Who will pay for debts of Electric Networks of Armenia?

Who will pay for  debts of Electric Networks of Armenia?

Susanna Petrosyan, Yerevan. exclusively  for Vestnik Kavkaza


In the upcoming months in Armenia it is planned to increase prices for electricity for the forth time in the last five years. On May 8 CJSC Electric Networks of Armenia (ENA)  officially submitted an application to the Commission for Regulation of Public Services (CRPS) to increase electricity tariffs. In particular, it is proposed to increase prices from the current daily rate of 41.85 to 58.93 drams and night tariff from 31.85 to 48.93 drams. If the application is accepted then it is going to be the third price increase in tariffs over the last 2 years. 


The Armenian authorities consider another increase reasonable and try to explain it with  poor management of the ENA company , which is a subsidiary of Russia's Inter RAO UES. Thus, according to Minister for Energy and Resources, Yervand Zakharyan, only for the last three years, ENA has suffered a loss of 37.6 billion drams (1 US dollar is 475 drams). According to official data, instead of the permissible loss of 12% over the last 4 years the losses in the networks amounted to 16%, each percent of loss is equivalent to 2.5 billion drams. "The losses associated with theft, with the date of manufacture of the equipment, the quality of operation and the level of responsibility of the employees,"  the Minister said. In other words, the Armenian government, represented by the Minister for Energy recognizes that the ENA company  is engaged in theft and is attempting to cover their debt through higher electricity tariffs.


A number of civil initiatives, non-governmental organizations and opposition forces have expressed their outrage as the impact of the tariff increase on already extremely difficult socio-economic situation and the position of the Armenian government, which declares , on one hand, theft, and on the other pointing to the validity of price increases for electricity. Of course, with the activities of the leaders of ENA about embezzlement of which (in expensive cars and apartments in Yerevan, on costly trips and so on.)  media wrote and public statements were made by some public and political figures, the business owner  Russian Inter RAO UES must figure out something. However, the Armenian government should not stay away because ENA acts on the territory of Armenia. Many opposition politicians and experts surprised by the position of the Armenian authorities, whose statements about the theft in the ENA company do not have any logical extension. "It was theft, catch, try, return the stolen,’’ says independent MP Edmon Marukyan proposes.


According to the MP from the opposition faction he Armenian National Congress' (ANC) Stepan Demirchian, it is obvious that the rise in price of electricity is not due to objective reasons, no matter how they are trying to convince society, and aims to cover the accumulated by ENA debt of nearly $ 250 million dollars:  "accumulated debt" of ENA "caused by bad governance, in other words, with thefts that took place. 


And all this happened in front of the government. Rather than improve the system, to punish those responsible, to make the company's management more efficient, they are trying to cover the company's debt with the resources of the population, which is unacceptable. We must put an end to impunity, to develop and implement a program of recovery."


The parliamentary opposition considers the continued policy of raising tariffs, which will lead to the next round of price hike for goods and services, and hence to the further impoverishment of the population, to be unacceptable. The opposition demands that a special hearing be held with the participation of representatives of both the government and administration of the ENA company.


The future increase in electricity prices caused an uproar in the community. On May 24-24 in Yerevan and some other cities protests were organized by the civil initiative ‘No to Robbery’. On the evening of May ENA, the initiative organized a two-hour protest, which was attended by many media resources, which refused to use electricity for two hours. On May 27 in Yerevan and in more than 15 cities across the country there were rallies and marches to protest against the price hike fares. In the organization of protests, local civil society activists and representatives of the opposition parties, ANC and Heritage took part.


It is possible that this wave of discontent in the country in some way sobered the officials and representatives  of the ruling elite in general. A couple of days after the crowded marches in the capital and protests in other cities, the energy minister Yervand Zakarian, previously indicated the validity and the need to raise the tariff ruled out sharp price increases and expressed doubt that the application of the ENA on a tariff increase of 17 drams will be fully satisfied. The Minister suddenly confessed that he understands all the protesters, all the discontented citizens: "I also do not want to raise the price of electricity. There are social issues that really bother our citizens."


We can assume that this is a derogation from the usual tough stance of the government in a social and economic matters. However, given the familiar logic of the Armenian authorities, this is just a tactical move, which hides all the same the clear desire to implement its own (governmental) decisions. It may be applied to the scheme, which implies an increase in tariffs in two stages, so as not to encourage further social discontent.


In all cases, the position of the authorities will be cleared up in 10 days, it was then, according to official data, the CRPS will make a statement at the request of the ENA. Meanwhile, civil society activists, who are working in partnership with the opposition political forces, do not intend to depart from the fight started: on June 19, another rally is scheduled.


Vestnik Kavkaza

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