Risky-For-Us Issues Discussed at EEU Inter-Governmental Board Session

• 05.06.2019, 15:43
• Lilia Amirkhanyan
•  EEU,  "Insight" Analytical Center ,  World,  Armenia,  Analytics

At the EEU intergovernmental board session, held in Yerevan, a range of key issues were raised concerning setting up joint markets of energy carriers, eliminating trade obstacles and so on. At least theoretically there are no hindrances to carry out the envisaged solutions. However, political statements are way far from implementation.

One of the issues was that of setting up joint markets. Such markets envisage creation of stocks – joint commercial platforms. The key issue concerning us is the absence of stock market in Armenia. This means that our country is technically not ready to act in such platforms. But there is even a deeper issue, namely the gas tariffs, for example will be decided in stock markets. On the one hand this can reduce the tariff as a result of competition, on the other hand it can be risky. Given that the bulk of our production is based on gas we will face a high level of uncertainty. In addition gas price is largely affected by world price of oil. Consequently gas tariff will be directly linked to the constantly fluctuating oil prices.

Gas tariff risks will also affect power production. Most of Armenian power plants work with gas. If power production is placed in the joint power market context we will in addition have the circumstance that joint markets envisage free trade between the countries.

As a power producer country we can face the challenge of a cheaper import from another EEU country. This doesn’t mean that joint market is not good. It is inevitable given the rationale behind the integration processes. However economies must be ready for that.

One of the key issues for us is the structure change of the mutual trade turnover with the EEU. That is to say Armenia-EEU trade turnover bulk accounts for the trade with Russia. It is important to work on trade diversification. Another key issue is that of industrial co-operations. When it comes to IT Armenia must preserve its leading position in the Union and meanwhile work on creating workplaces, boosting economy and so on. Setting up industrial co-operations, discussed at the session can contribute to the solution of those problems.