Veolia Water Suggests Increasing Water Tariff by Over 40 Drams

The Chairman of the Public Services Regulatory Commission, Garegin Baghramyan, provided details regarding the proposed increase in water tariffs. Veolia Water LLC submitted an application to the Commission at the beginning of August, seeking to raise the water tariff by over 40 drams. The current price of 180 drams per cubic meter is proposed to be increased to approximately 223 drams.

In a conversation with journalists, Baghramyan noted that changes in the water tariff are a periodic process. 'The water supply system of Armenia has been leased for 15 years. After being declared the winner, the company presented basic tariffs for 15 years that are subject to adjustment based on only three factors. Looking at the base price, I can say that it was already 214 drams for 2022. So we already have a 34 dram increase, which was formed during the bidding process. The application was submitted in early August, and monitoring is currently being conducted in collaboration with the Water Committee and consumer NGOs. We have completed the process in the regions, and starting October 1, it will also commence in Yerevan. We are discussing with the Water Committee, Veolia Water, and the Government the possibility of making changes to the lease agreement scenario. There is a scenario where the price increases until 2025-2026, and then begins to decrease. We are currently negotiating with Veolia Water to establish a more stable pricing policy, but it is not yet clear,' Baghramyan remarked, adding that the reasons for the price increase vary, including inflation and increased electricity costs.

The review period for the application is 80 days, and if approved, the new tariff will come into effect from January 1, 2022. 'According to the law, the decision must be made by December 1 at the latest,' Baghramyan stated.

When asked how it is possible to raise the water price when Prime Minister Nikol Pashinyan stated in 2018 that an agreement had been reached with Veolia not to increase water costs until 2024, Baghramyan replied that the same price could be maintained through budget revenue. 'We can postpone increases until 2035 without paying the corresponding lease fees to the public budget. That is, if there are financial resources in the budget, we can choose not to pay the approximately 6.8 billion in lease fees and even lower the tariffs. These are options that need to be discussed based on budget capabilities and needs. The 180 dram tariff per cubic meter has been maintained for about three years due to a decrease in lease fees. If that policy is chosen, and we end up paying the same price, that is possible, but it will be at the expense of budget revenues. I do not find it correct or appropriate to pay less for water at the expense of the budget. This sends the wrong signal, in my opinion,' said the Chairman of the Public Services Regulatory Commission. He noted that discussions would take place to ensure that the price remains the same for socially vulnerable consumers.