Water Operators Riskily Spent 1.7 Billion Drams, Real Water Volume Accounting Missing: Report

The Audit Chamber has published the annual report for 2018, which will be presented to the National Assembly in the near future. Regarding the audit of the Water Committee, the Audit Chamber identified several violations. In particular, it was noted that there is a lack of real accounting for water volumes, although measuring devices worth 500,000 euros were purchased in 2013 and, for unclear reasons, were not installed at specified locations.

It was noted that the property belonging to "Jrar" LLC has been leased without adhering to the legal requirements set forth by the Republic of Armenia, and the rental fees were established arbitrarily. For instance, the Vernashen pumping station was rented out to "Green Energy Concern" LLC for 220,000 drams per month. The latter has pledged this pumping station to obtain the corresponding credit line. The area of the Her-Her reservoir has been leased to "Yaguar Animal World" LLC for 20,000 drams per month for fish farming purposes.

By October 1, 2018, 40.5 million cubic meters of water had been released from the Her-Her reservoir for energy purposes for two hydropower plants, while "Jrar" LLC received only 3 million drams in return (the cost of the supplied water amounted to about 93 million drams).

According to the report, the expenses related to spring preparation works from 2017 and up to October 1, 2018, amounting to around 460 million drams, are considered risky, with 233 million drams paid in cash. "The execution of these works is not substantiated by documentation. No procurement process has been conducted. The costs of the works are significantly inflated. For example, a staff worker is paid 80,000 drams per month, while a contract is signed with someone doing similar work for 917,000 drams for 27 days. The market value of 'ZIL' brand vehicles is about 2.5 million drams, whereas they are rented for an average of 1.2 million drams (for 30-42 days), while 'Kamaz' brand vehicles are rented for 1.5 million drams. A total of 1.7 billion drams have been spent riskily by the water operators," the audit revealed.

Water taken naturally from Lake Sevan has been diverted through relevant channels to the corresponding reservoirs of the pumping stations and then pushed back through the same channels. This has resulted in the additional consumption of 1.1 million kWh of electricity. By comparing the energy consumed by certain pumps with their technical specifications (productivity), it was found that "Jrar" LLC had accounted for 6,528.86 and 6,798.74 thousand cubic meters of mechanical water extraction in 2017 and as of October 1, 2018, respectively, which corresponds to values of 76.2 million drams and 78.3 million drams, respectively.

The Water Operators have not adhered to the irrigation water supply schedules presented to "Jrar" LLC, which has negatively impacted the water volume released from Lake Sevan and the volume of water pumped by the Mkhchyan and Ranchpar pumping stations, and, consequently, the volumes of electricity consumed. The cash collection function for water continues to be carried out by water operators. An effective water management-planning system has not been developed. Planning should be conducted starting from the water demand of farmers to the discharge of water from Lake Sevan. The full potential of the unified electronic information system for water operators is not fully utilized, which results in a decrease in the effectiveness set for the water management process.

The project and preliminary estimates for the rehabilitation of certain emergency sections in the Arpa-Sevan Tunnel have been prepared in violation of the procedures and standards established by the legislation of the Republic of Armenia, resulting in the preliminary estimate being calculated 1.6 billion drams higher than necessary.