2015年-世界发展银行全球_Armenia_Water_Sector_Tariff_Study_136页_11mb

Armenia Water Sector Tariff Study Summary (February 2015)

Core Content

This report provides an in-depth analysis of the water and sanitation (WSS) sector in Armenia, focusing on affordability, willingness to pay, tariff setting, and reform recommendations. It outlines the challenges and opportunities in transitioning to cost-recovery tariffs while ensuring service quality and financial sustainability.

Main Points

1. Affordability and Willingness to Pay

• Current Affordability: WSS tariffs in Armenia are among the lowest in the region. In 2012, the poorest quintile spent only 2.3% of their total household per capita consumption expenditures on water, well below affordability thresholds.
• Willingness to Pay (WtP):
  • A survey found that 35.7% of households are willing to pay more for service improvements.
  • In Yerevan, 27.1% of respondents were willing to pay more, with an average of 12.1% increase.
  • In non-Yerevan areas, 41.4% of respondents were willing to pay more, with an average of 21.4% increase.
  • Table 0.1 compares the average maximum WtP for Yerevan and non-Yerevan respondents.

2. Revenue Shortfall and Subsidies

• Revenue Shortfall: In 2012, tariffs covered only 67.3% of the sector’s total costs. Even with government subsidies, the water sector had a shortfall of 3.38 billion AMD.
• Subsidy Requirements:
  • The report outlines four transition options with varying levels of subsidies required.
  • Option 1 requires the highest subsidies (33,307 million AMD), while Option 4 requires the least (10,472 million AMD).
  • The Family Benefits Program (FBP) is a key mechanism for protecting the poorest customers through direct cash transfers.

3. Cost Recovery and Transition Challenges

• Tariff Increases: To achieve financial sustainability, tariffs must be increased. However, this must be done carefully to avoid rate shock.
• Phased Transition: The report emphasizes the need for a phased transition to minimize the impact on customers, particularly the poorest.
• Risk of Rate Shock: Options 1 and 3 have higher initial and subsequent rate hikes, increasing the risk of rate shock. Options 2 and 4 are recommended as they align more closely with WtP survey results.

4. Public Communication and Institutional Trust

• Public Support: Building public support is essential for a successful transition. Customers need to understand the reasons for reform, the benefits, and the expected tariff changes.
• Institutional Distrust: The survey highlights significant institutional distrust among customers. There is a belief that water providers should bear the cost of infrastructure improvements, which could lead to resistance if tariffs are raised too quickly.

5. PPP Contracts and Service Coverage

• PPP Contracts: Five water utilities serve 75% of the population under three PPP contracts with French and German companies.
• Service Coverage: Over 560 villages remain outside the PPP coverage, with independent arrangements for water supply.
• End of PPP Contracts: The current PPP contracts will expire in 2016, requiring retendering and new investment planning.

Key Recommendations

• Subsidy Delivery: Ensure targeted subsidies to protect vulnerable households, particularly through the FBP.
• Transition to Cost-Recovery: Implement a phased transition to cost-recovery tariffs to avoid rate shock and ensure affordability.
• Public Communications: Launch sustained communication campaigns to explain the reasons for tariff increases, the benefits of improved services, and the expected changes in the transition period.
• Institutional Reforms: Address institutional challenges and improve transparency and accountability in service delivery.

Critical Information

• WSS Improvements: Since 2000, there have been significant improvements in service quality, coverage, and efficiency, as outlined in Table 1.1.
• Cost Components:
  • O&M Costs: These are a major component of the revenue requirement.
  • Capital Costs: Investment needs are substantial, particularly for network rehabilitation and expansion.
• Electricity Tariff Projections: Electricity costs are expected to rise, which will impact overall service costs.
• Population and Demand Projections: Population growth and demand trends are considered in the tariff setting and investment planning.

Summary of Transition Options

• Option 2 and 4 are recommended for their lower risk of rate shock and alignment with WtP survey results.

Conclusion

The Armenian water sector has made significant progress over the past decade, but financial sustainability remains a challenge. A transition to cost-recovery tariffs is necessary, yet must be carefully managed to protect the poorest customers and avoid public resistance. The report recommends a phased approach, targeted subsidies, and sustained public communication to support this transition.