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Water tariff in Armenia will not increase in the next 2 years

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19.09.2019
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The single operator of water supply in Armenia - "Veolia Djur" company applied to the Public Services Regulatory Commission (PSRC) to revise the current  tariff for drinking water from the current 180 drams per 1 cubic  meter up to 181.8 drams (including VAT). As the head of PSRC Garegin  Baghramyan assured an ArmInfo correspondent, despite the availability  of the application, the tariff will remain unchanged both in 2020 and  2021.

According to him, over the past months, the Armenian government has  been negotiating with "Veolia Djur" around the water tariff. As a  result, due to additional tax fees and in return for reducing the  rent for the network, an agreement was reached on lowering the base  water tariff. As a result, a single water supply operator turned to  the Regulator with a request to increase the water tariff to 181.8  drams, and not to 211 drams stipulated by the 15-year agreement for  2020.

In addition, as Bagramyan explained, according to the established  practice, annually, until August 10, the "Veolia Djur" company  applies to the PSRC, use as a basis the basic tariff and adjustments  depending on the electricity tariff, inflation, as well as the volume  of retail supplies in the field water supply. In the latter case,  actual volumes of water sales are taken into account in comparison  with the basic indicators fixed in the lease. But, since "Veolia"  traditionally uses data from the beginning of the year to June, and  the PSRC has data for July, the regulator is based on its own more  recent data when revising the tariff. "In July of this year, compared  with July 2018, water consumption increased by about 1 million cubic  meters, which automatically leads to a certain reduction in the  tariff. That is, only on the basis of this factor, the proposed  tariff of 181.8 drams is reduced by 1 dram", Baghramyan said.

The fixed increase in consumption, as explained by the head of the  PSRC, is the result of a decrease in theft of water and illegal  consumption, as well as economic growth. For the third year in a row,  the Regulator monitors the actual volumes of water supply by  "retailers" to identify cases of illegal connection to the water  supply system and violations.

From September 17 to November 1, regular monitoring of retail supply  volumes in the water supply sector will be carried out and, when such  facts are revealed, the registered volumes will also be taken into  account in calculating the new water tariff. As of today, 14 groups  have been formed together with the water committee, and the media  will participate in the monitoring if desired, as well as public  organizations. The Head of the Regulator also urges citizens to join  the "campaign" and, if there is information about illegal  consumption, report to the PSRC by phone (010) 584 529.

The last important factor that gives rise to an optimistic forecast  by PSRC is the position recorded in the license agreement with  "Veolia Djur". "When a tariff is specified in the range of plus or  minus 0.5% of the current tariff, the tariff is revised. Based on the  above factors, I am more than sure that the current tariff will not  be revised. Moreover, the tariff will not be kept at the expense of  the planned investment, "- said the head of the department. However,  from January 2020, the government will not subsidize the difference  in tariff in the amount of 11.414 drams per 1 cubic meter of water,  approved from January 1, 2018 at the level of 191.414 drams per 1  cubic meter.

As of today, as Garegin Baghramyan stated, an agreement was reached  with "Veolia Djur" (Veolia Djur, the daughter of the French Veolia  Enviroment SA - Ed. note) on maintaining the basic tariff for water  at the level of 176.4 drams for 2020-2021.

Earlier, ArmInfo reported that the PSRC accepted for examination the  application of a single operator dated August 7, 2019 to clarify  tariffs for water supply and sanitation. The application will be  studied within the next 80 days from the receipt of the application.  If approved, the new regulations will enter into force on January 1,  2020. The next "clarification" of the water operator, upon its  approval, will de facto lead to a rise in price of water supply and  sanitation services for the final consumer - from the current 180  drams per 1 cubic meter up to 181.8 drams.

Meanwhile, in November 2018, the acting Prime Minister Nikol  Pashinyan, who heads the campaign list of the My Step bloc, said  during an election campaign in Alaverdi that there would be no  increase in drinking water tariffs until 2024. Meanwhile, according  to the agreement signed with the company, a tariff reduction is not  provided, and moreover, a tariff increase is envisaged until 2023,  and only after 2023 will it decrease to the level of 2016, that is,  after the 15-year lease term of the water supply system. 

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