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Armenia, Russia ‘Still In Talks On New Gas Tariff’

By Astghik Bedevian

Armenia has still not reached agreement with Russia on the cost of Russian natural gas which is certain to rise substantially and push up Armenian utility prices this year, officials in Yerevan said on Wednesday.

Armenia is one of several former Soviet republics affected by a politically charged steep increase in gas prices announced by Russia’s state-controlled Gazprom monopoly late last year. The landlocked resource-poor country was supposed to pay twice as more for the imported fuel starting from January 1. But according to ArmRosGazprom (ARG), the national gas operator, the old tariff of $56 per thousand cubic meters will remain in force pending a mutually acceptable solution to be found by the two sides.

“Negotiations are still going on between ArmRosGazprom and Gazprom,” ARG spokeswoman Shushan Sardarian told RFE/RL.

But Sardarian made it clear that a price hike is inevitable and that the Russian-Armenian talks are focusing on “mechanisms of payment” for further gas deliveries. Armenian government officials likewise appear resigned to such a development, saying that they hope the Russians will somehow cushion its effects. The presidents of the two countries are expected to again discuss the issue at a meeting in Moscow later this month.

With a reversal of the Russian price hike now appearing out of question, it remains unclear what specifically Yerevan expects from the Russian side. According to Armenian press reports, Moscow is ready to refrain from levying extra payments in return for getting hold of Armenia’s largest hydro-electric power plant.

The gas dispute has further strained Russia’s relations with pro-Western ex-Soviet states like Georgia and Ukraine. The latter reached a compromise agreement with Gazprom on Wednesday after weeks of tensions that nearly disrupted Russian gas deliveries to Europe. Under the terms of the deal welcomed by the European Union, Ukraine will pay an average of $95 million per thousand cubic meters of gas imported from Russia as well as Kazakhstan and Turkmenistan. That is up from the $50 Ukraine paid until now, but much less than $230 demanded by the Russians.

“It is obvious that the Russian attempt to destabilize Ukraine economically and politically was not successful,” Oleksander Dergachev, an independent Ukrainian analyst, was quoted by the Reuters news agency as saying. He claimed that “Russia did not succeed in making its will felt.”

Unlike Ukraine, Armenia has no intention to join NATO in the foreseeable future and maintains close political and military ties with Russia. Still, it now looks set to pay $110 per thousand cubic meters of Russian gas.

The unpopular measure has been criticized by Armenian politicians and even government officials. Parliament speaker Artur Baghdasarian went so far as to suggest that Yerevan should consider demanding financial compensation for the presence of a Russian military base in Armenia.

Incidentally Gazprom and another Russian energy company own a controlling 55 percent stake in ARG, which runs Armenia’s entire gas infrastructure. Sardarian said ARG will soon ask a state utility regulator to allow a major increase in the retail price of gas supplied to individual consumers.

The gas price hike will also affect thermal power plants that generate more than one third of Armenia’s electricity. The deputy head of the state Public Service Regulatory Commission, Nikolay Grigorian, admitted that the existing electricity fees, already seen as too high by many Armenians, will go up as a result. Speaking to RFE/RL, Grigorian said the regulatory body will also likely sanction a considerable rise in the price of drinking water soon.

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