Yerevan Water and Sewerage Management Contract

concluded

In February 2000 a consortium led by Italian company Acea concluded an agreement with the Yerevan city hall for the management of the state-owned Yerevan Water and Sewerage Company(YWSC). The four year contract was awarded following a competitive tender. The main obligations of the Acea consortium were to improve managerial efficiency, reduce unaccounted for water flows, and supervise emergency short term investments in the Yerevan water supply system intended to improve the drinking water supply, in particular in the poorer areas of the city. The total population served by the project was 900,000. The managing consortium was a joint venture composed of three companies: Italy’s Acea and Carlo Lotti & Associati and Britain’s WRc. The management fee negotiated under the 2000 contract was $5 million. The management contract was part of a bigger project estimated to cost $35.5 million and designed to improve the performance of YWSC. The World Bank, through its International Development Association (IDA), provided a $30 million loan to the Armenian Ministry of Finance and Economy for the project. The loan had a 35 year maturity with a 10 year grace period. The IDA loan covered the $5 million management fee paid to Acea JV, and financed a $25 million investment program that included short-term expenditures to improve operations & maintenance. The Government of Armenia funded the remaining $5.5 million of the total project cost. At the time the contract was signed the negotiated water tariff was US$0.10/m3. By May 2005 this tariff had risen to US$0.24/m3. The management contract resulted in a 50% saving in energy consumption, the installation of over 280,000 water meters and almost 70% of the city receiving a 24-hour water supply. YWSE had no outstanding debts at the end of April 2005 and the average collection rate had increased to 95% for metered customers. The contract was extended until the end of 2005, when a new management contract was awarded to Veolia Environnement. None None