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“Why Can Price of Gas Go Up But Not Price of Electricity?” Discussion in Armenian Parliament

The Public Services Regulatory Commission (PSRC) of the Republic of Armenia (RA) is raising the electricity tariff upon the request of businesses in this sector, which have huge financial problems. 

All major businesses appealed to the Commission with this request with the exception of Vorotan Cascade of Hydroelectric Power Plants, which last year was sold to the American company ContourGlobal, said PSRC Chair Robert Nazaryan (pictured) in parliament today during the hearings on the increase of electricity tariffs.

Recall, the Commission adopted a decision to raise the price of consumer electricity by 3.5 to 4 Armenian drams per kWh. Currently, the rate is 38 AMD per kWh.

Speaking with members of parliament, Nazaryan raised the question of why ArmRusGazprom can appeal to the Commission to raise the gas tariff, but those working in the electricity sector cannot. 

The Commission president said that a financial gap of 17.9 billion formed in the electricity sector last year. He explained that this was primarily due to interruption in service of the power plant.

"One bloc of the power plant began operating 88 days later than anticipated, resulting in 300 fewer million kilowatts of electricity being produced," he said, adding that this is why Electric Networks of Armenia (ENA) incurred additional financial expenses. 

Yerevan Thermal Power Plant also accumulated a debt last year, of 7 billion AMD (about $16.9 million), Nazaryan said. Repair work is necessary in order to regulate the work of the Yerevan TPP, which also requires funds.

The MPs directed questions at the speaker, attempting to understand whose inaction it was that created the need for raising the electricity tariff and whether it's necessary to increase the price at all. 

Prosperous Armenia Party MP Naira Zohrabyan, in particular, said: "I would want the electrical networks employees to be here. Remind me, for how much were the Electric Networks [of Armenia] sold and what investments were promised to be made? Second, why are all electricity producers showing 0% profit? Are they masochistically working without profit?"

Nazaryan said that ENA was sold for $40 million in 2002, and there has been no investment since 2007. After that, when the Russian company Inter RAO UES became the owner, 80 billion AMD (about $194 million) investments were made. 

Nazaryan said only the nuclear power plant and Yerevan TPP don't have any profits. 

As reported earlier, local daily Zhoghovurd reported that the financial gap arose due to the fact that when the nuclear power plant was not operational, ENA purchased electricity at a higher rate from Hrazdan TPP, which runs on Russian gas, when it could've purchased it from Yerevan TPP, which runs on cheaper Iranian gas.