Possible Increase in Electricity Tariffs as Well

Hraparak.am reports: "The Public Services Regulatory Commission has officially announced that starting from January 1, 2022, the tariff for drinking water will increase by approximately 20 drams, reaching 200.47 drams. Only the socially vulnerable subscribers will remain unchanged at 180 drams. However, Nikol Pashinyan promised otherwise. Back during the 2018 parliamentary election campaign, he stated: 'According to the previously signed contract, drinking water should have increased in price throughout the republic in December, but we were able to work with 'Veolia Water' and agreed that there would be no increase in drinking water prices in Armenia until 2024.'

We asked Hraparak's president, Garegin Baghramyan, why the agreement was violated and it was decided to raise the tariff two years earlier than planned. 'No agreement has been violated. The agreement was regarding that if there were appropriate compensations, then 'Veolia' would not object to changes in the basic prices fixed in the 2016 competition. In other words, from 2019 until including also 2018, 2019, 2020, and 2021, there have been decreases in the basic tariffs with appropriate compensations, meaning lease payments, government subsidies, resulting in the current price of the same 180 drams. Now, those agreements are still in force, if we want to reduce the lease payment again, we will still have the same tariff we have—180 drams,' said G. Baghramyan.

– And why don’t you want to do it again?

– For that, we have proposed a new scheme to the government to separate the socially vulnerable consumers, negotiate with 'Veolia' for the next 10 years. Let’s say, we should have tariff increases for 3-4 years, then from that increased point, it should start decreasing, and so we won’t have sharp increases followed by decreases, allowing for stability both for the economy and for consumers. We have discussed fundamentally that there will be no decrease in lease payments for ten years, meaning there won't be any decrease in budgetary revenues over a ten-year period. We also separate the group of socially vulnerable consumers who will not be affected by this increase at all, leaving it at 180 drams. As a result, we have come up with a picture that by raising the price by about 20 drams, in the coming ten years we will have stable tariff policy. This does not mean that it will be exactly 200 drams. Of course, based on inflation, certain deviations of 1-2 drams up or down may persist.

– So, the government provided these compensations for 2019-2020, 2021, but there won’t be any for 2022?

– There are different types of compensations; it could be in the form of direct subsidies. When we provided 'Veolia Water' with the leasing system by contract, there are lease payments in their rates. Every year about 5-6 billion, even more, is paid from the state budget. Now you can say you don’t want that 6 billion, for example, pay 4 billion to the budget, and you could even reduce the tariff. We had proposed that moving forward, we consider such a scenario that whatever was originally planned to be paid to the state budget should not decrease at all, only that the movement of those funds should be adjusted over the years based on the principle that the budget contributions paid over ten years should remain the same.

– But the fact is that Pashinyan promised in 2018 that there would be no increase in water tariffs until 2024, now it turns out he has deceived the people again.

– You say there has been an agreement; I say the agreement is still in force. Now we have offered to follow such a scenario because I, for example, do not find it fair for my water rent to be subsidized at the expense of the state budget — what for?

– Is there an expectation of changes in the gas and electricity tariffs in 2022?

– Regarding the electricity tariff, it will be clear in the coming days. I assume that there may be an issue of certain increases.

– On what basis will it increase?

– We will present the bases in a few days. It is related to the 5th energy block of Hrazdan, and the repayment schedule of the nuclear power plant loan is the basis. We receive letters from the companies every year, see what problems they have, what their financial situation is, and based on that, we calculate and see whether the current prices for consumers are sufficient to ensure that those funds or not. If they are not sufficient, the question arises, whether it should increase by that amount.

– So, will we know in a few days whether the electricity tariff will increase?

– It will be on February 1, 2022, if there is an increase.

– What about gas; is there a discussion about changing its tariff as well?

– Gas is interconnected with these agreements, depending on what agreements there will be regarding the 5th energy block of Hrazdan. They are interconnected. I assume also that there are other factors besides Hrazdan-5. But the lion's share will be influenced by the 5th energy block of Hrazdan."