Commenting on the electricity rate hike protests in Yerevan, now in its third day, Prime Minister Hovik Abrahamyan basically ruled out any roll back of a recent decision to hike electricity rates by 7 drams (1.5 cents) as of August 1.

“At the outset, I want to say that no government, including Armenia’s wishes any rate increase. However, the government is obligated to come to grips with certain objective realities that frequently differ from public perceptions,” Abrahamyan said.

The prime minister said that if electricity rates didn’t go up, thus compensating for real losses to the energy system, Armenia faced serious threats.

“If the noted losses aren’t compensated for, then the electric company will continue not paying the generating stations. As a result, we will have a chain reaction that will have irrevocable consequences for the economy,” Abrahamyan said.

He told a cabinet session meeting today that the average monthly utility bill of consumers in Armenia would only increase by 1,400 AMD.

In an attempt to show that the government was nevertheless concerned about the effect such an increase would have on socially vulnerable families, Abrahamyan said they were working on a decision that would increase living allowances to some 105,000 families (400,000 individuals) in Armenia by 24,000 AMD (US$51) per year.

Abrahamyan did not rule out the possibility that abuses occurred in the country’s energy distribution network.

He stated that despite the extent of such abuses, none of the losses were taken into account when coming up with an electricity rate.

Abrahamyan said that the Public Services Regulatory Commission is reviewing all the expenditures of the utility company (Electric Networks of Armenia) and if it encounters any deviation in market prices it is cutting those expenses, thus not allowing the company to pass the losses on to the customer.

The prime minister said that the issues now faced by the energy sector in Armenia are diverse and that the government is drafting a long-term development plan for the sector.