Italian Group Set to Run Yerevan’s Water Supplies

YEREVAN (RFE/RL)–An Italian-led consortium is set to become the exclusive operator of Yerevan’s water supplies and sewerage network for the next four years–officials said on Tuesday after declaring it winner of an international tender.

Deputy Finance Minister Ara Aslikian announced that the consortium of three firms led by Italy’s ACEA. will most probably be given management rights for the state-owned Yerevan Water and Sewerage enterprise after offering the lowest operational charges. The new operator will have a daunting task of transforming the loss-making network into an efficient company–making use of $25 million in funds mostly made available by the World Bank as part of its $30 million Community Development loan to Armenia.

The Armenian government will pay about $5 of the sum–with the rest of the money coming from the World Bank.

Of three Western bidders shortlisted in July for the last phase of the tender–ACEA and its partners asked for the lowest price for operating the enterprise – $2.93 million. The consortium also includes Italy’s C. Lotti & Associati and Britain’s WRc companies. They and ACEA had an aggregate turnover of more than $300 million last year.

Much of the Armenian capital’s water and sewerage infrastructure is outdated–and government experts estimate that 65 percent of drinking water is being lost. Bill enforcement in Yerevan was a meager 20 percent last year.

A four-year "management agreement" to be signed with the foreign operator will require it to put in place an efficiently functioning operational system–drastically reduce the losses and carry out a massive upgrading of the infrastructure with the World Bank funds. The authority to set water tariffs will rest with the state which will remain the network’s owner.

Aslikian told reporters that the choice of the operator will have to be approved by the Armenian government and World Bank–but added that the ACEA-led consortium will almost certainly secure the contract. Also bidding for the Yerevan network were Germany’s biggest water supplier–Berliner Wasser Betriebe–and a French consortium comprising two firms–Lysa and Suez Lyonnaise des Eaux.

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