Weekly economic review

Analysis Materials 16 May 2007 12:02 (UTC +04:00)

Last week the Azerbaijan President instructed the Tariff Council to reconsider the tariff of some utilities. In this respect the secretariat of the Tariff Council is developing proposals and will submit to the TC approximately in the second half of 2007. The gathering will focus considering the tariffs on 8 types of communal services, including the garbage utilization, use of elevators and payment for apartments. At present several variants on change of tariffs are under consideration.

The key reason for reconsidering the tariffs is adjust their prices to the prime cost. The researches carried out by Azerbaijani specialists testify that the current tariffs do not justify themselves. Notably, by the last decision made by the Tariff Council on January 6, 2007, tariffs on energy carriers, public utilities (electricity, water, water collection services), service rendered by law enforcement bodies, State Lands and Cartography, as well as transport passenger carriages were increased.

Possibly the future decision of the Tariff Council of Azerbaijan on repeat increase of the prices for several kinds of the communal services will lead to the improvement of the financial opportunities of the communal organizations and in its turn, it will cause more qualitative service to the population. Presently the situation of the communal infrastructure and its services is not secret. However, the steps taken by the Azerbaijani Government on increasing the tariff for the communal services will not decrease the necessity to reform the whole sector of housing communal services. In exchange of the increase of the tariffs, the population demands rendering qualitative communal services. Other vice the social confrontation is unavoidable. In addition, each time after the decision of the Tariff Council, the factors affecting the inflation significantly increase.

Thus, the family budget of the Azerbaijani citizens incurs by double. Firstly it needs to pay off increased tariffs for communal services, as well as cover inflation expenses on all commodities and other services. As a result, a process takes place that even the measures on improving social programs can not afford this case.