Starting from 2017 Armenia will have single operator of water supply and new tariff

ArmInfo. A 15-year term  agreement will be signed with a new single operator of water supply  and sanitation Armenia in November. The new operator of water supply  single throughout the country with common tariff will start operating  from January 1, 2017. 

Consultant of Water Supply and Sanitation Systems in State Committee  of Water Resources under the Ministry of Energy Infrastructures and  Natural Resources Mushegh Karapetyan informed ArmInfo's correspondent  that preparatory work on holding international tender for choosing  single operator of water supply in Armenia was being done since 2014.  Three international companies:  French operators Saur (manages  "Armwaterchannel") and "Veolie Generale des Eaux (owner of  'Yerevan-Jur'), Italian Akea company (manager of Yerevan Jur in  2000-2005) and Armenian-German Consortium "AEG Service" (maintenance  service of gas supply systems and water supply via Shirak water  channel and Lori water channel") were competing for the position of  single operator of water supply and water disposal. All the four  companies passed the round of evaluation of technical proposals, on  the results of the second round of tender French Veolia Environment  SA was announced the winner. The company offered the lowest tariff on  water. The relevant contract was approved by the Armenian government  on October 27 and will be signed by the company in the middle of  November. As a matter of fact, starting from January 1, 2017 new  single water operator will take management of five acting operators:  "Yerevan- Jur", "Armwaterchannel", "Shirak Water Channel", "Lori  Water Channel" and "Nor Akunq". 

The State Committee already mentions the positive sides of the  reforms. It turns out that as of today the five operators were  servicing 410-420 communities in Armenia, mainly large towns and  villages. No water was supplied to around 570 communities due to  small number of population. The current policy of the responsible  agencies is to include these territories in the zone of water supply.  Karapetyan noted that in some of these communities there is no  infrastructure at all and only when relevant water systems are  installed the single operator will be able to manage these  communities. For this reason the situation in these communities has  been already studied and in 30 of them in various regions of Armenia  investments will be made in the nearest future via state funds and  loans. In this context it is expected to attract funds from Asian  Development Bank, German Development Bank (KfW) and European Bank for  Reconstruction and Development (EBRD). 

Mushegh Karapetyan thinks that the decision to have one single  operator instead of the current 5 will be justified. A huge work was  done to study the sector prior to making reforms. It became clear  that it is important to have one operator for conducting common  policy. Besides, Karapetyan clarified that the tenant according to  the new contract is obliged to pay rent for state property entrusted  to it and pays part from gained income. The second, the tenant will  operate financial flows itself and if before the state was  subsidizing the field, from now on there will be no subsidies. And  most importantly, the expert noted that the managing company is  obliged to make investments in modernization of water supply systems  amounted to at least 37.5 bln drams within 15 years, although  according to Head of State Committee of Water Management Arsen  Harutyunyan the amount of investments may total up to 80 blnd rams  ($170 mln). 

However, society is seriously concerned not so much over the new  reform as over reform of tariff policy.  Meanwhile, Head of Tariff  Policy Department of Public Services Regulatory Committee Garegin  Baghramyan has told ArmInfo that one of the important results of the  reform will be introduction of a common tariff. Earlier the tariff  for Yerevan was 170.256 drams for 1cu.m and up to 200 drams in the  regions. The official did not told the amount of the common tariff  for all the consumers as negotiations with the tenant still continue,  however he said that he does not think that the new tariff will be  set at the highest threshold of the existing tariff.  In the rental  contract basic tariffs for 15 years will be set where the basic  tariff for the 1st year will be set based on costs of retail supplies  in water system and disposal of sewage.  Starting from the 2nd year  tariff will be corrected considering a number of factors:  change of  electricity tariff and amount of retail supplies, as well as  inflation. The tariffs will be revised no sooner than once in a year.