The water supply in Yerevan today is far from being normal. The system
created in the years of the Soviet Union has been completely destroyed.
Yerevan is facing the problem of having high-quality water supply. In
1998, the government of the Republic of Armenia asked the World Bank to
make some investments for water supply in Yerevan. A contract was
signed between both sides that same year. With this, the International
Development Association of the World Bank is providing a $30,000,000
million dollar long-term loan and a $5.5 million dollar funding for the
government. In 2000, the World Bank announced an international contest
for a project coordinator. The Italian “A Utility” company won and a
contract was signed with the company for four years starting from May
1, 2000.
Until 2001, the Yerevan Water Supply Station (YWSS) was under the
control of the city council. In February of 2001, the government
created a state water economy committee and the YWSS got subjected to
this new governmental structure. It can be said that the authorities
were not satisfied with the “A Utility” company’s work and they made
these changes in order to fix the situation. The government gave this
new structure a great opportunity to carry out its actions. The
committee recalculated and re-evaluated the work done for water supply
and cutting of water. The water supply committee was a strong and
influential structure. It even managed to force the government to
change pivotal decisions. For example, the government had decided that
there will be no rise in the price of drinking water until 2005. The
rise in prices was foreseen only after 2005. The highest price set was
75 drams. So, the price of one cubic meter was going to rise from 55
drams to 75 not immediately in 2005, but during the course of years. It
was predicted that it would be easy to function with this system and
receive a 15% profit. However, when the committee started to control
Yerevan’s “Water-piping sewerage” again, it decided that they had
miscalculated, the 75 drams was not enough and there is no profit.
Starting from April of 2004, the price of water became 90 dram 20 luma.
The representatives of this field have announced many times that that
price is also low for the system’s functions. The sewerage is in the
same situation. During the first year, 4,600 accidents have been
recorded and that number was supposed to reduce by 50% in 2004, however
it has increased by 30%. What’s strange is that the investments made
had no positive effect on the water supply or the sewerage. In a case
like this, the “A Utility” took advantage of its chance to get any
rewards. How? If Yerevan’s water supply and water dissolution work is
carried out thoroughly and at a high level, the “A Utility” has a
chance to get rewards. Besides that, it receives a fixed amount of $2.9
million dollars for four years. If the work is considered top-class,
the company can be rewarded with $375,000 dollars. If any of the
pivotal standards be lower than the high-class, then the reward granted
will be reduced. In the case of bad standards the company is absolutely
freed of raises.
According to the studies by V. Hovhannisyan, in 2001, when the Yerevan
Water Supply Station was under the supervision of the city council, the
mayor was aware of the malfunctioning of the station and had suggested
the government to consider the contract invalid. However, in November
of the same year (after the creation of the water economy committee),
the city council, the Ministry of Finances, the committee and the
office for community development discussed the whole situation. They
are making changes in the government program for the upcoming year and,
as surprising as it sounds, it favors the “A Utility” company.
Basically, if the “A Utility” has not done such a good job from the
beginning, no problem. Next year it will work a little better and will
receive the best pay. They created some conditions where the reward was
given even when the company’s work had been unsatisfactory. This
strange story was about a rounded up amount. The rounded up amount,
according to Vahan Hovhannisyan’s speech, if it was 0 in 2001(during
the difficult years in Armenia), in 2002 it was $341,000, in 2003 it
was $659,000 dollars. The government, the committee, the “A Utility”
and the World Bank do not discuss whether or not the work corresponds
to the contract’s requirements. In addition, the same government, the
“A Utility”, even the World Bank and the so-called “Rambol” independent
auditor do not agree with V. Hovhannisyan. It was even surprising why
there were some issues raised by the conference. Was the goal to reveal
the abuse or to make it seem like it is just a rumor? The federalist
president of the congress expressed his intolerance towards the
republican side of the government. There is no explanation for the work
carried out by the authorities. This whole story ha been put aside by
removing professional financier of the state water supply Gagik
Martirosyan. In addition, the World Bank will grant $20,000,000 dollars
in 2005. The loans are becoming smaller for no reason and with no
effect.
P.S. We will continue with the problems of Yerevan’s water supply in
our next editions. In particular we will discuss the project forseen
for water supply and the quality of water in general.