Causes of situation in Armenia entirely economic, no politics involved – head of Inter RAO
Inter RAO is in charge of the Electric Networks of Armenia (ENA) that holds a monopoly in electricity distribution in the country, Kovalchuk said. The company is in a hard financial condition and asked the Armenian regulator for a 40% tariff increase, yet the regulator has partly satisfied the bid and raised the tariffs by 16% only, he said.
The electricity tariff increase gave rise to mass protests in the country. Armenia’s president said the government will pay the increase costs until the audit of ENA is completed by international companies. The audit will take from 3 to 6 months.
Kovalchuk said Inter RAO welcomed the idea of carrying out an audit in ENA.
“I am confident that conclusions made following the audit will affirm the need for systemic changes in the sector,” the head of Inter RAO board said.
Long-year losses are suffered by the Electric Networks of Armenia because of the existing tariff regulatory system and market functioning rules in the country, according to Kovalchuk.
Under the current system, generating companies are financed at the expense of ENA, and the distributing company is enforced to buy more expensive electricity than anticipated in the country’s energy balance, with no compensation from consumers.
Insufficient tariff increases over the last 11 years, nuke station repairs and reduced generation at hydro power plants led to the distribution networks’ receiving some 37 billion drams (4.3 billion rubles) less in profit.
“This was the main cause of the current uneasy financial situation,” Kovalchuk said.
Before the company managed to use loans to make up for the cash deficiency, but borrowing opportunities have expired, he said.
Due to cash deficiency ENA has been operating at the verge of financial stability and has had no chance to pay to generating companies since the beginning of 2014.
On June 17, 2015, Armenia’s Public Service Regulatory Commission raised the electricity tariff by 6.93 drams ($0.015 or 16.7%) per kilowatt-hour effective as from August 1, as compared to 17 drams’ (40.8%) increase asked for by the bidder, the Electric Networks of Armenia (ENA).
The regulator’s decision gave rise to protests in Yerevan and other cities. ‘No To Plunder’ civil campaign participants have been holding demonstrations and sit-in in Yerevan demanding the government to cancel the price hike. Early morning on June 23, the police used water cannons to disperse peaceful demonstrators in Baghramyan Avenue that left 18 people injured. Large-scale protests resumed on the same day, demanding the authorities to cancel the hike and to punish those involved in violence used to disperse the peaceful demonstrators. Baghramyan Avenue remains blocked till now.
Last Friday, following his meeting with Russian minister of transport Maksim Sokolov (co-head of Russia-Armenia intergovernmental commission), Armenia’s president Serzh Sargsyan said an audit will be performed in ENA. Last Saturday, the president said that the government will pay the tariff increase pending the completion of the audit. The protesters split up into two camps, with the first group having accepted the presidential proposal and moved to Freedom Square and the radical demonstrators having remained in Baghramyan. –0--