Government must develop a new energy strategy and reduce potential risks

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Since the topic of gas price increase continues to be relevant and key in today's debate in Armenia, it is probably worth referring to it again to see if price increases really do not concern ordinary consumers, as the authorities assure. This is very important because the gas price increase at the border was 10%, while consumers continue to pay the previous price.

That is, the statement that this price difference can be covered by the internal regulations of Gazprom-Armenia, in fact, contains serious risks that must be addressed. In particular, this price increase for obvious reasons will lead to a reduction in the company's revenue, and this will have a number of consequences. In the first place, this may lead to a reduction in taxes, because it is no secret that Gazprom-Armenia is on the list of major taxpayers in Armenia. It also means that the investments that this company has committed to make in accordance with the signed interstate agreement will be reduced.

A reduction in these investments will lead to a reduction in new jobs and, consequently, a reduction in taxes for the Armenian economy. If consumer prices for gas remain the same, then the price of this product is still unclear for legal entities. That is, a possible reduction in the price of gas for economic entities through a chain reaction will lead to an increase in prices for other goods, freight and passenger traffic, with all the ensuing consequences.

However, the main problem is that it is unclear how many years this gas price will be held, and whether it really will not be revised again at the end of 2019. Under these conditions, the new authorities of the Republic of Armenia today must begin negotiations for the next three years in order to establish a clear and permanent price. Such clarity will only allow developing a clear policy of the state’s energy security, which, in turn, will allow to avoid similar developments and minimize possible risks in connection with the next increase. The authorities should understand that the times of cheap gas are already in the past, and a possible increase in gas prices is a reality with which they will have to face constantly.

It should also be realized that cheap gas does not exist, since the cheapest gas in the region is imported to Armenia. A more intelligent step would be the development of a new energy strategy by the government that would help reduce risks in the foreseeable future.

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