A public utilities regulator has approved a second water tariff rise within just over a year sought by a French company that became Armenia’s single operator in late 2016. This time, however, the increase will be subsidized by the Armenian government for a year.
The French company, Veolia Djur, had formally asked the Public Services Regulatory Commission (PSRC) to raise the tariff from 180 drams to 194.3 drams (some 40 U.S. cents) per cubic meter for the vast majority of consumers. The PSRC on Wednesday decided to partly satisfy the French company’s request.
Garegin Baghramian, the head of the PSRC’s Tariff Policy Department, said the water tariff will be increased by 11.4 drams – to 191.4 drams per cubic meter. (According to the current exchange rate, one U.S. dollar is about 485 Armenians drams). The new tariff will become effective from January 1, 2018.
On November 2, Prime Minister Karen Karapetian instructed the State Water Committee (SWC) head to submit a proposal to the government on how to keep the existing retail water tariff if a new rise is approved.
At today’s session of the PSRC a representative of the SWC and the Commission’s head announced that the government will fulfill its promise and during 2018 consumers in Armenia will continue to pay 180 drams per cubic meter of water.
“The difference between the current tariff and the tariff to be applied from January 1 should be subsidized at the expense of lease payments,” said Armen Sergoyan, head of the SWC’s Water Supply and Drainage Systems Department.
PSRC Chairman Robert Nazarian said: “Certainly the tariffs for our consumers will remain at the same level as they are today. I think the State Water Committee will submit a relevant draft decision to the Government at one of its upcoming sessions and it will be adopted.”
The regulators already sanctioned a nearly 6 percent rise in the water price last December. The PSRC head told Veolia Djur representatives at that time to “operate in a way that will preclude further tariff increases.” He said the Armenian subsidiary of France’s Veolia utility group must specifically crack down on “illegal water consumers.”
Veolia Djur General Manager Christian Lefaix was also present at today’s meeting. Addressing him, Nazarian noted that there are numerous shortcomings in terms of water consumption volumes, which have also been revealed as a result of a relevant monitoring. “I should ask Mr. Lefaix today to use all his reserves and potential in this direction and do everything possible so that we do not raise the tariffs due to the volume of water consumption,” the PSRC head said.
Armenia’s drinking water and wastewater treatment facilities are run by Veolia in accordance with a 15-year management contract which it signed with the Armenian government in November last year.
Before that the French company for a decade managed the water and sewerage network of Yerevan. It significantly improved water supply in the Armenian capital in that period not least because of capital investments made in the aging network.
In a November 2016 statement, Veolia said that it will attract $200 million in funding from the European Bank for Reconstruction and Development and the German development bank KfW over the next four years for similar infrastructure upgrades across the country. “By 2030 the entire population of Armenia will thus be supplied with drinking water [around the clock] thanks to Veolia,” said the statement.