The Government of Armenia has decided to reduce its financial support of the water & sanitation sector and is currently working to award an 8-year lease contract to a private operator for services in Yerevan. The Government is concerned about ensuring affordability for poor customers while transitioning to private operation and full cost-recovery tariffs. In an effort to mitigate the impact on poor citizens, the Government hopes to use OBA to offset additional costs during the life of the lease contract. The proposed OBA subsidy would be designed to ensure affordability for all customers and would provide a tariff discount to the poor. For its part, the private operator would receive reimbursement on an output-basis for water supplied to customers eligible for support.

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The proposed OBA scheme would assist approximately 36,000 households in Yerevan.

GPOBA’s Technical Assistance has helped in designing an effective OBA mechanism that provides the appropriate amount of assistance to the poor.

Jonathan Kamkwalala