Publication: Utility Pricing and the Poor : Lessons from Armenia
Date
2001-05
ISSN
Published
2001-05
Author(s)
Abstract
Increasing cost recovery for utilities
is a cornerstone of the Government of Armenia's
economic reform program. This report assesses the 1999
electricity tariff increase and the potential for future
improved water sector cost recovery, with particular
attention to questions of service accessibility and
affordability for the poor . The burden of energy
expenditures is large for most households, particularly for
the poor. Electricity makes up the bulk of these
expenditures, and a further increase in tariffs, without
increasing access to low cost substitutes, would lead to the
greatest hardship for the urban poor. Future electricity
tariff increases should be closely coordinated with improved
price response prediction and credible action to mitigate
the potential impact on the poor and the environment. The
water utilities are caught in a low-level equilibrium trap,
characterized by decreasing service quality and revenue. The
water utilities must break out of this trap by generating
more revenues through improved service delivery. A two-stage
approach is recommended. In the first stage, revenues should
be increased by enforcing payment from the households that
currently have reliable service but are not paying their
bills, in the second stage, after collection capacity is
strengthened, the utility should start a program of tariff
adjustments, based on improved service and meter-based billing.
Citation
“Lampietti, Julian A.; Kolb, Anthony A.; Gulyani, Sumila; Avenesyan, Vahram. 2001. Utility Pricing and the Poor : Lessons from Armenia. World Bank Technical Paper;No. 497. © Washington, DC: World Bank. http://openknowledge.worldbank.org/entities/publication/89501f66-4f61-552c-aa06-78d4cf585999 License: CC BY 3.0 IGO.”