March 1, 2011

A parliament member from the oppositional Armenian Revolutionary
Federation/Dashnaktsutyun (ARF) called today for setting up an
ad hoc commission to make a probe of the country's natural gas
system. Addressing his parliament fellows Vahan Hovhanesian said the
issue has become a pressing problem.

'The ARF faction had asked the government to provide it with answers
to a set of written questions, regarding the natural gas system,
but the answers did not satisfy us. This is why we believe that an
ad hoc parliamentary commission is needed to make an in-depth look
into the issue,' he said.

He said also the faction's request that the government make an analysis
of the sector because parliament members are not obliged to possess
specific relating information was ignored.

He said the sector is dominated by one company and in this case natural
gas deliveries and distribution must be governed by a special law that
does not exist. He also argued that the findings of the commission
would be useful to allow to gauge the impact of the monopoly on gas
pricing. He said the proposed ad hoc commission would also have to
develop fair pricing proposals.

'Huge investments have ben made in connecting households and
enterprises to the network and gas is available even to households,
which have no money to pay for it, but the fact is that the cost of
delivering gas from Siberia to Armenia is as much as bringing it from
Armenia's border to end users,' he said.

According to calculations, the retail price paid by Armenian households
is as much as $387 per thousand cubic meters.

A spokesman for Armenian president said last week the price of
natural gas in Armenia this year will not rise. The announcement came
after Armenian president Serzh Sargsyan discussed the issue with his
Russian counterpart Dmitry Medvedev. The issue reportedly featured
large during their talks in Saint Petersburg last Friday.

The spokesman, Armen Arzumanian, told journalists after the talks
that Sarkisian and Medvedev reached agreement on the price, but he
gave no details of that agreement, saying only that Armenian consumers
will not be paying more for Russian gas at least until next year.

Arzumanian also said that the gas price for socially vulnerable
categories of the population will be lowered in 2011. He said the
president has instructed the government to work out "appropriate
mechanisms" for ensuring the discount. The proposal would be put to
vote during the next session of the parliament on March 21-24.

Russian Gazprom that holds more than 80% in Armenia's national
gas operator ArmRosGazprom, raised the cost of gas for Armenia by
14 percent in 2009 and by another 17 percent in 2010 April to $180
per thousand cubic meters. Following it the Armenian Pubic Services
Regulatory Commission (PSRC) approved a 37.5 percent surge in the
gas price for households requested by ArmRosGazprom. Last September
Gazprom said it would gradually bring its gas tariffs for Armenia,
Moldova and Belarus up to "market-based" international levels in
the coming years. Gazprom currently sells gas to western and Central
European countries for over $300 per thousand cubic meters.

From: A. Papazian