“168.am.” How Cheap Russian Gas Is Sold to the Population in Armenia at a Price Nearly 2.2 Times Higher
Amid discussions surrounding a possible increase in the price of imported gas, 168.am has addressed Armenia’s gas tariff policy, presenting how Russian gas purchased at a preferential price at the border reaches the population at a price nearly twice as high, while substantially lower tariffs apply to certain sectors of the economy.
As “168.am” writes, Russia has been supplying natural gas to Armenia for years at a price significantly below international market prices. However, not all consumers in Armenia feel this advantage equally. As a result of differentiated tariffs in the domestic market, the population pays considerably more for gas than, for example, greenhouse farms and companies engaged in agricultural processing.
According to the publication, Armenia currently purchases Russian gas at the border for $177 per 1,000 cubic meters. With the VAT charged at the time of import included, its price reaches $212, while the equivalent price under the current tariff for the population is $395. Thus, gas purchased at the border reaches consumers at a price more than 2.2 times higher.
“168.am” also draws attention to the sharp difference between the tariffs. In particular, during the season, greenhouse farms pay only $234 per 1,000 cubic meters of gas. That is, after including VAT, the price of gas for these consumers increases by only $22, while in the case of the population, the increase reaches $218.
Moreover, if VAT is excluded from the calculation, the price of gas for the population increases by $218 after crossing the border, while for greenhouse farms it increases by only $57. In fact, the additional price burden imposed on the population is incomparably greater than that established for certain sectors of the economy.
Businesses engaged in agricultural processing also benefit from the same preferential conditions. These tariffs are set by the Public Services Regulatory Commission of Armenia (PSRC), which is authorized to approve consumer gas prices in the domestic market. Therefore, responsibility for the high tariffs applied to the population cannot be attributed solely to the price of imported gas or to “Gazprom Armenia.”
The publication emphasizes that the price of gas at the border is formed on the basis of agreements reached with Russia, while tariffs for consumers inside Armenia are approved by the Armenian authorities through the PSRC. Therefore, the explanation for the enormous difference between the import price and the amount paid by the population should be sought precisely in Armenia’s tariff policy.
This difference becomes particularly noticeable when comparing the approaches applied to the population and to individual sectors of the economy. The low tariffs provided to greenhouse farms and agricultural processors have also become possible because Armenia receives gas at a preferential price at the border. Meanwhile, the population, which should likewise benefit from this advantage, is forced to pay a significantly higher price.
According to the “168.am” publication, when speaking about the difference between the price of imported gas and domestic tariffs, the authorities often bypass precisely this circumstance. The high price paid by the population is presented as an argument that the preferential price of Russian gas is not such a significant advantage for Armenia. However, this logic bypasses the main circumstance: the level of domestic tariffs is determined by the Armenian authorities.
Thus, certain groups of consumers benefit from the economic advantages of cheap Russian gas, while the high tariffs set for the population significantly reduce the impact of that advantage. Under a unified or more equalized gas tariff system, the price paid by the population could be significantly lower than its current level.