The price of drinking of water in Armenia will not rise next year despite the government’s decision to stop subsidizing it, public utility regulators said on Wednesday.
The price currently stands at 191 drams (40 U.S. cents) per cubic meter. But households and other consumers pay only 180 drams per cubic meter thanks to the government subsidy provided to a French company managing Armenia’s water distribution.
The Veolia Djur operator informed the Public Services Regulatory Commission (PSRC) in August that it can keep this tariff unchanged in 2020 even without the subsidy. The PSRC formally approved the application after weighing up all factors determining the cost of water supplies in the country.
In August 2018, Veolia Djur asked the commission to raise the price to 205 drams per cubic meter, saying 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 former Armenian government signed in November 2016.
The government’s State Committee on Water Resources strongly objected to Veolia Djur’s plans. Shortly afterwards, the Armenian police launched a criminal investigation into what they called corrupt practices by state utility regulators and the water operator. The police also claimed to have found financial irregularities in Veolia’s contracts with Armenian suppliers.
The company, which is part of France’s Veolia utility giant, angrily denied the accusations. None of its employees in Armenia has been prosecuted since then.
Later in 2018, Veolia agreed withdrew its demand for the price rise in return for financial concessions made by the current government. The latter allowed the company to make less capital investments in the water network than were envisaged by the 2016 management contract.
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.