The reforms were directed to the legal and institutional spheres, investment and tariff policies as well as to water metering and accounting systems.
Legal Reforms
Over the last twenty years, Armenia has implemented serious legislative and institutional changes in the water sector. The reforms were directed to the legal and institutional spheres, investment and tariff policies as well as to water metering and accounting systems.
According to the Water Code, the water systems in Armenia cannot be privatized; they can only be transferred to private management under different forms of PPP. It can be noted that the overall legal and regulatory environment is mainly favourable for deepening PPP in the water sector. PPP Contracts have not raised any serious regulatory problems.
Institutional Reform
Reforms were carried out as well as with the aim of separating the regulatory aspects. This led to creation of a new independent institution: the Public Services Regulatory Committee.
Investment priorities
As there were no financial resources to improve the situation, it was decided to solve the problem through involvement of foreign credits and grants under the Government guarantees. Lots of loan projects implemented with the support of IFIs (ADB, EBRD, WB, KFW, NIF, EIB).
Tariff Policy
Before 2003 different governmental bodies defined tariffs in Armenia. At present, tariff policy is implemented by the Public Services Regulatory Commission.
Currently the majority of the population of Armenia is served by lease contracts under PPP arrangement. From 2017 second stage of reforms started in Armenia under lease/concession advance level of PPP scheme. The PPP contract for 15 years 2017-2031 and tariffs are approved for 15 years, with the possibility of some adjustments each year, according to the lease contract.
Water Metering
Many serious steps were undertaken to improve water supply calculation. A metering strategy was designed and implemented.
Currently about 650 thousand consumers (which make more than 90% of all consumers) have installed individual water meters.
The water meters installing brought to a considerable reduction of water consumption, whereas, the water consumption norm was set in the past at 400 liters per capita per day, after the installation of water meters the water consumption has become some 120 l/day per capita and even less in rural areas. Installation of water meters helped to improve calculation for actual water losses too.
In terms of modernization and development of WSS infrastructure and limited financial means, PPP is one of the most effective mechanisms to solve various complicated problems emerged in the water sector. With regard to directly supporting PPP development, The Government of Armenia defined series of priorities for creation and maintenance of favourable conditions for private sector participation.
The 3 types of PPP are used in Armenia: management contract, lease contract and lease with concession fragments. In general, the PPPs in the WSS sector of Armenia were implemented stage by stage, with more simple models at the beginning (e.g. management contract) and relatively complicated models (leasing, concessions) afterwards. All companies in Armenia without any exception proceed along this path.