Social media services say that domestic electricity prices are projected to rise in the months to come

Social media users say that electricity prices are expected to rise after introduction of amendments to fuel and water tariffs. Prices are expected to rise twice.

ОАО "Azerishig" closed 2019 in the red in the amount of 54,9 million manats while  2018 figures stood at 12,9 million manats of net profit. Besides, the company has sales tax payable to the state budget worth above 3 million 90, 000..

Under the Accounts Chamber, the state budget draft for 2021 provides for dividends to the big state companies (SOCAR, “Azerbaijani railways”, ОАО “Azerishig”, ЗАО “Azerbaijani Caspian Shipping Corporation”, ОАО “Azerenerji”) valued at 46 million manats by dividends from enterprises with a government stake. The Accounts Chamber notes that repayment of a part of obligations of the said companies from the Guarantee Fund and the state budget by guarantee credits and completion of financial-economic activity at a loss generate dividend risks as set forth by the mentioned source for 2021.

To some experts thinking, all these are sure to change electricity prices.

Are changes in electricity prices expected to take place in the country? Is there need in raising prices?

A press-service of OAO «Аzerishyg» reported that the company has not addressed to the Tariff Board for tariff change. «This is absolutely wrong information. There have not been any price increase statements».

At the same time, the company replied that they could not say anything about the current tariff sufficiency.

Economist Natiq Jafarly told Radio Azadlyg that in January «Azerigaz» made an official inquiry to the Tariff Board concerning tariff raising.  «Prices for petroleum and diesel fuel have been raised while the situation around the natural gas has improved. This is to say that state companies as natural monopolists are minded to be insured against loss-making activity through raising prices and reducing subsidies from the state budget. They draw no conclusions from loss-making management in disregard for reduction of unnecessary costs».

The expert pointed out that subsidies of state companies from the state budget were reduced. «This is a true stride. The reason is that the state companies-monopolists cannot be a burden for budget. On the other hand, citizens should not defray this burden».

N Jafarly opines that it is essential to reduce expenditures and uncover the cause of the existing situation.

It has to be kept in mind that monopolist companies set aside the possibility of gaining additional funds at the expense of spending cutdown, management optimization and, instead, focus on gaining additional funds at the expense of tariff raising. «The problem is that overpricing of expenditures creates opportunity for corruption».

The economist emphasized that tariff escalation for communal services will always be on the agenda. «It is no wonder that both «Azerishig»  and «Azerigaz» addressed such a proposal to the Tariff Board".

As viewed by the expert, there is no need in raising prices. "The point is that even today’s electricity and gas prices sold to the population of Azerbaijan are far from being cheap when adjusted for citizens’ purchasing power and rates of return, as well as inflated value of gas and electricity consumption. In considering purchasing power of Azerbaijani citizens, these prices are slightly above, especially as there are gas and electricity consumption limits. That’s why there is no need in raising tariffs ".

Note that the last electricity price hike in Azerbaijan took place in 2016. By the decision of the Tariff Board dated July, 15, 2016, wholesale rate per a kilowatt hour has been set at the value of 4,3 gapiks, retail-sale - 7 gapiks.

It was stated that the said decision had been adopted with the objective of ensuring stability and good energy supply, reduction of financial dependence of producer and distribution network, as well as long-term prospective development.-0-