Armenias Water Sector Reform Experience: Access to water and sanitation Yerevan, Armenia 2011

Area: 29,800 sq. km Capital city -Yerevan Population: 3,235,000 (July 2009 est.) Official language: Armenian Terrain: High plateau with mountains, little forest land. Climate: Highland continental, hot summers, cold winters. Provinces: ten provinces, 915 communities, of which 49 are considered urban and 866 are considered rural Armenias Water Sector Reform Experience

WATER SUPPLY IN SOVIET UNION TIMES Water systems were managed by centralized-planning system The construction of these systems was carried out with violations of engineering norms, low quality materials and technologies The water supply of almost all the settlements fed from centralized systems was limited to schedule hours There was no such concept as tariff Payment was done according to calculation by 1inhabiant per sq/m Armenias Water Sector Reform Experience

WATER SUPPLY IN POST-SOVIET UNION TIMES As of independence of Republic of Armenia, intensive rehabilitation reforms started in water systems management Linked with development programs, the Water Code was created in early 2000 Water-metering concept has started, tariffs were established Investment projects started everywhere in Armenia through international donor funds International operators were invited for management of water systems, first in Yerevan than for Armenian Water Company (2005) Parallel to water systems management reforms, development programs started in sewerage treatment systems Armenias Water Sector Reform Experience

Number of water supply hours 6 hours(average) Electricity/Income ratio 72 % Installed water meters 30% NEED FOR INVESTMENT 1 billion USD SITUATION BEFORE MANAGEMENT CONTRACT Armenias Water Sector Reform Experience

SOLUTION: -The step of management before lease contract -Creating a sufficient company level attractive to a private operator SOLUTION: -The step of management before lease contract -Creating a sufficient company level attractive to a private operator WHY MANAGEMENT CONTRACT ? Armenias Water Sector Reform Experience

FIXED FEE - 10 million USD for 6 years PIC - 1,3 million USD from year 2 to year 6 FIXED FEE - 10 million USD for 6 years PIC - 1,3 million USD from year 2 to year 6 CRITERIA FOR SELECTING AN OPERATOR Armenias Water Sector Reform Experience

International Tender where SAUR was interested 70% technical score 30% financial score After technical score two participants were chosen: SAUR and German company International Tender where SAUR was interested 70% technical score 30% financial score After technical score two participants were chosen: SAUR and German company SAUR had the best technical score and a cheaper offer MC was signed with SAUR for 4 years with 2 years possible extension SAUR had the best technical score and a cheaper offer MC was signed with SAUR for 4 years with 2 years possible extension WHY SAUR ? Armenias Water Sector Reform Experience

Armenian Water and Sewerage CJSC Management contract Operator:Saur, France The term of management: , extended till 2011 Service area: 37 urban and 280 rural settlements Number of population under the service area: Investment projects: 620 thousand people Armenias Water Sector Reform Experience

FINANCIAL RESOURCES AVAILABLE TO SAUR Armenias Water Sector Reform Experience * 1 USD= 363,44 AMD (as of Dec. 31, 2010 rate)

FINANCIAL RESOURCES AVAILABLE TO SAUR Armenias Water Sector Reform Experience * 1 USD= 363,44 AMD (as of Dec. 31, 2010 rate)

FINANCIAL RESOURCES AVAILABLE TO SAUR WB FIRST PHASE Armenias Water Sector Reform Experience * 1 USD= 363,44 AMD (as of Dec. 31, 2010 rate)

FINANCIAL RESOURCES AVAILABLE TO SAUR WB SECOND PHASE Armenias Water Sector Reform Experience * 1 USD= 363,44 AMD (as of Dec. 31, 2010 rate)

FINANCIAL RESOURCES AVAILABLE TO SAUR OTHER DONORS: ADB (USD) Armenias Water Sector Reform Experience * 1 USD= 363,44 AMD (as of Dec. 31, 2010 rate)

FINANCIAL RESOURCES AVAILABLE TO SAUR OTHER DONORS: EBRD (EUR) Armenias Water Sector Reform Experience

PRIORITIES OF INVESTMENTS More spread out settlements in the service area instead of 3-4 settlements WHY? - Situation was catastrophic in many settlements - Objective to raise the level of service in the service area at the same time - Show population that the investments are on the way CRITERIA USED: -Electricity expenses -Lower time of supply -Lack of equipment - Expectation of financial income Armenias Water Sector Reform Experience

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REVIEW OF ACHIEVMENTS Armenias Water Sector Reform Experience

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DAILY HOURS FOR SERVICE (Annual average) Armenias Water Sector Reform Experience

DREAMS COME TRUE People caring water in buckets for decades WATER IN PRIVATE TAPS- Finally

ELECTRICITY CONSUMPTION Armenias Water Sector Reform Experience

MASIS PUMPING STATION OLD NEW

% OF WATER DISINFECTED Armenias Water Sector Reform Experience

DILIJAN DRINKING WATER TREATMENT PLANT Alum and Lime Injection Liquid Chlorine Injection

Billing Payments Number of Payments ( customers receiving service) Subscribers with water meters 4.4 mln USD % 10,5 mln USD % Armenias Water Sector Reform Experience

33 Magnet used to slow meter down

PUBLIC RELATIONS Drawing of Lots Armenias Water Sector Reform Experience

WB INDICATORS 22 Indicators are used All are making progress (Visit our Web-site) Armenias Water Sector Reform Experience

Armenias Water Sector Reform Experience Armenia Water and Sewerage Management Contract Lease ? FUTURE PLAN

Armenias Water Sector Reform Experience TECHNICAL 18 hours of water supply Reduction of electricity expenses from 40 mln kwt o 20mln kwt Reduction of losses from 80% to 60% NEED FOR INVESTMENT 100 million USD FUTURE PLAN

Armenias Water Sector Reform Experience FINANCIAL Future level of tariff should cover AWSC obligations, including debt service If no tariff increasing the Government subsidy should be increased to compensate the lack of income to cover all expenses FUTURE PLAN

Armenias Water Sector Reform Experience INCOME Subsidies Tariff Grants COST OF SERVICE To be sustainable: Tariffs+ Subsidies = Total Cost of Service FUTURE PLAN

Armenias Water Sector Reform Experience LEASE CONTRACT (How to choose the leaser?) -tender -direct negotiation FUTURE PLAN

Armenias Water Sector Reform Experience FOR FUTURE OPERATOR (Leaser): -No respect of terms of contract - Financial crisis (decreased income) -Political changes -Geopolitical situation FOR COUNTRY (Client): - NOT adequate operator(case of tender) -No investment means (international funds) RISK FOR THE FUTURE

CONCLUSION Armenias Water Sector Reform Experience THE SUCCESS OF THIS PROJECT is linked with: Professionalism and competency Respect of local values Professionalism and competency Respect of local values Government & Local Authorities OPERATORDONORS Supportive approach Respectful to the spirit of operator Supportive approach Respectful to the spirit of operator Assistance to country Support to operator Assistance to country Support to operator

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