Electricity becomes expensive, and appetite comes with eating

The «Electric Networks of Armenia», owned by the Russian JSC «INTER RAO», on May 8 applied to the Commission on Regulation of Public Services of the Republic of Armenia to increase the electricity tariffs. In the application, the company has offered to increase the electricity tariff for consumers by 17%. This initiative of the company has caused a wide public outcry and popular discontent. In different cities of Armenia were held protests demanding to leave the existing electricity tariffs unchanged.

In his interview to the «RUSARMINFO» agency, Alexander Pasechnik, economist and head of the Analytical Department of the National Energy Security Foundation, has expressed the view that the tariff formation of the «Electric Networks of Armenia» takes place in the framework of investment adjustments, that is, the company raises rates to carry out investment plans. And the task of the state, says the economist, is to keep the appetite of companies. «Raising tariffs is a common business process, which is considered to be unpopular. It’s less frequently practiced, trying to hold the increase in tariffs. Russia is in this sad situation as well. We have frozen prices, but natural monopolies always require tariff increase,” said the economist. A more logical reason for the tariff increase, according to Pasechnik, is the company’s losses. In such cases, in order to avoid bankruptcy, the companies raise rates and reduce the amount of investment. Sergey Kalenjyan, Dean of the Higher School of Corporate Management of the Russian Academy of National Economy and Public Administration under the President of the Russian Federation, talking to the «RUSARMINFO» agency, said that it would be logical first to find out the reasons that led to the need to raise tariffs. In his view, the state and society can monitor the activities of these companies and that Russia’s ownership of this company does not mean anything. They must be in a competitive environment and can not sell their services to the public at exorbitant prices. «Monopolies that regularly put pressure on the society by raising the prices are common diseases in Russia and Armenia. They do not deal with the real improvement of management, do not apply for the new technologies, and the market competition is not formed. As a result, the monopolies transfer all their problems to consumers. Such an activity is a common practice of these companies. « According to the economist, the state policy should not be confused with the usual work of these companies. However, if on the level of the business the problem can not be solved, then the negotiations should be conducted on the state level, where the allied relations between Armenia and Russia can help to find a solution to the problem. Speaking of monopolies, in this case about the Armenian daughter of the «Inter RAO», experts believe that, if necessary, the issue of pricing can be resolved with the participation of the state, unless it is interested in its decision. To do this, the state has a huge number of tools of influence, experts say.