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

Armenia’s Water Sector Reform Experience : Access to water and sanitation Yerevan , Armenia 2011. Armenia’s Water Sector Reform Experience. Area: 29,800 sq. km Capital city - Yerevan Population: 3,235,000 (July 2009 est.) Official language: Armenian

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

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  1. Armenia’sWater Sector ReformExperience: Access to water and sanitation Yerevan, Armenia 2011

  2. Armenia’s Water Sector Reform Experience 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

  3. Armenia’s 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

  4. Armenia’s 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

  5. Armenia’s Water Sector Reform Experience Situation before Management Contract Number of water supply hours 6 hours(average) Electricity/Income ratio 72 % Installed water meters 30% NEED FOR INVESTMENT 1 billion USD

  6. Armenia’s Water Sector Reform Experience Why Management Contract ? SOLUTION: -The step of management before lease contract -Creating a sufficient company level attractive to a private operator

  7. Armenia’s Water Sector Reform Experience Criteria for Selecting an Operator Fixed Fee - 10 million USD for 6 years PIC - 1,3 million USD from year 2 to year 6

  8. Armenia’s Water Sector Reform Experience Why SAUR ? • 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

  9. Armenia’s Water Sector Reform Experience

  10. Armenia’s Water Sector Reform Experience Financial Resources available to SAUR * 1 USD= 363,44 AMD (as of Dec. 31, 2010 rate)

  11. Armenia’s Water Sector Reform Experience Financial Resources available to SAUR * 1 USD= 363,44 AMD (as of Dec. 31, 2010 rate)

  12. Armenia’s Water Sector Reform Experience Financial Resources available to SAUR WB First Phase * 1 USD= 363,44 AMD (as of Dec. 31, 2010 rate)

  13. Armenia’s Water Sector Reform Experience Financial Resources available to SAUR WB Second Phase * 1 USD= 363,44 AMD (as of Dec. 31, 2010 rate)

  14. Armenia’s Water Sector Reform Experience Financial Resources available to SAUR Other Donors: ADB (USD) * 1 USD= 363,44 AMD (as of Dec. 31, 2010 rate)

  15. Armenia’s Water Sector Reform Experience Financial Resources available to SAUR Other Donors: EBRD (EUR)

  16. Armenia’s 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

  17. Armenia’s Water Sector Reform Experience REVIEW OF ACHIEVMENTS

  18. Armenia’s Water Sector Reform Experience Daily Hours for service 2004 2010 14.00 h 6.00 h (Annual average)

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

  20. Armenia’s Water Sector Reform Experience Electricity consumption 2004 2010 40,5mln kwt 68 mln kwt

  21. MASIS PUMPING STATION NEW OLD

  22. Armenia’s Water Sector Reform Experience % of water disinfected 2004 2010 61% 80%

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

  24. Armenia’s Water Sector Reform Experience Number of Payments (170 000 customers receiving service) 2004 2010 Billing Payments 4.4 mln USD 10,5 mln USD 140 000 35 000 Subscribers with water meters 88% 40%

  25. Magnet used to slow meter down

  26. Armenia’s Water Sector Reform Experience PUBLIC RELATIONS Drawing of Lots

  27. Armenia’s Water Sector Reform Experience • WB INDICATORS • 22 Indicators are used • All are making progress • (Visit our Web-site)

  28. Armenia’s Water Sector Reform Experience Future Plan 2010 2012 2013 2019 2011 2014 2015 2016 2017 2018 Armenia Water and Sewerage • Management Contract • Lease ?

  29. Armenia’s Water Sector Reform Experience Future Plan 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

  30. Armenia’s Water Sector Reform Experience Future Plan 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

  31. Armenia’s Water Sector Reform Experience Future Plan “To be sustainable: Tariffs+ Subsidies = Total Cost of Service” Grants Subsidies Tariff COST OF SERVICE INCOME

  32. Armenia’s Water Sector Reform Experience Future plan • LEASE CONTRACT (How to choose the leaser?) • -tender • -direct negotiation

  33. Armenia’s Water Sector Reform Experience Risk for the Future • 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)

  34. Armenia’s Water Sector Reform Experience Conclusion THE SUCCESS OF THIS PROJECT is linked with: OPERATOR Government & Local Authorities DONORS • Professionalism and competency • Respect of local values • Supportive approach • Respectful to the spirit of operator • Assistance to country • Support to operator

  35. www.armwater.am

  36. BEST REGARDS FROM COMPANY STAFF THANK YOU!

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