Water Facilities Permitting in Armenia

Armenia’s current water code requires a water system use permit (WSUP) without exception for any system of facilities. The WSUP is issued by the Public Services Regulatory Commission (PSRC). It has been suggested municipalities and small community water associations that own and operate their own domestic water delivery system should be exempt from the requirement for a WSUP. The major reason for the exemption would be to prevent dual regulation, ie regulation by the locals and also by the state through the PSRC. In addition, where access to the local person operating the water system can be made by “visiting with the neighbor across the street”, consumer and often times operator are one and the same. In such circumstances over arching state regulation is not required.

Since the PSRC has not enforced the WSUP requirement against the locals, the need for changes in the present water code may be overlooked at present. The real reason in fact may be that very few local delivery schemes exist (except rurally). Armenia’s urban population receives water services by conveying their water facilities to the State in return for a 49% in a joint stock company controlled by the State which owns a 51% share. The stock company then contracts with a third party operator for water services.

These Company-Operator contracts are “issues of public importance.” As such, the Prime Minister of Armenia appoints a Commission to develop and approve these contracts. Since the Yerevan Jur contract is up for tender in October 2008, it is expected that a Commission will be appointed soon. This Commission may well set the stage for the four other water companies who exist in Armenia who will also need new tenders in the near future. This process of developing the new contract for Yerevan Jur may well set the stage to move further into water sector privatization or not.