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By Atom Markarian
A state body regulating public utilities gave on Friday the green light for a drastic increase in the drinking water tariffs across Armenia, saying that the measure is needed for cutting substantial losses incurred by the state-owned water network.

The decision by the Regulatory Commission on Public Utilities means the price of drinking water will jump from 56 drams (10 U.S. cents) to 90 drams per cubic meter in Yerevan and 100 drams in other parts of the country from April 1.

The water and sewerage operators were pushing for an even higher increase. Their joint applications filed to the commission last November asked for 120 drams per cubic meter, arguing that they badly need additional funds to upgrade and maintain the aging Soviet-era network of pipes.

Arben Ghulian, head of the company managing water supplies to all Armenian regions except the capital, said it will continue to operate at a loss even after the tariff hike. He said the company is making capital investments only thanks to World Bank loans.

Richard Walking of the Italian A-Utility firm that runs the Yerevan network likewise said that the measure will make it self-sufficient. “But there is no planning in the Yerevan Water Company to apply for another increase in six months’ time,” he added.

The deputy chairman of the regulatory body, Nikolay Grigorian, said the higher tariffs will not hit households hard because most of them now have water meters in their homes and are much more economical in water consumption. He claimed that they may end up spending less money on water than they do now.

The nationwide introduction of the meters, largely completed over the past year, has been a key element of the government efforts to restructure the loss-making water network. Officials say that the reform will dramatically improve the situation with water supplies by the end of this year. The government has borrowed millions of dollars in infrastructure loans from the World Bank and other Western sources in recent years and says more funds are needed to get the sector into shape.
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