Gazprom-Owned Gas Operator in Armenia Accused of Tax Evasion

The Armenian tax authority has launched criminal proceedings against the country’s national gas distribution company, which is owned by Russia’s Gazprom, accusing the Armenian operator of evading millions of dollars in taxes, RFE/RL reported.

Armenia’s State Revenue Committee (SRC) announced the criminal charges on November 14, claiming Gazprom Armenia inflated its expenditures and under-reported its earnings in 2016 and 2017. This allegedly resulted in “several billion drams” in outstanding taxes.

“The criminal investigation has only just started,” the head of the SRC’s investigative division, Eduard Hovannisian, said.

No Gazprom Armenia executives have been formally charged thus far.

Gazprom Armenia was second on the list of the 100 largest taxpayers last year, according to Armenian media. In the first 9 months of 2018, the company paid $62.5 million in taxes, down from $66.4 million in 2017.

Hrant Tadevosian, Gazprom Armenia’s chief executive, denied the accusations, calling them “baseless.” He says the SRC’s announcement is damaging to the company’s reputation, which he said had received a certificate of good conduct from the SRC as recently as September.

The criminal proceedings come at an unfortunate time for the Armenian operator. Tadevosian said the company is in the process of negotiating a soft $150 million loan with a Russian bank to repay its old loans. He said the agreement would allow the company to reduce its expenses by $2.4 million per year.

According to a 2016 Armenia-Russia agreement, Russian Gazprom sells 1,000 cubic meters of gas to its Armenian subsidiary Gazprom Armenia at $150. Gazprom Armenia then sells it to households at about $300 per cubic meter. The most recent Armenia-Russia gas agreement expires in December.