The implemented reforms The implemented reforms and progress on developing and progress on developing

a strategy for the WSS a strategy for the WSS sector in Armeniasector in Armenia

Helsinki, 24 May 2007

Gagik Khachatryan Gagik Khachatryan

First Deputy Chairman First Deputy Chairman

State Committee of Water System of RAState Committee of Water System of RA

EAP Task ForceState Committee of State Committee of Water System of Water System of

ArmeniaArmenia

Main Directions of the Reforms

Legal reforms – establishing legal base for private sector involvement and sector commercialization

Institutional reforms – sharing management and regulation functions, establishing an independent regulator, decentralization and privatization

Investment policy Tariff policy Reforms in the sphere of social security –

introduction of family allowance system Involvement of private sector in providing utility

services to the population

EAP Task ForceState Committee of Water System of ArmeniaState Committee of Water System of Armenia

Key Objectives of the Project

Key objectives of the project were to update the Finance strategy for urban WSS and extend it to rural WSS, and help SCWE implement it by:

Linking the strategy to the budgetary decision

making process; Increasing the reliability of investment needs

assessment, using robust methods to assess,

manage and forecast demand for water supply and

sanitation services; Ensuring that tariff policies were sustainable from

an economic and social point of view.

EAP Task ForceState Committee of Water System of ArmeniaState Committee of Water System of Armenia

Required Funding – Urban WSS

Total need of funding for urban water supply and sewerage utilities for 2002-2015 according to the Development Scenario (billion Dram reflected in 2002 prices)

23,8

110,2172,0

264,1

183,9

34,6 34,60

86,492,1 71,5112,4

592,8

405,4

187,4

-

100

200

300

400

500

600

700

Водоснабжение Водоотведение Всего по ВКХ

Новое строительство Реконструкция Содержание, ремонт и восстановление Эксплуатационные затраты Итого

EAP Task ForceState Committee of Water System of ArmeniaState Committee of Water System of Armenia

New construction Renovation O & M and Rehabilitation Operational costs Total

Water supply Total for WSSSanitation

Structure of required funding for WSS for 2002-2016 (by sectors)

EAP Task ForceState Committee of Water System of ArmeniaState Committee of Water System of Armenia

Required Funding - structure

9% 6%13%

21%19%

49%

42%45%

38%28% 31%

0%

20%

40%

60%

80%

100%

Водоснабжение Водоотведение Всего по ВКХ

Новое строительство Реконструкция Содержание, ремонт и восстановление Эксплуатационные затратыNew construction Renovation O & M and Rehabilitation Operational costs

Water supply Total for WSSSanitation

Extending Finance Strategy to rural WSS

EAP Task ForceState Committee of Water System of ArmeniaState Committee of Water System of Armenia

Targets set in PRSP and MDGs and government policy regarding rural WSS (in Armenia some 60% of population is rural) Complex issue, because till recently the Government:

- lacked data on status of WSS infrastructure and services in some 850 villages outside the service area of water utilities;

- institutional gaps.

Financial dimension: under the Baseline scenario expenditures for rural WS in Armenia estimated at about AMD 2 billion per year (compared to some AMD 30 billion for urban WSS , in that: (1 € = 480 DRAM)),

About 40% - O&M, 60% - re-investments, About 50% - by water utilities, the rest by rural communes

Implementation of a Finance strategy for rural WSS will be more an institutional and managerial than financial challenge

Role of the NPD on Financing WSS

Facilitate implementing the government policy by assisting in:

Setting realistic sector development targets Developing and implementing a sound finance

strategies Identifying priority policy measures and priority

investments Formulating minimal water supply concept Building awareness, ownership and capacity

EAP Task ForceState Committee of Water System of ArmeniaState Committee of Water System of Armenia

Stages of the NPD

EAP Task ForceState Committee of Water System of ArmeniaState Committee of Water System of Armenia

Oct. 2002 – March 2004: developing FS for urban WSS

- with focus on urban wastewater collection and treatment Oct. 2005 – Nov. 2006: focus on implementing the FS

for WSS through:

- integrating the updated FS into MTEF and PRSP;

- best use of available resources through increasing

reliability of investment needs assessment;

- advising on improving tariff policy towards sustainability

from economic and social point of view Dec. 2006 – present: extending FS to rural areas

- targets based on national “minimal water supply

standard” (complying with MDGs on WSS, but a bit more

ambitious)

EAP Task ForceState Committee of Water System of ArmeniaState Committee of Water System of Armenia

THANK YOUState Committee of Water System of ArmeniaState Committee of Water System of Armenia

13a Vardanants Street13a Vardanants StreetYervevan 0010 ArmeniaYervevan 0010 Armenia

Tel: (374-1) 540-733, Fax: (374-1) 540-264Tel: (374-1) 540-733, Fax: (374-1) 540-264Email:Email: scws@netsys.am