ARMENIA:

NPD Baseline for rural Water Supply and Sanitation

Yerevan, 22 March 2007Jochem JantzenDirector, TME

Institute for Applied Environmental Economics, Netherlands

EAP Task Force

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CONTENTS

• Data and data delineation• Baseline scenario, preliminary results

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DATA AND DATA DELINEATIONData available-Statistical data on population, water supply and sanitation (census)-Results JICA-questionnaire (416 returned of 565)-Results questionnaire to water companies (AWSC, Lori WSC, Nor Akunq)-Various water related studies PRSP, WB, OECD, info and interviews with water companies

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DATA DELINEATIONPopulation data on all settlementsMarz inhabitants

ruralnumber of

rural settlements

average number of

inhabitants

average size of

householdAragatsotn 97409 110 886 3,73Ararat 164612 89 1850 3,74Armavir 165632 90 1840 3,30Gegharkunik 107581 77 1397 3,27Kotayq 96714 58 1667 3,95Lori 105272 107 984 3,33Shirak 102392 115 890 3,90Syunik 47241 101 468 3,73Tavushi 81954 57 1438 3,17Vayotz Dzori 32448 41 791 3,45TOTAL 1001255 845 1185 3,48

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DATA DELINEATIONWater intake

0% 20% 40% 60% 80% 100%

Total

Aragatsotn

Armavir

Kotayk

Lori

Syunik

Shirak

Tavush

Vayots Dzor

Spring River/Stream Bore hole Lake/Pond Others

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DATA DELINEATIONWater distribution

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Aragatsotn

Ararat

Armavir

Gegharkunik

Lori

Kotayk

Shirak

Syunik

Tavush

Vayots dzor

Total

In house tap Yard tap Standpost Other/own supply

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DATA DELINEATIONWater sanitation

Type of sanitation

non flush toilet

flush toilet

Total 79% 21% Simple pit latrine 60% Improved pit latrine 10% Septic tank 9% 11% Sewerage 10%

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DATA DELINEATIONFinance

Data collected from water companies on:

-Charge levels, total revenues-Loans (KfW)-Central budget financing

Difficult to separate rural from total revenues / expenditures (water cie.)

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DATA DELINEATIONDiscussion-Feasible Model requires grouping-Technical criteria for grouping (water intake, treatment)-Other criteria (policy related):

- geographical- institutional- supply situation (no distribution)- size

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BASELINE SCENARIO: Data delineation water infrastructure

-847 rural settlements are grouped in totally 81 ´average settlements´

-criteria applied: water intake, geography-institutional, size

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BASELINE SCENARIO: Data delineation water infrastructure

Marz, company type of intake Nr of groups

Nr of inhabitants

Nr of settlements

distance intake, spring

Aragatsotn spring, borehole 6 56000 62 5,88

Ararat spring, borehole 6 75999 42 5,30

Armavir spring, borehole 6 62612 35 5,42

Gegharkunik spring, borehole 6 71724 52 5,88

Kotayq spring, surface w, borehole 9 57775 34 4,75

Lori spring, surface w, borehole 9 57028 58 3,93

Shirak spring, surface w, borehole 9 54247 60 3,40

Syunik spring, borehole 6 20655 45 5,14

Tavushi spring, surface w, borehole 9 51764 37 8,53

Vayotz Dzori spring, borehole 4 14975 21 7,97

AWSC Spring 3 394842 254 5,62

Nor akunq Borehole 3 17419 11

Lori WSC spring 3 16310 15 12,13

No distribution 2 49904 121

Total 81 1001255 847

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BASELINE SCENARIO: Expenditures (mln DRAM/year)

total O&M Re investmAragatsotn 92 44 48Ararat 131 77 53Armavir 92 58 34AWSC 694 307 388Gerharkunik 88 42 45Kotayq 146 61 85Lori 174 65 109Lori WSC 25 11 14Nor Akunq 24 17 7Shirak 131 57 73Syunik 131 44 87Tavushi 134 50 84Vayotz Dzori 28 12 15Total 1 889 846 1 042

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BASELINE SCENARIO:Financing: revenuesBudget and loans:

Budget 1 163 mln DRAMLoans 3 663 mln DRAM

-Current rural revenues roughly estimated at:

Total 1 015 mln DRAMAWSC 850 mln DRAMNor Akunq 21 mln DRAMLori WSC 56 mln DRAMRest 90 mln DRAM

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BASELINE SCENARIO:Financing: potential revenues- Water sold 120 m3/household- Collection rate <> Service level- Current potential revenues roughly estimated at:Total 1 551 mln DRAMAWSC 881 mln DRAM (66%)Nor Akunq 74 mln DRAM (97%)Lori WSC 58 mln DRAM (70%)Rest 538 mln DRAM (30%)

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BASELINE SCENARIO: Financing gap (mln DRAM/year)

-500

0

500

1.000

1.500

2.000

2.500

3.000

2006 2006 2007 2007 2008 2008 2010 2010 2012 2012 2015 2015O&M Re-investments Renovations Charge revenuesBudget Loans Financing gap

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BASELINE SCENARIO:Affordability potential revenuesOptimistic

Income 2005 per capita

DRAM/year

Share of water charge in

household income

Income 2012, per capita

DRAM/year

Share of water charge in

household income

20% poorest 77 000 6.6% 157 000 2.2% 2nd 20% population 136 000 3.7% 293 000 1.2% 3rd 20% population 205 000 2.5% 441 000 0.8% 4th 20% population 300 000 1.7% 713 000 0.5% 20% richest 929 000 0.5% 1695 000 0.2% Average 329 000 1.5% 659 800 0.5%

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BASELINE SCENARIO:Affordability potential revenuesPessimistic

Income 2005

DRAM/year

Share of water charge in Household income

Income 2012

DRAM/year

Share of water charge in Household income

20% poorest 77 000 6.6% 117 000 6.5% 2nd 20% population 136 000 3.7% 214 500 3.5% 3rd 20% population 205 000 2.5% 323 000 2.3% 4th 20% population 300 000 1.7% 506 500 1.5% 20% richest 929 000 0.5% 1312 000 0.6% Average 329 000 1.5% 494 600 1.5%

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BASELINE SCENARIO: Questions-Affordability now assumed at 3% (for Water Supply in rural areas), should it be for example 4%?-Sanitation: are the assumptions realistic?-Are projected revenues realistic?

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BASELINE SCENARIO: Discussion-With projected optimistic economic growth, little problems to be expected for affordability-With less optimistic assumptions, affordability will remain a problem- Revenues are not enough to cover both O&M and re-investment expenditures (even with increased revenues)