Armenia Water and Irrigation Services Enhancement Program - Phase 1 Project

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The proposed Program is aimed at providing access to improved irrigation services and safely managed rural Water Supply and Sanitation (WSS) services in selected areas of Armenia through a partnership involving the Government of Armenia (GoA), the World Bank (WB), and Agence Française de Developpement (AFD). Recognizing that the goals of this program cannot be addressed through a single operation, it will be operationalized through a Multiphase Programmatic Approach (MPA) to facilitate sustainable transformation. The phases are progressive, and each phase maintains a similar structure and builds towards the achievement of the overall program development objective. The structure of the MPA is uninterrupted and overlapping to ensure that the Program's activities continue without a gap in the implementation of the key activities. The MPA includes (i) a six-year Phase 1 (2025-2031) with focused investments in enhancing the institutional capacity of critical water sector entities, revision to the methodology and structure of irrigation and WSS tariffs, completing core water sector strategies and irrigation master plan, finalizing all infrastructure investment feasibility and design stage documents for all proposed investments in irrigation and rural WSS, civil works to modernize five irrigation schemes, and construction/rehabilitation of supply infrastructure in selected settlements for rural water supply on a pilot basis using performance-based conditions (PBCs); and (ii) a six-year Phase 2 (2029-2035) to scale-up and expand infrastructure investments in all remaining irrigation schemes and priority settlements for rural WSS with a focus on operational and financial efficiency, and climate adaptation. The second phase will place a strong emphasis on institutionalization and widespread uptake of the policies, plans, strategies, and tools developed under the previous phase. The Phase 1 program, using the Investment Project Financing (IPF) lending instrument with PBCs, aims to enhance climate-resilient access, efficiency, and financial sustainability of irrigation and rural WSS in selected areas of Armenia. It will focus on four components: (i) Component 1 – Water Sector Reform and Institutional Strengthening with PBCs: This component will focus on strengthening national water resources policy and planning through development of a comprehensive national water strategy, a ten-year national irrigation strategy, a WSS national strategy, an irrigation master plan, and legal and regulatory reform. It will furthermore improve irrigation sector management and service delivery through a review of tariffs and subsidies, transformation of the Water Supply Agency (WSA) into an efficient and customer-oriented irrigation service provider, strengthening of the Ministry of Territorial Administration and Infrastructure (MTAI) and the Water Committee (WC), and establishing a Irrigation Water Accounting and Adaptation Center (IWAAC) for water and climate monitoring. (ii) Component 2 – Rural Water Supply and Sanitation Enhancement: This component will first focus on institutional strengthening, capacity building, and investment planning of rural WSS services through development of rural WSS sector policies, a roadmap, tariff review, and strengthening management capacities at the national and local levels. Furthermore, it will support investment planning, including the preparation of feasibility studies for priority rural WSS investments for both MPA phases. Lastly, it will support the construction of water supply infrastructure in selected unserved settlements, which will include rehabilitation of the water network, including household connections, and any necessary water treatment infrastructure. In phase 1, these investments are expected to be in Ararat, Kotayk, Aragatsotn, Shirak, or Tavush, based on technical, economic, socio-political, and institutional considerations (iii) Component 3 – Modernizing Irrigation Infrastructure & System Management: This component will focus on financing rehabilitation and modernization of selected irrigation systems at main, secondary, and tertiary canal levels. Activities include rehabilitation and modernization of headworks, critical sections of main canals, and secondary and tertiary network levels currently managed jointly by WSA at the large main canal and reservoirs level and by Water User Associations (WUAs) at the secondary and tertiary distributary level. It will further focus on rehabilitating some critical infrastructure under the responsibility of the WSA to ensure continuous provision of irrigation water to WUAs in priority command areas. (iv) Component 4 – Project Management: This component will support project implementation, including procurement and financial management (FM) related to implementation of civil works, compliance with agreed environmental and social management measures, and project monitoring and evaluation (M&E). This component will finance staff costs; coordination of the project-financed activities with other ongoing International Financial Institution (IFI) projects in the water sector; and design, implementation, and reporting of baseline and project completion surveys.