YEREVAN (RFE/RL)–The government of France will lend Armenia 24.9 million euros ($39 million) to assist in the ongoing upgrading of Yerevan’s water and sewerage network run by a French company, officials said on Tuesday.
An agreement to that effect was signed in Yerevan by Finance Minister Tigran Davtian and French Ambassador to Armenia Serge Smessow. The disbursement of the low-interest loan, repayable in 20 years, is conditional on a 2.4 million-euro subsidy, which the Armenian government agreed to provide to the network.
According to Andranik Andreasian, head of Armenia’s State Committee for Water Resources, most of the French loan will be used for the reconstruction of Yerevan’s sewage disposal facility. A separate statement by the Finance Ministry said the rest of it will be spent on the replacement of leaky pipes and purchase of other equipment that will make supplies of drinking water to city residents "more reliable." Most of them currently have running water for less than 10 hours a day.
The government had pledged to phase out water rationing in the Armenian capital by 2004 with a sweeping restructuring of its aging water and sewerage network. As part of the effort supported by a $30 million World Bank loan, hundreds of thousands of Armenian households had to purchase and install water meters in their homes.
Veolia Eau, the French utility giant which took over the long-term management of the Yerevan network in 2006, now says that it will need years to ensure 24-hour water supplies to the vast majority of local households. The operator argues that as much as 80 percent of drinking waters leaks out of eroding Soviet-era pipes before reaching consumers. The World Bank funds were supposed to significantly reduce the huge losses.
An Armenian parliamentary commission claimed in early 2004 that the scheme failed to achieve its objectives because of a gross misuse of the World Bank loan by government officials and private contractors. The allegation, denied by both the bank and the government, was given fresh currency and detailed last summer by a Yerevan-based British engineer who participated in the parliamentary inquiry as an expert.