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By Ruzanna Stepanian
Armenian state regulators are expected to allow a 40 percent increase in the price of drinking water sought by a French company that has been chosen to manage Yerevan’s water and sewerage network.

The Veolia Eau utility says the measure is essential for the success of its plan to upgrade the obsolete and notoriously inefficient network and improve the difficult situation with water supplies in the Armenian capital.

The Public Service Regulatory Commission was due to consider on Friday its request to raise the price from 125 drams to 173 drams (40 U.S. cents) per cubic meter of supplied water. But the state body regulating utility prices in Armenia adjourned the discussion for one month on the grounds that the French operator is still in the process of taking over the state-owned network’s management.

Still, the commission chairman, Robert Nazarian, indicated that the tariff increase will almost certainly be approved. He argued that it was a key term of a 10-year management contract signed by the Armenian government and Veolia Eau last December as a result of an international tender overseen by the World Bank.

The new operator will use $20 million in World Bank loans and has pledged to invest 9 million euros ($11 million) of its own capital over the next decade to substantially reduce the Hayjur network’s enormous losses, improve the collection of fees and ensure 24-hour supplies of drinking water to the vast majority of Yerevan residents.

Many of them still have running water for only several hours a day despite past government pledges to phase out water rationing by the end of 2004. An Italian firm that ran the network from 2001-2005 under a separate $30 million program financed by the World Bank clearly failed to resolve the problem. Hayjur executives say more than 80 percent of water supplied to Yerevan from the nearby mountains still does not reach households due to the network’s leaky Soviet-era pipes.

Hayjur’s new French chief executive, Serge Popoff, described the requested tariff increase as a temporary measure. He said Veolia Eau plans to cut network losses by half within the next three years and reduce the water price to 90 drams per cubic meter as a result.

However, the chairman of the Armenian Consumers Union, a non-governmental organization, was skeptical, pointing to the previous network operator’s track record. “Extra charges are supposed to be used for upgrading the system,” Armen Poghosian told RFE/RL. “But reality is different. What we have seen so far is a foreign operator coming over here and failing to meet its commitments.”

(Photolur photo)
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