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Armenia: Water Investment Programme - Feasibility Study



Business sector:

Municipal and environmental infrastructure

Funding source:

Not Yet Determined

Contract type:

Consultancy Services

Notice type:

Invitation for expressions of interest (CSU)

Issue date:

27 Jan 2015

Closing date:

16 Feb 2015   at  23:59   London

Access eSelection

Assignment Description:
The European Bank for Reconstruction and Development ("EBRD" or the "Bank") is considering providing a sovereign loan of up to EUR 30 million to be on-lent to the Armenia Water and Sewerage CJSC (the "Company" or "AWSC"). The Bank’s loan is expected to be co-financed by a sovereign loan from the European Investment Bank ("EIB") of EUR 30 million and an investment grant from international donor(s) of EUR 20 million. The proceeds of the loan and grant will be used to rehabilitate water supply in ten regions of Armenia and wastewater infrastructure in three regions of Armenia as well as to procure operating assets such as water meters, control systems and pumps (the "Project"). The investments will reduce water losses and improve system performance and reduce operational costs. The wastewater investments will significantly reduce pollution through untreated sewerage.

The Government of Armenia ("GoA") has embarked on sector reforms in the water and wastewater sector. During the last decade, the GoA has restructured the water sector and adopted a new water code. The State Committee of Water Economy ("SCWE" or the "Client") of the Ministry of Agriculture was established in 2002. Management and lease contracts with private water operators have been concluded along with large investments in water infrastructure upgrades. All this resulted in a remarkable improvement in service delivery, the reduction of operation costs and the increase of revenues. Currently there are five water companies which are managed by three private operators:
- AWSC serving 0.62 million population in several regions of Armenia under a Management Contract with SAUR;
- Yerevan Djur serving 1 million population under a Lease Arrangement with Veolia;
- Three regional utilities (Nor Akunq, Lori and Shirak) serving 0.32 million population under a Management Contract with a consortium of companies MVV Decon, MVV Energie, AEG Service under SAUR’s leadership (since January 1, 2014).

Outside the service areas of the 5 major water and sewerage companies there are about 560 communities (with a population of 650,000) which have different organisational arrangements for water system management.

The involvement of the private sector has resulted in significant performance improvements, particularly in service delivery, reduction of non-revenue water, reduction of operation costs and increase of revenues.

However, there are several key challenges remaining to be addressed in the next decade: (i) low levels of tariff resulting in inadequate financial viability of water companies and low investments in capital maintenance and repair, (ii) low levels of service and high investment needs for communities not covered by water operators, (iii) high levels of water losses in the systems, (iv) lack of strategic planning in the sector, and (v) low coverage of wastewater collection and wastewater treatment.

The GoA is therefore about to launch a "second generation" of reforms in the water sector. It is agreed that after termination of the ongoing lease and management contracts the sector weaknesses should be addressed by restructuring not only the water management system but also the legal and regulatory framework with particular focus on institutional solutions for the rural water sector.

For that purpose the GoA in cooperation with international financial institutions (e.g. the Bank, WB, KfW, ADB and EIB) has initiated implementation of several technical assistance projects in order to properly design the "architecture" of the second generation of reforms in the water sector. These studies will be made available for the Consultant for background information for this assignment.

The EBRD is now seeking to select and engage a consultant (the "Consultant") to implement a Feasibility Study for the Project, including a technical, financial, environmental and social due diligence (the "Assignment").

The main objective of this Assignment is to assist the Bank with the technical, financial, environmental and social due diligence of the Project, as well as to identify how the Project can ensure that men and women are enabled to benefit equally from Project activities. Specifically, the Consultant is expected to implement the following tasks:
- Identify the priority investments including preparation of a detailed budget for the investment programme and propose to the Bank a final list of investments to be designed and prepared for financing;
- Perform technical due diligence to review the proposed investments and set out the rationale for the investments in the context of the investments selected, cost saving, reduction of water losses, restoration of the greatest hours of reliable water supply, rehabilitation of wastewater collection and treatment, and any other current and anticipated policies;
- Estimate the economic and financial internal rates of return ("IRR") of the proposed Project investments and identify key cost reduction elements;
- Prepare a Financial Model and projections for the Company;
- Prepare an affordability analysis;
- Undertake environmental and social ("E&S") due diligence including: defining the Project’s area of influence; reviewing the existing environmental and social conditions; identifying and assessing the Project’s environmental and social risks, adverse impacts and benefits; assessing the Project’s compliance with the EBRD Performance Requirements ("PRs") relevant to the Project, including local and EU environmental standards. Based on the results of E&S due diligence prepare an and Social Action Plan ("ESAP") and a Stakeholder Engagement Plan ("SEP");
- Identify gender issues and perspectives that can be incorporated into Project activities; i.e. with respect to the rehabilitation of the service, implementation and operation of the Project.

Status of Selection Process:
Interested firms or groups of firms are hereby invited to submit expressions of interest.

Assignment Start Date and Duration:
The assignment is expected to start in Q2 2015 and last for 8 months.

Maximum Budget available for the Assignment:
EUR 1,200,000; Exclusive of VAT.
The consultant must determine whether any VAT would be chargeable on the services and the basis for that determination, without taking into consideration the Bank's special status as an IFI and state this to the Bank in their response to the Invitation for Expressions of Interest. To the extent that a consultant incurs input VAT on goods and services purchased in connection with the provision of services (e.g. VAT on airline ticket) which is not otherwise recoverable by the consultant from the local tax authority, the gross cost to the consultant of such expenses shall be treated as a reimbursable expense.

Funding Source: It is expected that the Assignment will be funded by the EBRD Technical Cooperation funds. Contracting will be subject to availability of funding.

Eligibility: There are no eligibility restrictions.

Consultant Profile: Corporate services are required. The Consultant will be a firm or consortium of firms with extensive experience in:
- Conducting feasibility studies, including technical, financial, environmental and social due diligence in the water and wastewater sector.
- Conducting water and wastewater sector assignments in the region, preferably for International Finance Institution (IFIs).

The Consultant’s team is expected to include the following key experts:
- Water and wastewater expert
- Civil engineering expert
- Financial expert
- Procurement expert
- Environmental impact assessment expert
- Social impact assessment expert

It is recommended that a part of the consultancy input will be carried out by local sub-consultants.

Submission Requirements:
In order to determine the capability and experience of Consultants seeking to be selected for this Assignment, the information submitted should include the following:
1) Company/group of firms’ profile, organisation and staffing (max. 2-4 pages);
2) Details of previous project experience or similar assignments undertaken in the previous five years, including information on contract value, contracting entity/client, project location/country, duration (mm/yy to mm/yy), expert months provided (if different from duration) , main activities, objectives;
3) CVs of key experts who could be available to work on the Assignment with details of the experts’ professional experience;
4) Completed Consultant Declaration Form and Contact Sheet, the template for which is available from the following web-link:

The above information should not exceed 20 pages excluding CVs and Contact sheet.

The complete expression of interest (including CVs and Contact Sheet) should be submitted in English, electronically through e-Selection, to reach the Bank not later than the closing date. The expression of interest shall be one file (pdf or Word). The EBRD reserves the right to reject applications of firms submitting more than one file. Only if the permissible file size is exceeded (4MB), the Consultant may split the expression of interest into further files.

EBRD Contact:

Sophie Medert
TC Team Advisor
European Bank for Reconstruction and Development
One Exchange Square
London EC2A 2JN
Tel: + 44 20 7338 7371, Fax: +44 20 7338 7451

1) Following this Invitation for Expression of Interest, a shortlist of qualified firms will be formally invited to submit proposals. Consultant shortlisting and selection is subject to availability of funding.
2) Please note that contracting will be subject to 1) the necessary co-financing being obtained for the investment and 2) a Sovereign Guarantee being agreed.
3) Please note that Consultants participating in the selection process for TCS 348: Armenia – Water Investment Programme – PPP Transaction Advisor, published on EBRD website on the 5th November 2014, will be allowed to participate in the selection for the assignment subject to this procurement notice, but will be eligible to be awarded only one of the assignments.
4) Please note that following Article 1.9 of EBRD’s Clients Guidelines, the Consultant who is selected to implement the Feasibility Study subject to this procurement notice will not be permitted to participate in the selection process for the upcoming assignment: Armenia – Water Investment Programme – Project Implementation Support.
5) Shortlisting criteria and respective weightings are:
a) Firm’s experience in conducting Feasibility studies, including technical, financial, environmental and social due diligence in the water and wastewater sector – 35%
b) Firm’s experience in conducting water and wastewater sector assignments in the region, preferably for International Finance Institution (IFIs) or equivalent – 15%
c) CVs of key experts with relevant experience as per above - 50%.

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