Saturday, June 27, 2015

Recent developments related to electric power in Armenia

It never ceases to amaze me how governments over and over fail to adequately communicate with their citizenry. A case in point is the recent decision by regulators in Armenia to allow ENA, the private electricity distribution network formed over a decade ago, to raise the peak tariff rate it charges consumers from about AMD 42 in 2014 to 48 per KWH in 2015, or from about USD 0.09 to 0.10 per KWH (with similar change to the off-peak rate).

Privately owned firms are free to set any price they want for their products. For privately owned public utilities, however, government regulators typically set rates so as to allow firms to realize a certain rate of return to recover their costs; public utilities, as natural monopolists, may otherwise charge much higher prices. For the electric grid in Armenia, the tariff rate has been fixed at 25 Drams for several years (pre and post privatization) until April of 2009 when it was raised by 20 percent to 30 Drams, which also happens to be the rate at which the Dram depreciated relative to the Dollar in the previous month. As the Dram continued to depreciate following the global Great Recession, regulators seem to have allowed the utility to charge higher tariff rates, albeit with a lag as the figure below shows.

Foreign investment in public utilities in Armenia, effectively electric and gas, took off in 2006, peaking in 2008 at USD 477 million in FDI; they dramatically declined to USD 7 million by 2013 (see here). When stated in USD, the tariff rates have changed little over this period. Raising tariff rates would be welcome by power providers as it will help them recover their costs. Of course consumers can get hurt by this, and it is no surprise that some strongly oppose raising rates. Unfortunately, and given the aging infrastructure, and in particular the nuclear power plant, tariff rates are likely to increase much more dramatically over the next decade to cover the cost of new investments. I am not sure that this is being communicated well to the public.

Electricity peak tariff rates in Armenia 

Reading resources:

Republic of Armenia : Power Sector Tariff Study (2013)

From Crisis to Stability in the Armenian Power Sector Lessons Learned from Armenia’s Energy Reform Experience (2006)

Also the following is useful:
Armenia Power Sector Policy Note (2014)

Thursday, June 18, 2015

Armenian Economic Association 2015 Annual Meetings

The Armenian Economic Association 2015 annual meetings will be jointly hosted by Yerevan State University (YSU), the Central Bank of Armenia (CBA-Dilijan), and the American University of Armenia (AUA) on June 19-21, followed by a workshop on “Forecasting techniques and forecast evaluation” on Monday, June 22, at CBA-Yerevan. Preliminary program is  available at

Registration for the meetings and the workshop is free at the conference homepage at

The Conference brings together academics and researchers from Armenia, Canada, France, Georgia, Germany, Hungary, Italy, Norway, Netherland, Spain, United Kingdom, and the United States. Presentations over the three days include over 50 papers which address topics in agriculture, finance, international trade, economic development, macro and microeconomics, migration, political economy, and among others.

The keynote speaker on Friday, June 19th, is Professor Armen Hovakimian, Chairman of the Finance and Economics Department at Baruch College, City University of New York, and the luncheon speaker on Sunday, June 21th, is Dr. David Dole, Country Director, Asian Development Bank.

The meetings conclude Sunday evening, June 21, at AUA, with the best paper award ceremony. Three categories of awards are available: Armen Alchian Awards for papers of general interest; Grigor Artzruni Awards for young scholars; and International Monetary Fund Awards for papers in Macroeconomics and International Economics.

On Monday, June 22nd, 10AM-3PM, Professor Tatevik Sekhposyan of Texas A&M University, formerly of central Bank of Canada will conduct a workshop on Forecasting models at CBA-Yerevan.

Forecasting Workshop: Armenian Economic Association 2015 Meetings

The Armenian Economic Association 2015 Annual Meetings conclude with a workshop on "Forecasting techniques and forecast evaluation," hosted by the Central Bank of Armenia at 10AM-3PM, on June 22nd, 2015.
This workshop examines time series models used for forecasting macroeconomic series and discusses forecast evaluation techniques. The main emphasis is on forecast evaluation techniques covering tests of relative and absolute evaluation and briefly considering the assessment of predictive density calibration. The workshop will involve both theoretical and empirical aspects of forecast evaluation.
Duration: 10AM-3PM; 2-hour lecture segment, with an hour break in between
Prerequisites: This is a graduate level workshop. Audience should be comfortable with simple algebra and familiar with basic concepts of econometrics.
About the instructor: Tatevik Sekhposyan is an Assistant Professor of Macroeconomics at the Texas A&M University at College Station. She has worked previously at the central Bank of Canada and holds a Ph.D. from the University of North Carolina at Chapel Hill. See more at
Registration is free but is required at the conference page