Yerevan Water Supply Going Private Gradually Armenia makes gains taking transitional route through private water

Abstract

In 1998, the Government of Armenia began to seriously weigh a private sector solution to the worsening situation with the water supply system in the country’s capital, Yerevan. The Government’s eventual decision to engage the private sector through a 4-year management contract— backed up by donor-funded projects—helped address some of the system’s biggest issues, such as high nonrevenue water and low revenue collection rates. With the system in a more promising condition following the management contract, the Government proceeded with a greater commitment to work with the private sector and offered a 10-year lease contract over the system. For Yerevan, the Government employed the two-step approach to engaging the private sector: first with a short-term management contract (4 years, extended to 5 years) then a longer-term lease contract (10 years) with a private operator. The Yerevan experience proves the approach’s viability for attracting the private sector to an ailing utility. The Government has already put its second largest water utility—Armenia Water and Sewerage Company, a closed joint stock company—on the same path as Yerevan.