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Armenia's Water Operator Avoids Price Rise


Armenia - A sign outside the Yerevan headquarters of the Veolia Djur company, September 2, 2018.
Armenia - A sign outside the Yerevan headquarters of the Veolia Djur company, September 2, 2018.

A French company managing Armenia’s water distribution network has agreed not to raise the price of drinking water in the country for the next few years in return for financial concessions made by the Armenian government.

The Veolia Djur operator moved in August to raise the price from over 191 drams (40 U.S. cents) to 205 drams per cubic meter starting next January. It said it needs additional revenue to upgrade the aging network. It also argued that annual price hikes are envisaged by its 15-year management contract with the government signed in November 2016.

The government’s State Committee on Water Resources strongly objected to Veolia Djur’s plans, criticizing the company’s track record.

Later in August, the Armenian police launched a criminal investigation into what they called corrupt practices by state utility regulators and the water operator.

A police statement said that in late 2017 the then chairman of the Public Services Regulatory Commission (PSRC), Robert Nazarian, and seven other senior officials from the regulatory body travelled to France on a visit fully funded by Veolia Djur.The statement charged that this amounted to a bribe paid by Veolia Djur’s director general, Christian Lefaix, and another senior executive paid for securing the PSRC’s subsequent decision to allow the company to raise the water price.

The police also claimed to have found financial irregularities in Veolia’s contracts with Armenian suppliers worth 3.7 billion drams.

The company, which is part of France’s Veolia utility giant, angrily denied the accusations. The PSRC also rejected them as “baseless.”

Last week, the PSRC indicated its plans to allow Veolia to set the water price at 202 drams per cubic meters. But it announced on Wednesday that Veolia has agreed to delay the price hike until 2025 as part of a deal with the Armenian Ministry of Energy and Natural Resources signed on Monday.

In a separate statement, the ministry specified that in return for keeping the price unchanged the company will be allowed to make less capital investments in the water network than were envisaged by the 2016 management contract. It presented the deal as proof of increased “mutual trust” between the Armenian government and Veolia.

According to the PSRC, the government will also continue to subsidize the water tariff in 2019. This means that Armenian households will keep paying 180 drams for every cubic meter of water.

Veolia managed the water and sewerage network of Yerevan from 2007-2016, phasing out Soviet-era water rationing in the vast majority of city neighborhoods. “By 2030 the entire population of Armenia will be supplied with drinking water [around the clock] thanks to Veolia,” the company pledged in November 2016.

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