Water scarcity as an economic factor: Veolia Jur plans 11 billion drams in investments

YEREVAN, April 2. /ARKA/. The water supply issue in Armenia is gradually moving beyond the communal agenda and acquiring economic significance. Rising consumption, climate change, and active development are creating persistent pressure on the system, requiring large-scale investments and a review of infrastructure policy.

As Marianna Shahinyan, General Director of Veolia Jur CJSC, stated in an interview with Novosti-Armenia, an investment program worth approximately 11 billion drams is planned for 2025-2026, aimed at modernizing the water supply system.

Water Shortages as a Result of Economic Growth

The key factor putting pressure on the system is increasing water consumption, caused by:

• active construction in Yerevan and its suburbs;

• an increase in the number of subscribers;

• and abnormally high temperatures in the summer.

This leads to additional demand for water, which the existing infrastructure is not always able to meet. This results in a deficit requiring not only operational decisions (changes to water supply schedules) but also capital investments.

Infrastructure Limitations and Investment Gap

According to the current agreement, Veolia Jur's mandatory investments are limited to 45 billion drams for 15 years, which applies to the entire service area—Yerevan, 45 cities, and 334 rural settlements.

Despite this, the company has achieved a significant reduction in losses:

• physical water losses were reduced by 16.44% (101.7 million cubic meters),

• commercial losses by 52.38% (61.2 million cubic meters).

However, these measures are insufficient to compensate for the new loads. In fact, there is a gap between the pace of urbanization and infrastructure investment.

Climate as a New Economic Pressure

Climate factors are emerging as a separate systemic risk. According to the company, in recent years the following has been recorded:

• a decrease in water yield from springs;

• increased consumption during peak periods.

This increases the need to create strategic water reserves for Yerevan, as well as for:

• modernization of existing networks;

• construction of new facilities;

• attracting additional water supply sources.

Such projects, as noted, will require funding from external sources, raising the question of government participation and possible financing models.

Tariff Policy: Balancing Affordability and Investment

The current tariff model (180–200.42 drams per cubic meter) is determined by a lease agreement and is regulated by the state. Tariff revisions depend on:

• water supply volumes;

• inflation;

• electricity prices.

At the same time, the current model limits the ability to accelerate investment growth, making the long-term sustainability of tariff policy a key issue for the industry.

Water as an Infrastructure Risk

The water supply situation is gradually transforming from an industry-specific problem into an infrastructure risk for the economy: for development and construction; for industry and services; and for the quality of the urban environment.

Under these conditions, water infrastructure is becoming a critical factor in sustainable growth, along with energy and transport.