes into that? i’m trying to increase traffic on my own blog. thank you.
ayekikan – this is offtop – but i’ll try to answer:
this depends on your blogging platform. If you are on WordPress and say – you link to my blog (which is also on wordpress), the detection will take place automatically, and there will be the “trackback’ here – showing, that you’ve linked to me.
if you’re on one of the other popular blogging platforms, you can copy the trackback URL that is visible under every blog post I make – it says ‘trackback’ and you can just copy that code, and when writing a post on your blog, you can paste the trackback URL in the special field designated there, usually a separate field near to where you write your tags. So the trackback URL for this post is http://ditord.wordpress.com/2008/04/16/natural-gas-prices-will-rise-to-84-dram-per-cubic-meter/trackback/
and then – once you hit publish, my blog will detect that trackback and an extract from your entry will appear here, so people will know, that you’ve commented on the same issue.
I hope this helps. You can also do a google search on ‘trackback’ and see if there’s a better explanation.
[…] already pays $270 per 1,000 cubic meters while the government in Armenia is already under attack for the price hike. However, RIA Novosti reports that the average price in Europe already exceeds […]
[…] followed by a demonstration in front of the government building on Republic square. Coupled with sharp rise of natural gas prices announced two weeks ago, and then the recent reports that the gas prices will climb even higher by […]
AUA cafeteria raised food prices in response as well.
but at the end of the day how are they really looking out for, its all about the bottom line these days….
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