Project Factsheet
Project:
Sector:
Country:
Water Supply Programs (Communal Infrastructure Programs II – Phases 1-3)
Municipal Infrastructure
Armenia
Facts
 Rehabilitation and construction of drinking water and
sewage disposal systems
 Phased approach for project implementation
 Focus on on-grid investments in urban areas of
Armavir, Metsamor, Gyumri,
Vanadzor and surrounding
communities and off-grid
communities all over Armenia
 Accompanying
technical
assistance to improve institutional structures
 Current Investment: approx.
95 million EUR
 Status: Implementation
Background
Armenia is a country rich in natural water resources and part
of its population in urban areas
already has access to central
water and sewage systems.
However, as a result of years of
inadequate investments and
maintenance measures due to
the collapse of the Soviet Union, the current supply is highly
unsatisfactory. Continuous drinking-water availability is ensured for barely 1/3 of the
population and the supplied water often does not meet necessary quality requirements.
As a result of its “Water Code”
(2002) and “Poverty Reduction
Strategy Paper” (2003), Arme-
nia has already made considerable progress using regionally
coherent sector policy to drive
forward efforts for the eradication of aforementioned issues.
On behalf of the German Federal Ministry for Economic Cooperation and Development
(BMZ), KfW Entwicklungsbank
has been involved in the sector
since 2000 to promote jointly
with the Armenian Government
the rehabilitation and construction of the country’s water infrastructure. Once fully implementted, at least 333,000 inhabitants
will receive high quality drinking-water in the program municipalities of Gyumri, Vanazor,
Armavir, Metsamor, and surrounding communities.
A third phase of the investment
programme is under preparation. The planned measures will
complement previous investments in the service areas of
the water utilities of Lori, Shirak
and Nor Akunq. In addition investment will be directed to the
rehabilitation of water supply
systems in the service area of
the Armenian Water and Sewerage Company and for partial
rehabilitation of villages that are
currently not under the service
area of any water utilities (offgrid communities). It is expected that a total number of
400,000 inhabitants will benefit
from the programme
Project Structure
During the first programme
phase, water utilities were established in the three provinces
of Lori, Shirak and Armavir. The
utilities are jointly owned by the
Government and local communities. They are responsible for
the provision of water services
in their respective areas. They
are managed by an international private company (PPP)
which is financed through an
accompanying measure. Recently, a water sector reform in
Armenia has been announced
in which one lease agreement
is planned to cover the entire
water supply in Armenia.
CIP I – Armavir
The first communal infrastructure program included a loan of
12.8 million EUR in the agriculturally reliant province of Armavir. During the implementation
phase, the water systems in
Armavir, Metsamor, and sur
surrounding villages were rehabilitated and expanded. As a
result, most residents now have
access to safe drinking water,
almost 24 hours per day. The
construction works were completed in 2009.
CIP II - Lori and Shirak
Based on structure of the first
program, KfW on behalf of the
German Government expanded
its commitment for an additional
53.4 million EUR to rehabilitate
and expand the water supply
infrastructure in the provinces
of Lori and Shirak, focusing on
Project Factsheet
the capital cities of Vanadzor
and Gyumri. The program will
be implemented in three consecutive phases: Whereas the
construction works of Phase 1
are almost completed, the main
construction works of Phase 2
started in 2012 and will be
completed in 2015. The third
Phase is expected to commence in 2015 and will also
cover the region of Nor Akunq
as well as a sewage treatment
component and the targeting of
off-grid communities.
Objectives
The objectives of the Armenian
Water Supply Programs are:
 Provide safe drinking water;
 Ensure a continuous water
supply;
 Reduce water losses;
 Enhance billing and collection efficiency;
 Embrace
market-based
principles and achieve costcovering tariffs;
 Improve the health of citizens and promote economic and social growth.
Partners
The State Committee of Water
Economy (SCWE) of the Ministry of Territorial Administration
manages policy-related issues
in the Armenian water sector
and currently holds 51% of
shares in the regional utilities.
In order to ensure cost-covering
operation of all utilities, SCWE
promotes private sector involvement and a stronger marketorientation. At present, four of
the five Armenian utilities are
headed by experienced, pri-
vate-law companies through
performance-based
management contracts. The water utility
of the capital Yerevan is working under a lease contract.
Continuing Challenges
After decades without appropriate access to safe drinking water, the programs contribute to
a substantial improvement of
the water supply in the region.
Despite this fact, around 1/3 of
the population is still not connected to a central water system. Large parts of the existing
water infrastructure are still in a
very poor state and in need of
considerable investment to
bring it up to a reasonable level.
As a result of the existing old
and worn-out water infrastructure, Armenia still disposes of
one of the highest amounts of
water losses in the world.
In addition, waste water is still
to a large part discharged into
the ground or rivers without any
kind of treatment.
Other remaining obstacles are
the existing needs in technical,
financial and institutional capacity building, and the comparably
low tariff levels.
The challenges in the Armenian
water sector can only be rectified through well-structured and
coordinated investment programs combined with extensive
institutional and capacity building measures.
Progress
 CIP I: Completed

CIP II, Phase 1: Completion
of main construction works
in 2013

CIP II, Phase 2: construction works started in 2012.
Main works will be completed in 2015

The third phase of the investment programme is under preparation.

A consultant team supported SCWE with the elobaration of a water sector study
for sector review and development of a new sector
strategy. An accompanying
measure on asset management under the upcoming
lease
contract
is
planned next.

A feasibility study on improving and developing water supply and sanitation
systems in rural communities has recently been concluded.
Contacts
KfW Regional Office Yerevan
4/1 Bagramyan
0019 Yerevan, Armenia
Lars Oermann
Director South Caucasus
Regional Office
Phone: + 995 322 550-318
[email protected]
Zara Chatinyan
Local Representative Armenia
Phone: +374 94 46 54 99
[email protected]
Sandra Schmidt
Project Manager
Urban & Regional Development
East Europe, Central Asia
and Caucasus
Phone: +49 69 7431 4630
[email protected]