In Armenia, domestic water supply and sewer services are supplied either by local municipalities or State owned stock companies. There are five State owned stock companies in Armenia, the State owns 100% of the shares in Armenian Water, Nor Akung and Yerevan. The State owns 51% of the stock in Lori and Shirak while the other 49% is owned by the local government (Marz or County).
Two private operators exist in Armenia: (1) “SAUR” SA Company (France) which operates pursuant to a management agreement with Armenian Water; and (2) Veolia dba as Yerevan Jur (Armenian Company) operates Yerevan through a lease of assets.
Interestingly, many commentators have noted that water facility ownership is in a state of confusion. Understandably so. When Armenia declared its independence from the Soviet Union some 15 years ago, ownership became a question as to all of the “commons” including large apartment buildings, collective farms, and water facilities.
Since little capacity existed then (and now) locally, the State initially took ownership of these “commons.” Eventually, the ownership of apartment buildings and collective farms was divided by a combination of “historical use” and a lottery. Unfortunately, this division failed to identify the ownership of any remaining “commons” such as the water and sewer pipes in the apartment buildings. This same confusion carried forth to local water delivery and sewer systems where local governments were either non-existent or without sufficient capacity to manage and operate these facilities.
Solutions are not easy. After 15 years the State is invested in maintaining its “ownership.” The State cites its need to retain control because local governments continue to lack capacity, particularly in the ability to finance any large scale improvements, repairs, and even in some cases, the day to day operations and maintenance. The State’s argument is compelling.
One report issued in conjunction with the State suggests that moving toward privatization of all water facilities is the answer to the financing issue. However, such privatization in this case means to turn over the ownership of Armenian water facilities to French companies. It is also requires that ALL water services will be delivered via private companies. While there is no doubt that the French companies have capacity to manage these water systems, there are many public concerns particularly as to consumer cost.
The State’s report in support of its privatization conclusion makes an all or nothing conclusion: In order to provide efficient and cost effective water services to all Armenia, private companies should provide water throughout Armenia, both in urban and rural areas. While the report recognizes that individuals can be self supplied by wells, it fails to mention or address the effectiveness of self-regulated and owned small community water associations.
Likely the State’s argument against incorporating individual supply and small community water associations in the Armenian mix of water delivery services, is again “capacity.” In general, this means that the population of Armenia maintain a “Russian” mentality preferring to allow the State to take the responsibility. However, given the very certain realities of the escalating costs to consumers under privatization, Armenians may well be interested in alternatives. Preserving flexibility as Armenian sorts out the ownership of the “commons” relative to water delivery and sewer facilities will be challenging.
