QUARTERLY REPORT October-December 2005

Done by the Management Contractor The 15-th of January 2006

______Patrick Lorin

TABLE OF CONTENTS

1. GENERAL VIEW ...... 4 2. OPERATIONS ...... 6 2.1 COMMERCIAL...... 7 1. QUARTERLY ACTIVITIES ...... 8 2. NEXT QUARTER FORECAST PLANNING ...... 10 ANNEX A...... 10 BILLING AND COLLECTION TABLE-1 ...... 11 COLLECTION OF AWS CJSC FOR OCTOBER-DECEMBER 2005 TABLE -2 ...... 12 DIAGRAM-1 ...... 13 DIAGRAM 2 ...... 14 COLLECTION FROM ALL THE BRANCHES OF AWSC, IN JANUARY-DECEMBER 2005 - TABLE 3 ...... 15 COLLECTION FROM ALL BRANCHES OF AWSC - TABLE 4 ...... 17 QUANTITY OF INSTALLED WATER METERS BY AWS CJSC ON DATE 01.01. 2006 - TABLE 5...... 18 2.2 WORKS ...... 19 SEWERAGE ...... 20 WATER ...... 21 HAND OVER PROCESS UNDER USAID PROGRAM ...... 23 BULK FLOW METERS INSTALLATION: ...... 23 2.3 TECHNICAL ...... 25 TECHNICAL STUDIES ...... 26 EVALUATION OF ASSETS ...... 27 MAPPING WORKS ...... 28 WATER QUALITY CONTROL ...... 29 1. POTABLE WATER DISINFECTION ...... 29 DEMAND OF DISINFECTANT RECORDS IN IV QUARTER, 2005 - TABLE 6 ...... 29 DIAGRAM- 3 ...... 30 2. WATER QUALITY CONTROL...... 31 DIAGRAM- 4 ...... 31 DIAGRAM- 5 ...... 31 POTABLE WATER INVESTIGATION IN IV QUARTER, 2005 – TABLE 7 ...... 32 3.ENVIRONMENTAL REPORTS ...... 34 ENVIRONMENTAL UTILIZATION & PROTECTION FEES BY THE REGIONS AND SECTORS TABLE-835 CONTAMINANTS VOLUME THREW TO WATER BASIN TABLE-9 ...... 36

QUARTERLY REPORT October-December 2005

MWW PROJECT PROCUREMENT REPORT ...... 38 2.4 EXPLOITATION...... 39 EXPLOITATION WORKS ...... 40 MAIN WATER PIPES & WATER LINES EXPLOTATION TABLE-11 ...... 41 DIAGRAM-6 ...... 42 COLLECTORS & WASTEWATER NETWORK EXPLOITATION - TABLE 12, DIAGRAMS 7,8 ...... 43 NETWORK ANALYSING -TABLE 13 ...... 44 DIAGRAM-9,10 ...... 45 DIAGRAM – 11,12 ...... 46 WATER PRODUCTION & LOSSES - TABLE 14 ...... 47 DIAGRAM – 13 ...... 54 DIAGRAM – 14 ...... 54 WATER VOLUME, PRODUCTED BY THE MECHANICAL WAY AND USED ELECTRICAL ENERGY VOLUME - TABLE 15 ...... 55 DIAGRAMS 15,16, ...... 56 CONCERNING THE PROCESS OF THE WATER METERS EQUIPMENT INSTALLATION BY THE AWSC TABLE-16 ...... 57 DIAGRAM 17 ...... 59 ELECTRICITY CONSUMPTION, TABLE-17,18 ...... 60 DIAGRAM 18 ...... 60 3. FINANCE & ACCOUNT ...... 61 SUBSIDY TABLE-19 ...... 62 CONCERNING INCOMES AND EXPENSES OF AWS CJSC IN IV QUARTER, 2005 TABLE-20 ...... 63 4. HUMAN RESOURCES ...... 64 ACTIVITIES PERFORMED BY HUMAN RESOURCES DEPARTMENT DURING QUARTER IV, 2005 ...... 65 DIAGRAM 20 ...... 67 5. PUBLIC RELATION ...... 68 ON ACTIVITIES IMPLEMENTED BY THE PUBLIC RELATIONS DEPARTMENT ...... 69 6. LEGAL & INSURANCE ...... 71 On procedure of covering AWSC CJSC debts receivable by court order and confiscating through Obligatory Implementation of Actions at Law as of 01.01.2006 TABLE-21 ...... 72 7. INDICATORS ...... 73 INDICATORS RECAPITULATION – Table 22, ANNEX B ...... 74 ADDITIONAL INFORMATION ...... 75

QUARTERLY REPORT October-December 2005

1. GENERAL VIEW

QUARTERLY REPORT October-December 2005

GENERAL VIEW

This Report covers the period from 1st of October to 31st of December 2005.

This last Quarter of the year 2005 has been marked by several events:

The visit of the World Bank Team

The end of 2005’s Subsidiary

The new organization in the Head Office

The beginning of the winter period

The lack of finance in order to cover the expenses and to start 2006 without debt.

The good movement in the matter of transferring the assets to WSC

Preparation of the Budget of 2006 Region by Region

Completion of 2005 Reports

The reception of all new equipments

Completion of the design for Sevan and Dilijan

In general, our activities are still on the good level: time schedule of supply, quality of water, billing and collection.

QUARTERLY REPORT October-December 2005

2. OPERATIONS

QUARTERLY REPORT October-December 2005

2.1 COMMERCIAL

QUARTERLY REPORT October-December 2005

1. QUARTERLY ACTIVITIES

ORGANIZATION

Organizational Structure

The structure of the Commercial Department is implemented. Only the positions of Divisional Manager for Billing at the head office, and Sectional Managers Revenue Collection and Billing in the Regional Branches are not yet filled,

Procedures Manual Due to lack of time, the Commercial Procedures Manual was not finalized as planned. The final draft should be ready during next quarter

Contractual agreements with Banks and Post Offices From middle of July, a new agreement came into force with Ardshininvest Bank, in order to allow customers to pay to their offices.

The new contract with HayPost was negotiated and finalized (reducing the fee for collection, and installing penalties for late transfer of cash collected. As at now, three possibilities are available for the customers to pay their invoices.

IT EQUIPMENT AND SOFTWARE

Software Upgrade The USAID Contract is due to expire on 31st January, 2006. No agreement was reached between USAID/Urban Institute and AVC Balance.

Internet access and Web site Internet accesses will be granted through head office and branches network ONLY after installation of a proper security software, which is planned for 2006.

Discussions are been held with various companies to design a web site for Armenian Water and Sewerage Company. First drafts pages are expected to be presented to Management in January 2006. The objective is to have our site finalized by the end of February, 2006.

MANAGEMENT CHART As part of the Commercial Department action plan for 2005, a management chart is to be prepared and distributed on a regular basis. The national version of the Management Chart as at the end of September is attached in annex. It is also available on sector’s basis and distributed to all branches.

QUARTERLY REPORT October-December 2005

The Management Chart is made of several chapters:

Revenue Collection Information on revenue collected is produced on weekly basis, based on data given by Finance Department. After closing of data bases, monthly figures together with analysis on the type of payments (cash or banks or HayPost), are also produced after checking of coherence with weekly data.

Revenue / Sales Ratio Based on weekly figures stated above, and as compared with estimated sales data from previous months, a weekly Revenue/Sales ratio is also shown. In addition an analysis of Revenue/Sales ratio by calculation method is also produced

Debtors Analysis As at the end of every month, customer’s debt is analyzed and distributed by different categories. We are actually in course of codifying new groups of customers like municipalities, electricity company, Haypost, Marz buildings, and others in order to better follow-up the evolution of the customer’s debt.

In addition, tests are actually carried out on a program allowing us to follow-up the evolution of the customer’s debt taking in account the separation made on 1st December 2004, at the starting date of the Management Contract

Debtors / Sales Ratio Another way of analyzing the performance of the company in terms of management of customer’s account is to follow-up the debtors / sales ratio. The ratio is making in number of days, representing the weight of the customer’s debt as compared to the annual turnover of the company.

Sales Analysis Reports on Sales Analysis are now provided to the regions and the sectors. Follow-up charts on customers number (receiving service or not), invoiced volumes and average invoiced consumption, and invoiced amount and average end-user tariff

System Losses Information on system losses will be prepared during next quarter

Use and Analysis of the Commercial Management Chart Meetings were held in the different regions to introduce the Management Chart to all Sectors Managers and Regional Commercial Managers. From next quarter, all sectors will be visited in order to help the sectors managers to analyze data provided and take the necessary corrective actions.

QUARTERLY REPORT October-December 2005

SPECIFIC ACTIONS

Inspections As part of the monitoring of Commercial activities, as well as on the request of branch managers, customer surveys were conducted in various sectors during the quarter. The following sectors were visited:

 In the South Region: Sisian  In the Center-West Region: Artashat  In the North-West Region: Abovian, Charentsavan, Hrazdan, Tsaghkadzor  In the North-East Region: Sevan, Ijevan, Dilijan, Gavar, Martuni, Stepanavan, Tashir

The comments are the same that last quarter: the main issue raised by these inspections is a lack of commitment of controllers: actual readings are often not coherent with the data base readings, illegal connections not reported, sealing absent or wrongly made. Action plan is to be drawn in order to correct these situations.

The main objective of the surveys conducted in the North East Region was to ascertain the brutal decrease of Armentel consumption in November.

End of Year targets Mid-term review meetings were held during the quarter in order to assess the achievements of the different sectors and to plan corrective actions to be carried out till the end of the year. The final results will be analyzed once the billing period of December will be closed, at the beginning of January, 2006. New targets will then be fixed for the year 2006.

Seminar on commercial activities A two days seminar on commercial activities was held in Paris by the end of October. AWSC project and commercial data were presented to other companies managed by SAUR in France and abroad.

2. NEXT QUARTER FORECAST PLANNING

 Finalizing Commercial Policies and Procedures manual  Training on Commercial Policies and Procedures  Review of 2005 commercial data  Preparing next year performance objective and contract on commercial activities for branches and sectors  Review of necessary improvements to be added to existing billing software

Please, see attached ANNEX A

QUARTERLY REPORT January-March 2005

BILLING AND COLLECTION TABLE-1

1000 AMD 2003 2004 2005 The% of Including Including The% of expenses expenses done done in # Month Total Total Total in branches in branches in Collection Collection Transferred Used in Collection Transferred Used in compliance compliance to AWSC branches to AWSC branches with collection with collection 1 January 70 99 48 51 52% 85 60 25 29% 2 February 66 97 55 42 43% 115 93 22 19% 3 March 100 146 86 60 41% 121 120 1 1% 4 April 134 130 68 62 48% 129 128 1 1% 5 May 109 128 60 68 53% 134 132 2 2% 6 June 201 172 95 77 45% 169 168 1 1% 7 July 123 154 93 60 39% 169 168 1 0% 8 August 128 150 87 62 41% 184 182 2 1% 9 September 199 141 59 82 58% 185 182 3 2% 10 October 148 126 31 95 75% 178 173 6 3% 11 November 138 116 36 80 69% 184 182 2 1% 12 December 177 141 89 52 37% 179 177 2 1% Total 1 593 1 600 807 791 49% 1 834 1 765 69 4%

Notes* The data of “Vanadzor”,”Shirak”, “Armavir” and “Yeghvard” Branches are not included in this table 11

QUARTERLY REPORT January-March 2005

COLLECTION OF AWS CJSC FOR OCTOBER-DECEMBER 2005 TABLE -2

1000 AMD

# SECTORS Total Billing Total Collection %

1 2 3 4 5 1 Abovyan 69 278 41 655 60,1% 2 Charentsavan 37 097 19 558 52,7% 3 Hrazdan 101 909 25 038 24,6% 4 Ashtarak 39 485 20 659 52,3% 5 Artik 61 229 26 271 42,9% TOTAL NORTH-WEST REGION 308 998 133 181 43.1%

6 Sevan 15 435 12 201 79,0% 7 Dilijan 12 699 9 351 73,6% 8 Ijevan 28 556 20 094 70,4% 9 Gavar 86 805 28 512 32,8% 10 Alaverdi 39 567 15 158 38,3% 11 Spitak 33 717 24 577 72,9% TOTAL NORTH-EAST REGION 216 779 109 893 50.7% 12 Masis 102 496 38 383 37,4% 13 Artashat 60 665 29 823 49,2% 14 Vedi 63 045 34 515 54,7% 15 Echmiadzin 103 082 53 841 52,2% TOTAL CENTER-WEST REGION 329 288 156 562 47.5% 16 Eghegnadzor 17 082 14 907 87,3% 17 Sisyan 35 749 26 134 73,1% 18 Goris 57 710 19 398 33,6% 19 Kapan 112 280 81 467 72,6% TOTAL SOUTH REGION 222 821 141 906 63.7%

TOTAL 1 077 886 541 541 50.2%

QUARTERLY REPORT January-March 2005

DIAGRAM-1

Collection of AWSC for October, November and December 2005

100,0%

90,0%

80,0%

70,0%

60,0%

50,0% % of Collection

40,0% % of collection in October 2005 30,0% % of collection in 20,0% November 2005

% of collection in 10,0% December 2005

0,0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

QUARTERLY REPORT January-March 2005

DIAGRAM 2

COLLECTION AWSC FOR IV QUARTER 2005

70,0%

60,0% 64% 50% 48% 50,0% 43% 51%

40,0%

30,0%

20,0%

10,0%

0,0% North West Region North East Region Center Region South Region Total

QUARTERLY REPORT October-December 2005

COLLECTION FROM ALL THE BRANCHES OF AWSC, IN JANUARY-DECEMBER 2005 - TABLE 3

1000 AMD I quarter II quarter III quarter IV quarter Total Year % of the spent amount in the branches in # Branches Total Transfered Total Transfered Total Transfered Total Transfered Total Transfered Used in comparsion collection to AWSC collection to AWSC collection to AWSC collection to AWSC collection to AWSC Branches with the total collection (13/11*100) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 1 Abovyan 25 666 23 328 36 052 36 078 44 678 42 097 41 655 42 092 148 052 143 596 4 456 3% 2 Charentsavan 9 513 8 880 15 404 15 239 18 536 18 386 19 558 19 072 63 011 61 576 1 435 2% 3 Hrazdan 16 273 14 897 20 937 21 142 28 079 28 061 25 038 24 971 90 326 89 071 1 255 1% 4 Ashtarak 12 946 9 202 16 243 16 154 18 873 18 757 20 659 20 221 68 722 64 334 4 387 6% 5 Artik 17 300 13 350 23 577 22 545 27 562 26 284 26 271 24 755 94 710 86 934 7 776 8% Total 81 698 69 658 112 213 111 159 137 728 133 584 133 181 131 111 464 821 445 512 19 309 4% North-West Region 6 Sevan 5 364 4 856 8 219 8 112 13 202 13 052 12 201 12 076 38 986 38 095 891 2% 7 Dilijan 3 919 2 831 6 858 6 706 10 279 10 094 9 351 9 007 30 407 28 638 1 768 6% 8 Ijevan 11 713 9 570 16 131 15 245 18 928 18 884 20 094 20 028 66 866 63 727 3 139 5% 9 Gavar 17 502 13 959 22 229 22 269 23 476 23 424 28 512 27 236 91 720 86 887 4 832 5% 10 Alaverdi 11 015 9 357 13 444 12 854 16 446 16 794 15 158 14 603 56 064 53 608 2 456 4% 11 Spitak 14 374 12 186 19 762 19 283 24 504 23 970 24 577 24 114 83 216 79 553 3 663 4%

QUARTERLY REPORT October-December 2005

I quarter II quarter III quarter IV quarter Total Year % of the spent amount in the branches in # Branches Total Transfered Total Transfered Total Transfered Total Transfered Total Transfered Used in comparsion collection to AWSC collection to AWSC collection to AWSC collection to AWSC collection to AWSC Branches with the total collection (13/11*100) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Total 63 887 52 759 86 643 84 468 106 836 106 217 109 893 107 064 367 258 350 508 16 750 5% North-East Region 12 Artashat 23 061 20 013 32 112 31 937 38 991 38 726 38 383 38 084 132 547 128 759 3 788 3% 13 Masis 16 824 14 195 24 259 24 238 26 960 27 023 29 823 29 559 97 867 95 015 2 852 3% 14 Vedi 23 006 19 895 25 317 25 236 32 856 32 802 34 515 34 374 115 693 112 307 3 386 3% 15 Echmiadzin 25 150 21 845 39 362 39 417 51 263 49 652 53 841 52 637 169 615 163 550 6 065 4% Total Center Region 88 041 75 948 121 050 120 827 150 069 148 203 156 562 154 654 515 722 499 632 16 091 3%

16 Sisyan 10 819 9 383 12 566 13 200 14 428 15 492 14 907 15 736 52 720 53 811 -1 090 -2% 17 Eghegnadzor 13 955 10 860 20 709 20 520 26 967 25 840 26 134 24 966 87 765 82 185 5 579 6% 18 Goris 10 389 8 769 14 147 13 995 18 264 17 819 19 398 18 990 62 199 59 572 2 626 4% 19 Kapan 52 717 46 435 64 655 63 980 84 284 83 803 81 467 79 323 283 123 273 541 9 582 3% Total South Region 87 880 75 446 112 078 111 695 143 943 142 953 141 906 139 015 485 806 469 109 16 697 3%

TOTAL 321 506 273 812 431 984 428 148 538 576 530 957 541 541 531 844 1833 608 1764 761 68 847 4%

QUARTERLY REPORT October-December 2005

COLLECTION FROM ALL BRANCHES OF AWSC - TABLE 4

Including %

From the Total Total Against of Time of debts of # Billing Collection monthly nthly

Collection previous (5/3*100)

months months

payable

expends expends

(5/4*100) (6/4*100) (7/4*100)

expends profit against Against of of Against

months of previous

Increase of

From the debts debts From the

bills payablebills

Increase of bills of bills Increase % collection Month

AMD*10 3 AMD*10 3 AMD*10 3 AMD*10 3 AMD*10 3 % % % % 1 2 3 4 5 6 7 8 9 10 11 2004 1 January 152 837 93 450 37 323 33 522 22 604 40% 36% 24% 24% 2 February 161 757 98 204 39 968 42 099 16 137 41% 43% 16% 25% 3 March 143 241 149 523 42 977 84 786 21 760 29% 57% 15% 30% 4 April 154 493 120 409 43 934 51 666 24 810 36% 43% 21% 28% 5 May 186 826 132 225 60 535 48 679 23 011 46% 37% 17% 32% 6 June 183 997 172 343 65 552 95 707 11 084 38% 56% 6% 36% 7 July 182 461 153 738 66 371 56 789 30 578 43% 37% 20% 36% 8 August 423 879 146 026 71 346 40 970 33 710 49% 28% 23% 17% 9 September 407 366 139 244 74 975 36 731 27 539 54% 26% 20% 18% 10 October 374 542 129 933 73 554 42 453 13 926 57% 33% 11% 20% 11 November 369 783 117 030 67 498 33 903 15 630 58% 29% 13% 18% 12 December 343 415 147 512 69 488 44 821 33 202 47% 30% 23% 20% Total 2004 3 084 598 1 599 639 713 522 612 124 273 992 45% 38% 17% 23%

2005 1 January 347 340 84 803 48 354 24 435 12 014 57% 29% 14% 14% 2 February 338 985 115 341 67 466 33 040 14 835 58% 29% 13% 20% 3 March 317 806 121 136 71 311 30 933 18 892 59% 26% 16% 22% 4 April 373 603 129 418 76 348 31 987 21 083 59% 25% 16% 20% 5 May 385 477 134 084 78 636 34 396 21 051 59% 26% 16% 20% 6 June 472 651 168 828 103 601 45 483 19 745 61% 27% 12% 22% 7 July 465 703 168 817 102 165 42 459 24 193 61% 25% 14% 22% 8 August 443 815 184 271 110 665 49 346 24 260 60% 27% 13% 25% 9 September 393 316 185 351 112 651 46 980 25 720 61% 25% 14% 29% 10 October 340 659 178 333 101 747 55 254 21 332 57% 31% 12% 30% 11 November 376 831 184 543 113 197 46 944 24 403 61% 25% 13% 30% 12 December 360 396 178 665 106 410 51 219 21 035 60% 29% 12% 30%

TOTAL 2005 4 623 680 1 833 608 1 092 550 492 476 248 582 60% 27% 14% 24%

QUARTERLY REPORT October-December 2005

QUANTITY OF INSTALLED WATER METERS BY AWS CJSC on date 01.01. 2006 - TABLE 5

Units Including TOTAL Total count of # SECTORS installed in Water meters Residential Juridical customers persons IV Quarter

1 2 3 4 5 6 1 Abovyan 18 550 18 137 413 372 2 Charentsavan 7 455 7 227 228 250 3 Hrazdan 7 335 6 963 372 725 4 Ashtarak 6 538 6 327 211 200 5 Artik 4 640 4 404 236 190 Total North-West Region 44 518 43 058 1 460 1 737 6 Sevan 5 927 5 703 224 133 7 Dilijan 2 383 2 305 78 135 8 Ijevan 5 591 5 392 199 185 9 Gavar 5 154 4 901 253 142 10 Alaverdi 7 551 7 404 147 311 11 Spitak 8 724 8 446 278 375 Total North-East Region 35 330 34 151 1 179 1 281

12 Artashat 9 064 8 812 252 639 13 Masis 5 779 5 484 295 416 14 Vedi 7 759 7 590 169 657 15 Echmiadzin 13 910 13 554 356 363

Total Center-Region 36 512 35 440 1 072 2 075

16 Sisyan 4 551 4 344 207 90 17 Eghegnadzor 5 197 4 854 343 403 18 Goris 4 199 4 072 127 559 19 Kapan 10 990 10 544 446 2 154

Total South Region 24 937 23 814 1 123 3 206

Total 141 297 136 463 4 834 8 299

QUARTERLY REPORT October-December 2005

2.2 WORKS

QUARTERLY REPORT October-December 2005

W O R K S

SEWERAGE

SPITAK

Polyclinic new connection

The sewerage liquids are overflowing in Polyclinic's yard since long year. During several years the sewerage system close to the polyclinic sector is blocked. The depth of the pipes there is important ( 4 to 6,5 m ).The maintenance of this area has never been done and all recent attempts to use unblocking equipments never give permanent effect and it was not possible to solve definitively the problem. That's why A.W.S.C used it's own means to install a new connection for the Polyclinic. A total of 183m of DN 200 asbestos-cement pipes have been installed and three manholes build in view to by-pass the very bad portion where we have these heavy blockage since many years. Probably big stones are one of the causes of such hard blockages, all manholes in this area are without cover. The new building method with "novelettes" has been used successfully for this job, giving a good regular slope to the profile from downstream to upstream. To complete the project it was also necessary to rebuilt 12 bottoms of manhole DN 300 from the connection point to the last point downstream DN 800. It was observed in many places that the technical shape and state of the bottoms of manhole are very-very bad. A lot of blockages are due to the stoppage of materials inside the bottoms of manhole. The bottoms of manhole are generally anti-hydraulic.

The total spend for this job was 860 000 AMD only, due to the fact that the pipes were free of charges and all done by A.W.S.C works teams.

SEVAN

Collapse of existing ceramic DN 200 pipe.

A serious blockage has been provoked with the progressive collapse of a DN 200 ceramic pipe in many points on an unknown distance. All surveys done showed that the local repair in such conditions at a depth of 2,5 m would not be technically acceptable ,more expensive and without giving a secure solution for later in the downstream portions not yet touched by this problem. A new route could be find between the blockage area and an existing pipe working normally. A.W.S.C was opening a new line DN 300 on 106 m to reconnect the blockage area to another lower pipe. Three manholes were build on this distance.

The total spend for this job was 1 067 200 AMD.

QUARTERLY REPORT October-December 2005

WATER

STEPANAVAN

Old leaking steel pipe.

Replacement of 180 m of leaking pipe, not reparable by a new PE DN 63. The total spend for this job is 364 000 AMD.

GAGARIN

Sanitary problem between sewerage pipe and old steel pipe.

Replacement of 300m of old steel pipe by a new DN 160 PE pipe laid according to the new specifications. This pipe will be connected in Spring when we will get better weather conditions. The new pipe has be laid at the opposite side of the sewerage.

The total amount spend for this job is 1 780 000 AMD.

ODZUN

By-pass of the village on Lori-Berd gravity pipe DN 500.

This by-pass is the first step of a global new regime applied to Lori-Berd pipe ( 300 l / s ). The Alaverdi sector used to receive water 30 minutes / day until November 2005.Since installation of this by-pass the average passed over 4 h / day, and this before the second step of regime regulation. After second step the delivery of water in Alaverdi sector should pass over 20h / day. Four gate valves DN 500 have been installed in view to give a large flexibility and full control for the new use of the system.80m of DN 500 installed, the rest was existing. The quantity of water saved in first step from Odzun village is 100 l / s and should be increased in second step until 150 l / s.

The total amount spend for this job was 1 400 000 AMD.

QUARTERLY REPORT October-December 2005

IJEVAN - ANAPAT

Temporary reconnection of Anapat DN 200 pipe.

Since four years the Anapat spring is not giving water due to the breackage of the DN 200 in an difficult access area. The emergency team from Sevan Region managed to repair this pipe before winter in temporary conditions.The result was immediate and 20 l / s were given in additional quantity to the town using an additional reservoir. The permanent repair has to be done in Spring 2006 as soon as the access will be possible again.

The total amount for this temporary reconnection was 400 000 AMD.

TALIN

Replacement of leaking pipe.

Due to the critical state of a permanently leaking steel pipe, a portion of 200m of PE DN 63 was laid according to the new specifications for PE systems.

The total amount spend for this job was 440 000 AMD.

AGARAK

Replacement of existing corroded pipe.

Some buildings were too often in shortage of water and sanitary quality of water not stable due to the very bad state of the tertiary system .A part of this tertiary system has been replaced on 560m by PE DN 75. All existing connections have been renewed.

The total amount spend for this job was 5 355 857 AMD among which 4 435 000 AMD in installation costs due to the hard excavation difficulties in rocky soils.

SEVAN

Replacement of a tertiary system for buildings.

A group of five buildings was in water shortage due to sanitary conditions and corrosion. A new tertiary system has been installed on 200m in PE DN 90 with new connections to the buildings. This done according to the new standard specifications respecting parameters for depth and mechanical protection of the pipe.

The total amount spend for this job was 1 305 720 AMD.

QUARTERLY REPORT October-December 2005

HAND OVER PROCESS under USAID PROGRAM

BULK FLOW METERS INSTALLATION:

USAID Program under PIU control

 Installation still ongoing in Lori marz, it stopped at the end of 2005 because of weather conditions.

 A random checking has shown that many flow meters are stopped and need to be dismounted for checking.

 The repairs of the non-conformity with the design has not been completed until today in many locations.

USAID Program for filters under AWSC control

 Installation almost completed in Ararat marz, still ongoing in other marzes, but stopped at the end of 2005 because of weather conditions.

 60 chambers have to be extended, but this will be done after the winter.

DN 80mm filters on DN 80 flow-meters DN 50mm filters on DN 50 flow-meters

QUARTERLY REPORT October-December 2005

GIJH SAR: DN 160mm PE for new captage GIJH SAR: DN 200mm for special crossing in a new captage

GAGARIN: New DN 160 mm PE GAGARIN: New DN 160 mm PE

DN 160mm PE spigot + flange for Night excavation with a new excavator “BELARUS”. connection with DN 150mm steel pipe

QUARTERLY REPORT October-December 2005

2.3 TECHNICAL

QUARTERLY REPORT October-December 2005

TECHNICAL STUDIES

The technical studies for the period of Quarter IV, 2005 were as follows:

 The defect acts and assessments of realization of the capital repair works on water supply & sewerage systems in the settlement of RA in 2006 have been worked out.

 Survey of the works process, carried out by “Berd” WTP capital repair project.

 Survey of the works process carried out in Arshaluys, Haytagh, Tsaghkalanj and Aragats communities of Echmiadzin sector by “Water Sector Development & Institutional Improvements of SI” PIU Project.

 Preparation of applications and working out of projects at the expense of state budget for 2006- 2008.

 Investigation for realizing the gravity water supply to Aparan city from “Yeznak” sources.

 Preparation of proposals and discussion of procedures directed to the water supply improvement of RA rural settlements presented by Marzpetarans.

 Implementation of inventory of water supply & sewerage systems of Center-West regional branch (Echmiadzin sector) and North -West regional branch (Ashtarak, Hrazdan sectors and Aparan, Tsaghkadzor subsectors).

 “Rehabilitation of water supply system in Sevan city” worked out by “Komunnakhagits” CJSC and “Rehabilitation of water supply & sewerage systems in Dilijan” projects worked out by “Jinj” Ltd for presentation of proposals for final version of tender package.

 Elaboration the technical conditions of water supply & sewerage for the Building of RA Defense Ministry at Nalbandian street 18 in Ijevan city.

 Arranging discussions and surveys with the community leaders with objectives to implement the services of settlements using “Irind-Arteni” water supply system of Talin sector (Aragatsotn marz of the RA), by AWSC.

 Project design estimate documents study and presentation of proposals for water supply and overflow water distribution to the villages of Tsaghkahovit area from “Vlei-Khach” sources.

 Jointly with organization “Armenian women for health and healthy environment” has worked out the necessary draft estimate documents for improvement of Hayanist village water supply (Ararat marz of the RA).

QUARTERLY REPORT October-December 2005

 Surveying of Aragats mountain base sources for water supply improvement of Artik city sector villages, as well, as other area included in Company.

 Study of “Geghadzor” sources for Shenkani community water supply improvement.

 Carrying out of ongoing tasks & letters.

EVALUATION OF ASSETS

1. Material was drawn up based on the information got from the North-East regional branch and on October 12, 2005 was given to the procurator of Gegharkunik marz for illegally remove and pass away of 1200 l.m 500mm diameter collector pipes surrounding of “Kaputak Sevan”. 2. Corresponding letters were written for clarification the problem of possession the WS administrative building to Gavar sector of AWSC North-West regional branch.

3. Study of materials and making of references regarding the sanitary non alienated zones of main water pipe & water pipe lines belonging to the Ashtarak sector of North-West region of AWSC, which pass through the area of Carbi village community in Aragatsotn marz.

4. Preparation, realization and forming the documents of auction works, organized with the purpose to alienate some of AWSC assets.

5. Coordination of assessment work by independent expert on auction in case of alienated of assets.

6. Carrying out the works of defining specified lists of AWSC alienation of assets.

QUARTERLY REPORT October-December 2005

MAPPING WORKS

The mapping works for the period of Quarter IV, 2005 were as follows:

 During the reporting period the Mapping Program had been worked out, where the mapping of Company’s technical systems and creation of its data base methodological principles were presented. As it foreseen in the project, as a pilot are selected the water supply & sewerage systems of settlement served by Ashtarak sector of North-West regional branch, for which was prepared the special technical task. The works are being carried out.

 Different type of mapping works are done for Haghtanak, Verin-Kyoprlu, Alaverdi, Jermuk, Tashir, Stepanavan, Ushi, Bjni, Dzoraghbyur, Lchashen, Shenkani, Ayrum, Ijevan, Mets Mantash, Ptghavan, Koghb, Deghdzavan, Berdavan, Koghb-2 settlements.

 Works have been done and currently are in process of creation of the main data base and mapping works on water supply & sewerage systems of settlements, included in the Company’s coverage area.

 In the result of field surveying for improvement of the water supply of Shirak and Aragatsotn marzes of the RA mapping works have been done.

QUARTERLY REPORT October-December 2005

WATER QUALITY CONTROL

1. Potable Water Disinfection

About 22.2 tones of chlorine gas and 1.2 tones chlorine powder (Tab. 6, Diagr. 3 ) was supplied to company’s branches for the disinfection of fresh water during Quarter IV. The consumption of disinfectants made 21.8 tones of chlorine gas and 2.1 tones of chlorine powder, which makes 92.1% of the demand.

In October-November in the Company’s branches the disinfection of potable water and the effective consumption and recording process of disinfection was supervised. In checked 50 chlorination stations for liquidation of reported defects, an appropriate comments and tasks have been done.

DEMAND OF DISINFECTANT RECORDS IN IV QUARTER, 2005 - TABLE 6

Remainder at Remainder Demand * in Received in Utilized in the beginning of at the end of Reporting Quarter Reporting Quarter Reporting Quarter Reporting Quarter Reporting Quarter (kg) (kg) (kg) # SECTORS (kg) (kg) Chlorine Chlorine Chlorine Chlorine Chlorine Chlorine Chlorine Chlorine Chlorine Chlorine gas powder gas powder gas powder gas powder gas powder NORTH-WEST 2 300 - 418 12 2 750 - 2 442 12 726 - 1 Abovyan 2 2 100 - 421 - 1 100 - 1 221 - 300 - Hrazdan 560 - 510 116 300 - 567 54 243 62 3 Charentsavan 800 330 520 212 1 000 - 1 050 176 470 36 4 Ashtarak 1 200 420 757 274 900 - 980 48 677 226 5 Artik TOTAL 6 960 750 2 626 614 6 050 - 6 260 290 2 416 324 NORTH-EAST - 50 - 60 - - - 60 - - 1 Sevan 1 500 160 339 - 2 250 - 1 501 - 1 088 - 2 Gavar 140 510 - 528 400 520 120 968 280 80 3 Ijevan 500 100 40 65 500 - 465 65 75 - 4 Dilijan 920 290 850 - 850 200 1 182 74 518 126 5 Alaverdi 320 590 - 298 450 480 300 498 150 280 6 Spitak TOTAL 3 380 1 700 1 229 951 4 450 1 200 3 568 1 665 2 111 486

QUARTERLY REPORT October-December 2005

2 Echmiadzin 2 300 - 250 - 1 650 - 1 650 - 250 -

3 Masis 2 700 - 758 182 2 650 - 2 723 - 685 182

4 Vedi 310 - 50 60 200 - 140 60 110 - TOTAL 7 710 - 1 458 354 7 100 - 6 863 60 1 695 294 SOUTH 185 - 18 7 200 - 218 7 - - 1 Goris 550 - 50 136 550 - 495 - 105 136 2 Eghegnadzor 4 150 150 1 762 121 3 350 - 3 975 94 1 137 27 3 Sisyan 430 - - 295 450 - 400 18 50 277 4 Kapan TOTAL 5 315 150 1 830 559 4 550 - 5 088 119 1 292 440

MAIN TOTAL 23 365 2 600 7 143 2 478 22 150 1 200 21 779 2 134 7 514 1 544

Remark * The calculation of demand was done without used water expenditures for the water over chlorination and disinfection of structures

DIAGRAM- 3

EXPENSES OF CHLORINE GAS BY REGIONS 2004-2005 3000 North-West 2500

2000 North-East

KG 1500 Center-West 1000

500 South 0 XI XII I II III IV V VI VII VIII IX X XI XII MONTH

QUARTERLY REPORT October-December 2005

2. Water Quality Control

Water quality control laboratories of the company have examined about 4.7 thous. samples during the IV Quarter. (Please see Tables 7, Diagr. 4,5). According to microbiological indicators, the deviations made 7.0 %, caused by water pipe breakages and insufficient water disinfection. Microbiological investigation of water quality control was done in Stepanavan, Martuni, Dilijan. By centralized order the chemical reagents & biological habitat were provided, as well as laboratory glasses. In October-November in 10 laboratories of Company’s branches the analyze performing process was controlled, as well as the availability and recording order of investigations and recorded substances (chlorine gas, chlorine powder, laboratory reagents).

DIAGRAM- 4

DEVIATION OF WATER QUALITY BY REGIONS 2004-2005 30 North-West 25

20 North-East

15 % Center-West 10

5 South 0 XI XII I II III IV V VI VII VIII IX X XI XII

MO NTH

DIAGRAM- 5

Compairing the used Disinfectant with Deviation of Water Quality 2004-2005

10000 12 8000 10 8 6000

6 % KG 4000 4 2000 2 0 0 XI XII I II III IV V VI VII VIII IX X XI XII Chlorine gaz MO NTH Deviation

QUARTERLY REPORT October-December 2005

POTABLE WATER INVESTIGATION IN IV QUARTER, 2005 – TABLE 7

ANALYZES QUANTITY OF REMAINDER CHLORINE ANALYZES QUANTITY OF MICROBIOLOGICAL INVESTIGATIONS Before distribution SECTORS In distribution network In distribution network # network Demand town village town village NAME does not MAIN does not does not total corresp. total failed total failed town village SITES total corresp. total corresp. to norms to norms to norms NORTH-WEST 1 Abovyan 260 17 - - - - 183 42 12 208 1 42 31 2 Hrazdan 132 0 79 0 14 0 312 18 8 313 10 32 2 3 Charentsavan ------183 48 - - - - - 4 Ashtarak - - 163 15 - - 243 78 7 276 24 29 16 5 Artik 352 5 285 4 45 4 246 198 440 101 0 26 0 Total 744 22 527 19 59 4 1 167 384 467 898 35 129 49 NORTH-EAST 1 Sevan 60 7 58 13 - - 186 60 16 196 23 18 0 2 Gavar 1 453 0 403 0 12 0 405 66 83 316 8 45 2 3 Ijevan * 867 28 267 16 37 9 147 26 - - - - - 4 Dilijan 149 0 131 0 - - 90 - 8 12 0 - - 5 Alaverdi 120 0 133 0 16 0 108 132 31 82 7 7 0 6 Spitak 107 56 161 68 - - 156 72 35 45 7 - - Total 2 756 91 1153 97 65 9 1 092 336 173 651 45 70 2

32 QUARTERLY REPORT October-December 2005

ANALYZES QUANTITY OF REMAINDER CHLORINE ANALYZES QUANTITY OF MICROBIOLOGICAL INVESTIGATIONS Before distribution SECTORS In distribution network In distribution network # network Demand town village town village NAME does not MAIN does not does not total corresp. total failed total failed town village SITES total corresp. total corresp. to norms to norms to norms CENTER-WEST 1 Artashat 15 1 288 22 38 0 936 300 13 283 43 202 28 2 Echmiadzin 562 26 315 78 416 52 528 222 42 315 27 416 10 3 Masis 46 0 117 0 33 0 45 84 - - - - - 4 Vedi ------36 75 - - - - - Total 623 26 720 100 487 52 1545 681 55 598 70 618 38 SOUTH 1 Sisyan 352 0 322 0 30 0 45 12 - 43 0 9 0 2 Goris 316 12 205 23 6 0 270 36 - 266 5 6 0 3 Kapan 241 0 2 090 125 18 1 1 029 6 - 57 25 29 5 4 Eghegnadzor 238 12 70 0 46 6 105 18 4 60 2 16 3 Total 1 147 24 2 687 137 100 7 1 449 72 4 946 32 60 8

MAIN TOTAL 5 270 163 5 087 353 711 72 5 253 1 473 699 3 093 182 877 97

REMARK The requirements calculation was done without quantity of used water expenditures in process of breakdowns liquidation.

QUARTERLY REPORT October-December 2005

3.Environmental reports

The calculations and reports on environmental fees and fees for utilization of resources submitted by the branches of the company in IV Quarter 2005, were summarized and registered in Nature Protection Inspection of RA Ministry of Nature Protection for the fees of the calculated funds of the accounting quarter to the budget.

The volumes of harmful substances discharge to the pool are as follows: BOD (Biological Oxygen Demand) volume made 183.6 tones, related substances – 159.7 tones, fuel – 0.38 tones, ammonium – 4.18 tones, sulfate 107.4 tones, chloride – 148.0 tones, zinc -0.05 tones, copper - 0.02 tones (see Tab. 8,9).

The allowed outflow limit has exceeded the BOD indicator by 21.0 %.

The calculated environmental fees made about 4.6 mln AMD, the fees for utilization of resources made 8.7 mln AMD (about 0.85 mln AMD formed by “3” ratio).

Because of N 1652-N Decree of RA Government, dated October 6, 2005 on “Defining measures of actual volumes considered subject to environmental protection and utilization” came into force, the calculated environmental protection fees for IV quarter exceed the fees for the previous quarter by 1.6, and environmental utilization fees - by 2.3 times.

34 QUARTERLY REPORT October-December 2005

ENVIRONMENTAL UTILIZATION & PROTECTION FEES BY THE REGIONS AND SECTORS TABLE-8

REGISTERED REGISTERED ENVIRONMENTAL UTILIZATION FEES ENVIRONMENTAL PROTECTION FEES REGIONS, (thous AMD) (thous AMD SECTORS WITH RATIO WITH RATIO SURFACE WATER GRAVITY WATER TOTAL TOTAL “1” “3” NORTH-WEST Abovyan - 325.8 325.8 - - - Hrazdan 11.8 433.8 445.6 1 356.3 - 1 356.3 Charentsavan - 286.7 286.7 - - - Ashtarak - 227.9 227.9 317.8 - 317.8 Artik - 108.2 108.2 303.9 237.4 541.3 TOTAL 11.8 1 382.4 1 394.2 1 978.0 237.4 2 215.4 NORTH-EAST Sevan - 178.8 178.8 202.2 - 202.2 Gavar - 532.7 532.7 736.0 - 736.0 Ijevan 14.5 66.0 80.5 350.2 - 350.2 Dilijan 38.5 - 38.5 156.2 - 156.2 Alaverdi - 289.9 289.9 396.8 - 396.8 Spitak - 291.7 291.7 442.3 - 442.3 TOTAL 53.0 1 359.1 1 412.1 2 283.7 - 2 283.7 CENTER-WEST Artashat - 347.0 347.0 282.1 278.2 560.3 Echmiadzin - 372.7 372.7 633.4 77.8 711.2 Masis - 192.3 192.3 394.3 - 394.3 Vedi - 205.4 205.4 350.8 83.5 434.3 TOTAL - 1 117.4 1 117.4 1 660.6 439.5 2 100.1 SOUTH Sisyan - 168.7 168.7 264.6 - 264.6 Giris - 102.7 102.7 250.8 70.1 320.9 Kapan 135.1 120.1 255.2 1 080.2 83.1 1 163.3 Eghegnadzor - 146.7 146.7 291.8 19.3 311.1 TOTAL 135.1 538.2 673.3 1 887.4 172.5 2 059.9

MAIN TOTAL 199.9 4 397.1 4 597.0 7 809.7 849.4 8 659.1

QUARTERLY REPORT October-December 2005

CONTAMINANTS VOLUME THREW TO WATER BASIN TABLE-9

CONTAMINANTS VOLUME AND PERMITTED DISCHARGE LIMIT Tone/Quarter PRODUCTED PLACE BOD5 related substances fuel ammonium sulfate chloride zinc copper

in fact PMO in fact PMO in fact PMO in fact PMO in fact PMO in fact PMO in fact PMO in fact PMO Hrazdan 18.9 36.3 9.2 73.1 0.04 0.50 0.70 101.5 15.6 128 20.1 128 0.0040 0.0240 0.0020 0.0030 Tsakhkadzor 2.3 3.8 1.1 7.6 0.01 0.05 0.09 10.5 2.0 13.3 2.5 13.3 0.0005 0.0025 0.0002 0.0002 Aparan 1.6 3.5 1.3 4.9 0.00 0.02 0.02 4.7 0.7 6.4 0.8 6.4 0.0001 0.0010 0.0001 0.0008 Talin 2.2 2.4 2.1 3.6 0.00 0.01 0.03 3.3 1.1 5.2 1.4 5.2 0.0002 0.0005 0.0001 0.0005 Artik 9.3 5.0 10.0 10.0 0.12 0.28 0.30 0.8 4.5 9.9 7.3 16.2 0.0006 0.0040 0.0001 0.0003 Ashotsk 0.4 1.0 0.4 1.6 0.00 0.00 0.01 0.0 0.4 1.4 0.4 2.0 0.0001 0.0003 0.0000 0.0000 Sevan 3.3 5.3 1.6 13.6 0.00 0.09 .0.01 19.0 2.8 24.0 3.5 24.0 0.0007 0.0050 0.0004 0.0005 Gavar 4.5 10.8 4.6 21.8 0.00 0.04 0.07 18.1 2.0 28.0 2.7 28.0 0.0008 0.0050 0.0003 0.0005 Martuni 2.7 7.0 1.2 14.1 0.00 0.02 0.05 8.9 2.0 13.5 2.5 13.5 0.0006 0.0070 0.0005 0.0008 Vardenis 3.9 5.8 3.2 11.7 0.00 0.02 0.09 7.4 2.1 11.2 2.8 11.2 0.0003 0.0040 0.0003 0.0005 Tchambarak 0.5 1.9 0.4 3.0 0.00 0.01 0.01 2.7 0.4 4.3 0.4 4.3 0.0001 0.000 0.0000 0.0001 Ijevan 6.7 5.6 6.4 11.5 0.01 0.06 0.14 11.2 3.3 13.5 3.7 13.5 0.0010 0.040 0.0004 0.0003 Berd 1.6 3.4 1.3 7.0 0.00 0.02 0.01 5.4 0.7 6.6 0.9 6.6 0.0003 0.0040 0.0000 0.0010 Dilijan 4.2 5.0 4.5 10.1 0.00 0.02 0.08 10.2 2.0 12.9 2.7 12.9 0.0007 0.0030 0.0002 0.0010 Alaverdi 6.0 8.2 4.7 20.4 0.01 0.07 0.10 21.9 2.7 31.9 3.3 31.9 0.0001 0.0070 0.0000 0.0070 Noyemberyan 0.2 2.2 0.2 3.4 0.00 0.01 0.00 3.1 0.1 4.8 0.2 4.8 0.0001 0.0005 0.0000 0.0005 Spitak 2.9 4.5 2.9 9.2 0.00 0.03 0.06 8.4 1.4 10.2 1.7 10.2 0.0004 0.0050 0.0002 0.0020 Stepanavan 4.3 6.1 4.1 12.3 0.00 0.01 0.00 11.4 2.0 13.9 2.3 13.9 0.0010 0.0040 0.0003 0.0005 Tashir 0.4 3.4 0.2 6.8 0.00 0.01 0.01 5.4 0.2 8.5 0.2 8.5 0.0001 0.0020 0.0000 0.0003

36 QUARTERLY REPORT October-December 2005

CONTAMINANTS VOLUME AND PERMITTED DISCHARGE LIMIT Tone/Quarter PRODUCTED PLACE BOD5 related substances fuel ammonium sulfate chloride zinc copper

in fact PMO in fact PMO in fact PMO in fact PMO in fact PMO in fact PMO in fact PMO in fact PMO Artashat 13.1 8.4 11.3 17.2 0.02 0.07 0.20 0.8 8.9 29.7 10.3 34.2 0.0020 0.0110 0.0012 0.0030 Echmiadzin 20.6 19.2 20.0 39.4 0.02 0.09 0.34 1.6 9.6 46.1 12.0 60.2 0.0034 0.0300 0.0020 0.0120 Masis 13.4 11.9 11.9 24.4 0.02 0.08 0.20 1.7 8.9 33.4 10.3 47.7 0.0002 0.0080 0.0012 0.0070 Vedi 5.1 3.6 5.1 7.3 0.01 0.02 0.17 0.4 0.1 8.1 8.3 13.8 0.0017 0.0040 0.0013 0.0020 Ararat 5.3 7.1 4.7 14.6 0.01 0.04 0.10 0.8 2.2 16.1 3.5 27.5 0.0018 0.0070 0.0007 0.0028 Sisyan 4.4 8.5 6.3 17.2 0.00 0.03 0.09 0.6 3.1 17.0 4.6 25.5 0.0001 0.0060 0.0003 0.0005 Goris 9.2 7.9 13.6 16.2 0.00 0.01 0.34 1.4 8.0 21.6 10.3 26.3 0.0018 0.0050 0.0012 0.0030 Kapan 20.2 19.2 12.2 38.8 0.10 1.03 0.67 3.2 8.8 38.4 13.1 62.8 0.0202 0.0130 0.0027 0.0050 Meghri 0.7 3.4 0.7 6.9 0.00 0.01 0.02 0.3 0.8 9.0 1.0 11.0 0.0001 0.0020 0.0001 0.0003 Agarak 3.0 5.3 2.76 10.9 0.00 0.01 0.08 0.5 3.2 10.9 3.9 13.4 0.0005 0.0040 0.0000 0.0030 Eghegnadzor 1.8 3.6 1.7 7.4 0.00 0.02 0.05 0.4 1.9 5.0 2.4 7.9 0.0003 0.0020 0.0002 0.0003 Vayk 1.8 3.0 1.7 6.2 0.00 0.01 0.05 0.2 1.9 4.0 2.4 6.9 0.0003 0.0020 0.0002 0.0003 Jermuk 3.15 2.8 2.95 5.6 0.00 0.01 0.00 0.1 1.5 4.4 2.9 6.1 0.0008 0.0020 0.0001 0.0003 TOTAL1. 183.55 232.2 159.71 471.7 0.38 2.75 4.18 28.5 107.4 523.9 148 802.3 0.0454 0.2198 0.0167 0.0633

REMARK * 1. Exceeding of PMD (Permitted Maximum DISCHARGE) is conditioned by the absent of WCS (Wastewater Cleaning Stations) 2. BOD- Biological Oxygen Demand

QUARTERLY REPORT October-December 2005

SAUR S. A. – AWS SCJC

MWW PROJECT PROCUREMENT REPORT

Procurement Management and Progress Report October-December 2005

During reporting period the has been revised Company Procurement Guidelines and the following WB procurement has been carried out:

PART B – AWSC INVESTMENTS

B1.1 – Vehicles, Office Equipment and Furniture – Two contracts have been signed for supply of Vehicles and Furniture. Shopping for Office Equipment is postponed for the clarification of new custom clearance procedures.

B1.2 – Renovation Works – Ongoing: The works have not been finished on time.

B3.2 – Equipment for Training Facilities – Two contracts have been signed for supply of Vehicles and Furniture. Shopping for Office Equipment is postponed for the clarification of new custom clearance procedures (the same with B1.1).

B8.1 – Chlorine – Ongoing: Contract has been signed.

PART C 1 – IMMEDIATE INVESTMENT PROGRAM

C1.1.1 – Machinery and Equipment – Four contracts have been completed. C1.1.2 – Treatment Equipment – Two contracts have been completed. C1.1.3 – Pipes, Fittings and Valves – Two contracts have been signed. C1.1.8 – Water Meters and Test Bench – Ongoing: The evaluation has been done.

C1.3.1 – Design of Sevan – The contract has been completed. C1.3.1 – Design of Dilijan – The contract has been completed. C1.3.5 – Audit of Management Contract – Ongoing in Contract implementation stage.

Note: See also the attached Table #10.

QUARTERLY REPORT October-December 2005

2.4 EXPLOITATION

QUARTERLY REPORT October-December 2005

EXPLOITATION WORKS

The exploitation works were mainly aimed at:

 Decreasing the water losses, as well as increasing water supply hours.  Increasing the number of eliminated damages.  Decreasing electricity consumption.

The water losses are very large – 80.3% and the main reason for it was the increase of gravity water volume in South Regional Branch (about 10%) and in North-East Regional Branch (about 20%). During the fourth quarter the volume of water produced in mechanical way was decreased however not to the extent of having an effect on decrease of water losses since the gravity water volume had increased significantly.

Due to the changes of exploitation method the number of scheduled water supply hours has increased in several sectors.

During the fourth quarter the hourly schedule of water supply increased in the following sectors:

1. Alaverdi - from 0.5 h to 4 h 2. Yeghegnadzor - from 7.2 h to 9.3 h 3. Goris - from 14.2 h to 17.1 h 4. Kapan - from 5.02 h to 7.4 h

Comparing the number of hours in water supply schedules of 3rd and 4th quarters it has increased from 8.14 hours to 8.82 hours.

The number of the eliminated damages has also increased and composed about 73% in December. Comparing the last 3rd and 4th quarters in 2 Regional Branches (Center West and South) the indicator of the number of damages per one kilometer of pipeline has decreased. These data show the first results achieved as a result of the intensity of the exploitation activities.

During the 4th quarter the electricity indicator has also improved. During the year the lowest indicator of the electricity consumed for production of 1m3 of water equaled to 0.64 kw/m3.

The exploitation activity is presenting below by the tables and diagrams.

QUARTERLY REPORT October-December 2005

MAIN WATER PIPES & WATER LINES EXPLOTATION TABLE-11

ARM REPAIR

EMERGENCIES QUANTITY REPAIRED EMERGENCIES OF OF

SUM

pipe pipe

Arm Arm

NETWORK NETWORK NETWORK

CHECKING Inside Inside

VENT

NETWORK'S NETWORK'S

VALVE TOTAL TOTAL TOTAL

Network Network

WORK HOURS WORK

DRR'S OVER OVER DRR'S

REGIONS

TOTAL TOTAL

HYDRA

Main Water Water Main Water Main

LEANER REPAIR LEANER

PARTLY REPAIR PARTLY OVER CHECKING OVER piece hour piece hour piece piece piece piece hour piece hour piece hour piece piece piece piece piece piece piece piece hour

1 2 3 4 5 6 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NORTH- 190 2 333 40 633 38 39 4 81 212 232 582 185 609 41 336 82 459 39 284 81 404 4369 1 EAST NORTH- 39 330 12 90 2 0 0 2 11 3 6 0 0 10 54 12 76 9 39 2 50 437 2 WEST CENTER 17 89 11 66 7 0 0 7 11 79 228 13 24 24 292 22 338 17 150 5 172 418 3 -WEST

4 SOUTH 44 223 21 175 17 0 0 17 81 41 114 0 0 33 92 9 134 25 76 5 106 593

TOTAL 290 2 975 84 964 64 39 4 107 315 355 930 198 633 108 774 125 1 007 90 549 93 732 5 817

CUMULATIVE

240 132

4 317 1 387 1 011 1 383 4 564 4 215 1 502 9 629 1 836 1 695 1 337 7 433 1 158 9 928

30 408 13 027 13 554 10 625 14 156 71 217

QUARTERLY REPORT October-December 2005

DIAGRAM-6

Quantity of repaired network, armature and liguidated break-downs 2500

2000

1500

Quantity 1000

500

0 I quart. II quart. III quart. October November December IV quart. NORTH EAST 1657 1961 1598 589 569 715 1783 NORTH WEST 609 663 410 154 142 103 399 CENTER WEST 1374 906 879 236 307 207 750 SOUTH 1076 930 1069 344 326 188 858

QUARTERLY REPORT October-December 2005

COLLECTORS & WASTEWATER NETWORK EXPLOITATION - TABLE 12, DIAGRAMS 7,8

INCLUDING INCLUDING

N REGIONS EWATER

HOURS

WELL WELL

CLEANED CLEANED

WORKING WORKING

OTHER OTHER

REPAIR

CHECKING

> 300mm < 300mm

PIPES OVER PIPES OVER

COVERING

PIPES REPAIR

LINE LENGTH LINE

WELL REPAIR WELL

OBSERVATION OBSERVATION

WASTEWATER WASTEWATER WAST WASTEWATER OBSTRUCTION

TOTAL SUM TOTAL OF

OTHER REPAIR OTHER

OBSERVATION OBSERVATION LIQUIDATION OF OF LIQUIDATION km w.h km km piece w.h piece w.h piece w.h km w.h piece w.h w.h w.h 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 1 NORTH- EAST 22 831 6 15 9 284 67 250 44 52 45 603 313 943 347 2 911 2 NORTH- WEST 5 196 0 5 6 58 6 15 6 0 0 0 232 449 0 718 3 CENTER-WEST 5 87 1 3 1 24 2 5 2 2 14 75 115 277 0 468 4 SOUTH 7 277 2 4 4 98 10 57 7 0 5 62 137 544 4 1 038 TOTAL 38 1 391 10 27 20 464 85 327 59 54 63 740 797 2 213 351 5 135 CUMULATIVE 328 11 872 84 246 235 3 025 640 2 067 343 281 548 4 678 5 453 16 578 1 792 39 488

Cleaned Wastewater Line Length Repairs of network and deep wells, as well as liquidation the blocks of wastewater system 120 1200

100

1000 KM 80 800

60 600

40 400

20 200

0 0 I quart. II quart. III quart. October November December IV quart. I quart. II quart. III quart. O ctober November December IV quart. NORTH EAST 61 92 99 22 21 22 65 NORTH EAST 640 1081 790 391 318 389 1098 NORTH WEST 82 37 19 8 9 5 22 NO RTH WEST 750 763 489 250 248 244 742 CENTER WEST 101 26 22 3 4 5 12 CENTER WEST 349 424 349 120 78 118 316 SOUTH 23 18 16 5 4 7 16 SO UTH 632 514 460 166 183 151 500

QUARTERLY REPORT October-December 2005

NETWORK ANALYSING -TABLE 13

MAIN WATER PIPE & WATER LINES WASTE WATER NETWORK # R E G I O N S MAIN INSIDE TOTAL WATER Wastewater Break- WATER Cleaned NETWORK LOSSES EMERGENCIES COLLECTOR TOTAL PIPE Network downs Network % (km) (km) m3/day *km piece/km km km (km) km piece/ km 1 2 3 4 5 6 7 8 9 10 11 12

NORTH- EAST 1 841 1 515 2 356 42 0.2 131 513 645 0,6 3,3 NORTH- WEST 2 567 689 1 256 85 0.1 132 555 687 0,4 0,8 CENTER-WEST 3 634 1 034 1 669 70 0.2 46 176 222 0,5 2,1 SOUTH 4 611 433 1 045 47 0.1 46 314 360 0,4 1,9 TOTAL 5 2 654 3 671 6 324 59 0.2 356 1 558 1 914 0.5 2.0

QUARTERLY REPORT October-December 2005

DIAGRAM-9,10

Water losses m3/day*km Emergencies quantity on 1 km water pipe 140 0,35 120 0,3 100 0,25 80 0,2 60 0,15 40 0,1 20 0,05 0 Average 1 quart Average II quart Average III quart October November December Average 1V quart 0 Average 1 quart Average II quart Average III quart October November December Average 1V quart NORTH-EAST 43 35 49 32 49 42 41 NORTH-EAST 0,2 0,26 0,17 0,2 0,2 0,2 0,2 119 67 80 85 75 85 82 NORTH-WEST NORTH-WEST 0,16 0,08 0,1 0,1 0,1 0,1 0,1 CENTER-WEST 67 63 81 82 70 70 74 CENTER-WEST 0,24 0,3 0,3 0,3 0,3 0,2 0,27 SOUTH 24 27 38 59 52 47 53 SOUTH 0,25 0,2 0,2 0,2 0,2 0,1 0,17

45 QUARTERLY REPORT October-December 2005

DIAGRAM – 11,12

Cleaned Wastewater Line length in % Break-downs quantity on 1 km wastewater network 18 0,7 16 0,6

14 0,5 12 0,4 10 8 0,3

6 0,2

4 0,1 2 0 0 Average 1 quart Average II quart Average III quart October November December Average 1V quart Average 1 quart Average II quart Average III quart October November December Average 1V quart NORTH-EAST 0,33 0,48 0,5 0,6 0,5 0,6 0,57 NORTH-EAST 3,7 2,8 5,1 3,8 3,3 3,3 3,5 0,35 0,3 0,3 0,3 0,4 0,4 0,37 NORTH-WEST 4,2 2,9 4,2 0,8 1,3 0,8 0,9 NORTH-WEST CENTER-WEST 15,7 2,8 3,3 3,6 1,6 2,1 2,4 CENTER-WEST 0,39 0,3 0,6 0,6 0,4 0,5 0,5 SOUTH 2,3 3,4 1,5 1,4 1,2 1,9 1,5 SOUTH 0,6 0,42 0,5 0,5 0,5 0,4 0,47

QUARTERLY REPORT October-December 2005

WATER PRODUCTION & LOSSES - TABLE 14

WATER Actual volume WATER VOLUME HAD ACTUAL Name of Source of water taken N SECTORS SUBSECTORS GIVEN TO LOSSES (pumping station) from source 3 CONSUMERS 3 /thous. m / 3 th.m / th.m /month % month 1 2 3 4 5 6 7 8 NORTH-EAST REGION Dzknget s. 0,0 Sevan Sevan 31,3 643,9 95,4 1 Hatsarat p/s 675,2 Total 675 31 644 95 Golovino WCS 48,9 Florovi Balka WCS 43,4 Dilijan Dilijan Bldan WCS 59,8 25,9 164,0 86,4 2 Shamakhyan s. 32,6 Jiliut Tala s. 5,2 Total 190 26 164 86 Qarqarut s. 58,9 Spitak dzur s. 53,6 Getahovit s. 50,9 Anapat s. 37,5 Ijevan Khozmarag s. 16,0 48,9 196,7 80,1 Getapnya p/s 9,9 Dzr i dzor s. 5,5 Gmbet s. 5,3 Ijevan 3 Azatamut s. 8,0 Total 245,6 48,9 196,7 80,1 Berd WTP 3,0 Berd 17,4 20,6 54,2 Chatakh s. 35,0 Total 38,0 17,4 20,6 54,2 Kushchinski s. 30,0 Chambarak 8,9 51,1 85,2 Taqa s. 30,0 Total 60,0 8,9 51,1 85,2 Total 344 75 268 78 47

QUARTERLY REPORT October-December 2005

WATER Actual volume WATER VOLUME HAD ACTUAL Name of Source of water taken N SECTORS SUBSECTORS GIVEN TO LOSSES (pumping station) from source 3 CONSUMERS 3 /thous. m / 3 th.m / th.m /month % month 1 2 3 4 5 6 7 8 Akunq s. 188,1 St. Vardan s. 33,7 Vartenis 53,1 307,9 85,3 Akner s. 115,0 Shat Jreq s. 24,2 Total 361,0 53,1 307,9 85,3 Tsakqari w/s 63,5 Martuni Tsakqari s. 60,0 54,5 99,0 64,5 Gavar Hopoy var s. 30,0 4 Total 153,5 54,5 99,0 64,5 Kaler p/s Hatsarat p/s 441,4 Gavar Khacher p/s 129,9 400,6 75,5 Sarukhan p/s 64,9 Gandzak b-h 24,2 Total 530,5 129,9 400,6 75,5 Total 1 045 238 807 77 Berdavan b-h 5,1 Noyembery Ayrumi p/s 69,0 13,6 72,2 84,1 an Gij sari s. 11,7 Alaverdi Total 85,8 13,6 72,2 84,1 5 Lori berd s, 401,8 Alaverdi 119,5 349,2 74,5 Agarak s. 67,0 Total 468,7 119,5 349,2 74,5 Total 555 133 421 76 Chakhkali s. 44,9 Drashen b-h 77,0 6 Spitak Spitak Nalband b-h 42,0 23,4 160,7 87,3 Ghazanchi s, 5,0

QUARTERLY REPORT October-December 2005

WATER Actual volume WATER VOLUME HAD ACTUAL Name of Source of water taken N SECTORS SUBSECTORS GIVEN TO LOSSES (pumping station) from source 3 CONSUMERS 3 /thous. m / 3 th.m / th.m /month % month 1 2 3 4 5 6 7 8 Spitak b-h 15,2 Total 184,1 23,4 160,7 87,3 Gyulidar s, 53,5 Stepanavan Getavan p/s 240,9 39,3 495,9 92,7 Novoseltsovo s, 240,8 Total 535,2 39,3 495,9 92,7 Aksyutin p/s 70,8 Tashir Sevaberd s. 42,3 35,7 95,9 72,9 Bazumi s. 18,5 Total 131,6 35,7 95,9 72,9 Total 851 98 752 88 MAIN TOTAL 3 659 601 3 058 84 NORTH-WEST REGION Makravan - 4 p/s 706,85 Bujakan s. 15 Abovyan 136,9 702,75 83,7 Dzoragbyur p/s 77,0 Abovyan Akunq p/s 40,8 1 Total 839,65 136,9 702,8 83,7 Byuregavan Nurnus s. 93,3 20,1 73,2 78,5 Total 93,3 20,1 73,2 78,5 Total 933 157 776 83 Solak p/s 20,9 Alapars p/s 109,2 Makravan-4 - Abovyan 18,1 Charencavan Charencavan w/p 90,0 228,7 71,8 2 Gyumush p/s 143,5 Fantan b-h 4,0 Gyumush -2 p/s 23,0 Total 319 90 229 72 49

QUARTERLY REPORT October-December 2005

WATER Actual volume WATER VOLUME HAD ACTUAL Name of Source of water taken N SECTORS SUBSECTORS GIVEN TO LOSSES (pumping station) from source 3 CONSUMERS 3 /thous. m / 3 th.m / th.m /month % month 1 2 3 4 5 6 7 8 Makravan p/s 96,0 Tsaghkadzo Tegenis s. 3,5 15 84,5 84,9 r Ulashik WCS 0,0 Total 99,5 15,0 84,5 84,9 Hrazdan Makravan-4 - Abovyan 3 64,8 w/p Hrazdan Solak p/s 7,1 238,0 1148,4 82,8 Makravan p/s 1314,5 Total 1386,4 238,0 1148,4 82,8 Total 1 486 253 1 233 83 Artik Mantash reservoir 668,9 123,3 545,6 81,6 Total 668,9 123,3 545,6 81,6 Zovasar s. 22,0 Jinj Akner s. Talin Maralik p/s 0,0 30,4 29,2 49,0 Kentagbyur s., N 809 s. 37,6 Total 59,6 30,4 29,2 49,0 Dagdzutner s. 35,0 Artik 4 Sari s. 2,2 Ghazanchi s. 10,0 Lusagbyur s. 7,3 Ashotsk 16,5 68,8 80,7 Zuygaghbyur s. 3,2 Gazanchi s. 7,0 Dzragacneri s. 9,7 Bavra b-h 10,9 Total 85,3 16,5 68,8 80,7 Total 814 170 644 79 50

QUARTERLY REPORT October-December 2005

WATER Actual volume WATER VOLUME HAD ACTUAL Name of Source of water taken N SECTORS SUBSECTORS GIVEN TO LOSSES (pumping station) from source 3 CONSUMERS 3 /thous. m / 3 th.m / th.m /month % month 1 2 3 4 5 6 7 8 Karbi b-h 93,3 Artak p/s 63,5 Ashtarak Artashavan s. 105,0 78,0 318,8 80,3 Sagmusavan s. 105,0 Wosketas s. 30,0 Ashtarak Total 396,8 78,0 318,8 80,3 5 Ortachit s. 34,0 Geghagzor s. Aparan 39,6 99,0 71,4 Eznak p/s 42,0 Jami p/s 62,6 Total 138,6 39,6 99,0 71,4 Total 535 118 418 78 MAIN 4 087 788 3 299 81 TOTAL CENTER-WEST REGION Masis c. Araratyan 1,2 p/s 496,4 79,0 417,4 84,1 Total 496,4 79,0 417,4 84,1 Masis 1 Masis v. Araratyan 1,2 p/s 744,6 157,7 586,9 78,8 Total 744,6 157,7 586,9 78,8 Total 1 241 237 1 004 81 Gor. bak b-h 119,0 Ghazaravani b-h 49,0 2 Echmiatsin Echmiadzin 260,4 1229,8 82,5 Ghazaravani b-h 157,2 Bazmagbyur 3 s. 1118,0

QUARTERLY REPORT October-December 2005

WATER Actual volume WATER VOLUME HAD ACTUAL Name of Source of water taken N SECTORS SUBSECTORS GIVEN TO LOSSES (pumping station) from source 3 CONSUMERS 3 /thous. m / 3 th.m / th.m /month % month 1 2 3 4 5 6 7 8 Ghazaravani s. Artameti p/s 4,0 Hushakerti p/s 8,0 Kozdasheni p/s 35,0 Total 1 490 260 1 230 83 Artashati b-h 252,6 Artashat Artashat 290,2 948,4 76,6 3 Garni s. 986,0 Total 1 239 290 948 77 Garni s. 187,0 Vedi 106,3 284,2 72,8 Dzermanis s. 203,5 Vedi Total 390,5 106,3 284,2 72,8 4 Ararat Garni s. 182,0 41,7 140,3 77,1 Total 182,0 41,7 140,3 77,1 Total 573 148 425 74 MAIN 4 542 935 3 607 79 TOTAL SOUTH REGION Sarnagbyur s. 122,0 27,0 95,0 77,8 Eghegnadzo Qarasun s. 76,0 13,9 62,1 81,7 r Vostan s. 98,0 8,9 89,2 91,0 1 Eghegnadzor Total 296,0 49,8 246,2 83,2 Vayk Bazmagbyur s. 74,0 26,1 47,9 64,7 Total 74,0 26,1 47,9 64,7

QUARTERLY REPORT October-December 2005

WATER Actual volume WATER VOLUME HAD ACTUAL Name of Source of water taken N SECTORS SUBSECTORS GIVEN TO LOSSES (pumping station) from source 3 CONSUMERS 3 /thous. m / 3 th.m / th.m /month % month 1 2 3 4 5 6 7 8 Jermuk Dzrasar s. 86,0 14,3 71,7 83,4 Total 86,0 14,3 71,7 83,4 Total 456 90,2 365,8 80,2 Shaqe s. 142,0 39,9 102,1 71,9 Sisyan Sisyan Mukhutyan s. 2,3 1,4 0,9 39,1 2 Zor - zor s. 0,7 0,3 0,4 57,1 Total 145 41,62 103,38 71,3 Akner s. 110,0 59,1 50,9 46,2 Goris Goris 3 Mukhutyan s. 290,0 67,5 222,5 76,7 Total 400 126,63 273,37 68,3 Geghi s, 116,0 22,2 93,8 80,8 Surin kap s. 52,7 8,8 43,9 83,3 Kapan Geghi WCS 480,1 106,6 373,5 77,8 Chanakhchi WCS 134,6 27,9 106,7 79,2 Vachagan WCS 4,1 1,5 2,6 63,2 Kapan Total 787,5 167,1 620,4 78,8 4 Agarak b-h 101,6 18,1 83,5 82,1 Agarak WCS 97,5 67,4 30,1 30,9 Megri Setenc s. 7,6 2,2 5,4 71,1 Megri WCS 59,3 8,5 50,8 85,7 Total 266,0 96,2 169,8 63,8 Total 1 054 263 790 75 Total 2 055 522 1 533 75 GRAND TOTAL 14 343 2 846 11 496 80,2 Note - Data in the report is operative

QUARTERLY REPORT October-December 2005

DIAGRAM – 13

WATER LOSSES

% 76

70 68

64 Average I quart. Average II quart. Average III quart. October November December Average IV quart. Water loss 72,8 69,8 78,9 80,4 80,3 80,2 80,3

DIAGRAM – 14

Actual volume of water taken from source

50 45 40 35 30 25

mln m3 mln 20 15 10 5 0 I quart II quart III quart IV quart Grav. 19 19 23 25 Mech. 21 19 21 19 Total 40 36 43 44

QUARTERLY REPORT October-December 2005

WATER VOLUME, PRODUCTED BY THE MECHANICAL WAY AND USED ELECTRICAL ENERGY VOLUME - TABLE 15

WATER VOLUME, PRODUCTED ELECTRICAL ELECTRICAL BY THE CUMULATIVE N SECTORS CONSUMPTION CONSUMPTION MECHANICAL during 2005 kw/m3 thous. kw/month WAY thousand m3/month

1 2 3 4 5 6 1 Ashtarak 1 042 0,1 106 1 956 2 Aparan 105 0,8 88 1 179 3 Artisan 253 0,3 81 2 355 4 Echmiadzin 373 0,7 252 4 275 5 Gavar 531 0,7 366 6 489 6 Sevan 675 0,9 634 7 496 7 Tashir 132 0,0 0 263 8 Stepanavan 241 0,8 188 1 435 9 Noyemberyan 74 1,2 92 1 059 10 Spitak 15 0,5 8 162 11 Abovyan 907 0,2 212 8 631 12 Charentsavan 308 1,6 508 4 415 Hrazdan and 1 411 0,8 1142 14 731 13 Tsakhkadzor 14 Martuni 508 0,1 40 525 15 Meghri 99 0,9 84 905 16 Sisyan 5 0,9 4 101 17 Ijevan 10 0,7 7 114 18 Masis 1 241 0,5 626 14 691 19 Ashotsk 51 0,6 29 403 20 Byureghavan 3 2,7 8 70 TOTAL 7 981 0,56 4 474 53 452

QUARTERLY REPORT October-December 2005

DIAGRAMS 15,16,

Comparison of the total electrical energy consumption with produced water volume in 2005 - 2004

-5

-10

-15

-20 January February March April May June July August September October November December Water -12,4 -9,3 -3,25 5 9 6 9,07 0,88 2,85 3,3 -6,71 0,81 Energy -10,9 -10,8 -3,32 -3 0,1 -2,4 3,6 -5,63 -2,89 -0,2 -11,03 -18,5

Electricity Consumption KW/m3

0,8 0,7 0,6 0,5 0,4 0,3 0,2 0,1 0 Average II quart Average III quart October November December Average IV quart Energy 0,65 0,67 0,7 0,65 0,56 0,64

QUARTERLY REPORT October-December 2005

Concerning the process of the water meters equipment installation by the AWSC TABLE-16

in its maintenance area (growth data as of January 01, 2006)

QUANTITY OF WATER METERS EQUIPMENTS

Water inlet In Exit of Blocks In Apart-s of Blocks Private Houses Budget org-s Other org-s Total Including

f f

er in in

meter meters meters meters meters meters meters

month

Not

quart

working

Necessary Necessary Necessary Necessary Necessary Necessary Necessary Necessary

condition

reporting

Reporting

Quantity of Quantity of Quantity of Quantity of Quantity of Quantity of Quantity of

Installed in Installed in Installed

water meters water meters water meters water meters water meters water meters water meters water

quantity of of quantity of quantity of quantity of quantity o quantity of quantity of quantity

installed water installed water installed water installed water installed water installed water installed water installed water SECTORSNAME piece piece piece piece piece piece piece piece piece piece piece piece piece piece piece piece piece 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

I CENTER-WEST 1 Artashato 79 0 123 0 7 948 2 133 20 019 6 679 109 49 84 203 28 362 9 064 174 639 21 2 Vedi 28 0 159 0 0 3 119 8 347 4 471 27 47 0 122 8 562 7 759 168 657 21 3 Echmiadzin 113 0 247 0 2 283 6 656 18 322 6 898 73 49 64 307 21 102 13 910 153 363 22 4 Masis 39 0 69 0 2 010 1 976 6 115 3 508 33 46 0 249 8 266 5 779 70 416 6 TOTAL 259 0 598 0 12 241 13 884 52 803 21 556 278 191 148 881 66 293 36 512 565 2 075 70

II SOUTH 1 Goris 14 0 154 0 1 398 1 696 2 138 2 376 13 45 0 82 3 717 4 199 269 559 0 2 Eghegnadzor 17 0 124 1 1 497 3 137 2 022 1 717 21 71 0 272 3 682 5 198 98 403 32 3 Sisyan 14 0 97 0 0 3 005 1 559 1 339 14 57 47 150 1 731 4 551 33 90 0 4 Kapan 16 0 339 1 5 028 9 160 2 222 1 384 29 80 0 366 7 634 10 991 528 2 154 1 TOTAL 61 0 714 2 7 923 16 998 7 942 6 816 77 253 47 870 16 763 24 939 928 3 206 33

QUARTERLY REPORT October-December 2005

III NORTH-WEST 1 Abovyan 20 7 308 34 87 16 027 1 653 2 110 9 47 0 366 2 077 18 591 112 372 27 2 Charetsa-van 14 0 178 18 0 6 101 7 831 1 126 15 41 70 187 8 108 7 473 85 250 11 3 Hrazdan 13 0 339 0 9 131 5 714 4 236 1 249 40 70 96 302 13 856 7 335 267 725 3 4 Ashtarak 40 0 209 0 2 086 2 733 4 838 3 594 47 55 66 156 7 287 6 538 84 200 0 5 Artik 76 0 257 0 2 927 2 430 10 904 1 974 71 69 32 167 14 268 4 640 57 190 14 TOTAL 163 7 1291 52 14 230 33 005 29 463 10 053 183 282 264 1 178 45 595 44 577 605 1 737 55 IV NORTH-EAST 1 Gavar 33 1 120 28 1 874 1 485 14 585 3 416 74 75 37 178 16 723 5 183 21 142 281 2 Sevan 17 5 134 31 1 331 3 824 2 479 1 879 29 31 30 193 4 021 5 963 31 133 31 3 Dilijan 9 0 97 1 1 142 817 2 754 1 488 14 26 20 52 4 036 2 384 - 213 135 0 4 Ijevan 14 0 177 0 2 227 2 764 2 137 2 628 28 54 0 145 4 583 5 591 62 185 9 5 Spitak 56 0 148 7 0 2 601 5 496 5 845 0 79 10 199 5 710 8 731 249 375 9 6 Alaverdi 40 0 246 0 2 145 4 328 3 328 3 076 35 61 0 86 5 794 7 551 58 311 162 TOTAL 169 6 922 67 8 719 15 819 30 780 18 332 179 326 97 853 40 866 35 403 208 1 281 492

MAIN TOTAL 652 13 3 525 121 43 113 79 706 120 988 56 757 717 1 052 556 3 782 169 517 141 431 2 306 8 299 650

REMARK* 1.The report figures were presented by the sectors in base of collection and should be correct. 2.Because some customers have use more than one water line (connection point) in exit of blocks, houses, budget and other organizations, the quantity of used water meters was calculated with the coefficient q=1,2

QUARTERLY REPORT October-December 2005

DIAGRAM 17

Quantity of Water meters installed in Reporting Quarter

8000

7000

6000

5000

4000

3000

2000

1000

0 I quart II quart October November December 1V quart North East 1848 2581 425 648 208 1281 North West 2940 3360 517 615 605 1737 Center West 2914 2706 763 747 565 2075 South 3945 7181 1261 1017 928 3206

QUARTERLY REPORT October-December 2005

ELECTRICITY CONSUMPTION, TABLE-17,18

In comparison between years 2004 and 2005 the cost of electricity decreased about 20.6 %.

The same saving we can see in case of electricity consumption. The saving quantity will compose 1 320 thous. KVT/hour.

DIAGRAM 18

Electricity consumption 13 last months

140 000 8 000

7 000 120 000

6 000 100 000

5 000 80 000

4 000 1000 KW 1000 1000 AMD 1000 60 000 3 000

40 000 2 000

20 000 1 000

0 0

April May June July Electricity cost March August January february October KW December September November December

MONTH

Please, see attached tables # 17,18

QUARTERLY REPORT October-December 2005

3. FINANCE & ACCOUNT

QUARTERLY REPORT October-December 2005

SUBSIDY TABLE-19

Subsidy FROM RA GOVERNMENT

Month 2005 Received Amount Comments

103.0 electricity consumption payment January 130,0 18.5 social payment 8.5 other 205.0 debt repaying 3.5 debt repaying % February 350,0 110.0 electricity consumption payment 18.0 social payment 15.5 other

March 100,0 100.0 electricity consumption payment

105,0 electricity consumption payment April 130,0 25,0 credit repayment 85.2 electricity consumption payment 15.0 social payment 110.0 final calculation on reduced employees May 230.0 previous salaries, incl. social payment 19.8 other expenses

June 85,0 85,0 electricity consumption payment

July 70,0 70,0 electricity consumption payment

August 90,0 90,0 electricity consumption payment

September 100,0 100,0 electricity consumption payment

October 81.49 81,49 electricity consumption payment

TOTAL AMOUNT 1 366,49

QUARTERLY REPORT October-December 2005

INFORMATION

CONCERNING INCOMES AND EXPENSES OF AWS CJSC IN IV QUARTER, 2005 TABLE-20

Sums Centralized payments Branch received Total Current Social Total Subsidy Net salary Covering Other Total N name from income expenses Electricity insurance Taxes expenses of credit payments branches fund 1 2 3 4 5 6 7 8 9 10 11 12 13 14 North–West Region 1 Abovyan Total 132 764.1 17 500.0 65 266.9 / 469.3 82 580.5 82 580.5 165 347.4 North–East Region 1 Artashat Total 158 996.2 20 000.0 52 437.5 / 132.3 47 315.8 47 315.8 119 753.3 Center–West Region 1 Sevan Total 97 385.8 15 500.0 72 226.3 43 946.2 43 946.2 131 672.5 South Region 1 Sisyan Total 121 220.1 12 000.0 53 051.0 / 17.8 6 833.6 6 833.6 71 884.7 Head Office Total 10 947.5 24 019.5 1 219.9 1 219.9 36 186.9 MAIN 510 366.2 81 490.0 591 856.2 75 947.5 267 620.6 181 896.0 37 541.5 76 145.0 16 000 215 927.4 527 509.9 871 078.0 TOTAL

Please see attached Diagram # 19

QUARTERLY REPORT October-December 2005

4. HUMAN RESOURCES

QUARTERLY REPORT October-December 2005

ACTIVITIES PERFORMED BY HUMAN RESOURCES DEPARTMENT DURING QUARTER IV, 2005

During the period mentioned there were performed works and implemented measures following as below:

 The structure of the HR Department has been reformed, staffing division and redeployment division have been unified and a single unit has been established.

 Taking into consideration the fact that that the Employment agreements with AWSC personnel were going to be expired, new Employment Contract example has been drafted, and, according to it, new contracts have been signed for the year of 2006 -with all of the Head Office staff and regional branches personnel as well.

 According to the AWSC HR plan employment relations have been stopped with fully retire (pension) age employees, particularly, with 7 employees of the Head Office. The process has been performed and carried out in a strict accordance to the local Regulations .

 The Head Office Chart Organization has been reviewed and reformed, as well as the remuneration rates table. Those are going to be implemented starting with the current month of 2006. Similar works are being performed now in regional branches and the results will be presented for Generality approval as soon as works are finished.

 Concerning the HR Plan related RA Finance Ministry comments an additional appendix to the plan mentioned has been drafted and composed.

 There have been drafted and approved the unified Position Passports / Duties- Responsibilities Form & Scope of Works/ forms. They are to be filled per specifics in every Department of AWSC Head Office and put into the action.

 With the purpose of getting a higher level of the common culture and corporative ethics there have been prepared badges for all the staff of the AWSC Head Office. A similar measures are being performed in the regional Branches as well.

 A necessary methodological support has been permanently provided to the HR divisions in the Regional Branches, to guarantee an exact level of the work in the corresponding field. In respect of this issue, it’s expedient to mention the NW branch HR staff precise work, which is eligible to an appropriate bonuses.

QUARTERLY REPORT October-December 2005

 Due to the process of redeployment of pension age employees corresponding vacancies have been filled through an open competition based recruitment, new peoples were employed, and those seem to have by now all the necessary skills, knowledge and abilities to hold appropriate positions.

 In the field of Training all the necessary preliminary measures have been undertaken to start the training of the Top-manager staff.

 The AWSC Head Office Staff personal files, which were in a very bad condition, are being exacted and completed by now, as well as the supporting database packages.

 During the period mentioned all the applications, complains and statements have been studied, discussed and responded in the limits of current Labor and Social Security regulations.

QUARTERLY REPORT October-December 2005

DIAGRAM 20

Information concerning AWS CJSC Personnel

3000 2610 2513 2497 2492 2500 1937 2019 2002 2032 2053 2021 2062 2018 2015 2030 2000

1500

Quantity Employees 1000

500

0 November December January February March April May June July August September October November December (01,12,04) (01,01,05) (01,02,05) (01,03,05) (01.04.05) (01.05.05) (01.06.05) (01.07.05) (01.08.05) (01.09.05) (01.10.05) (01.11.05) (01.12.05) (01.01.06) Months

QUARTERLY REPORT October-December 2005

5. PUBLIC RELATION

QUARTERLY REPORT October-December 2005

ON ACTIVITIES IMPLEMENTED BY THE PUBLIC RELATIONS DEPARTMENT

(October-December)

From the Department was published 3th number of “Informational Bulletin” with the title “Trust”.

In the newspaper “Aravot” (“Morning”) on 01.10.05. was published an article (with the title “Hovtamej in the cart”) and on 15.10.05. was published an interview with the head of the Community, which are related the main issues of the community, including unsatisfactory conditions of water supply. Regarding the issues arisen in the articles, Company has presented explanations to the Editor-in- chief of “Aravot” (“Morning”) Daily Newspaper and RA Public Services Regulatory Commission.

On October 10, 2005, the Director General held a special consultation in “South” Regional Branch, where was discussed the outcomes of financial and economic activity of the Company at September, as well as expected results of the 2nd stage of Management.

On November 11, 2005, was organized meeting of the Company General Director with the Governor of Syunik Region and the Mayors of Kapan and Goris towns. During the meetings was discussed the results of the agreements and implemented works, situation of the separate water supply structures, as well as necessity of implementation of the measures directed to the improvemets of them.

The Director General, Technical and PR Directors of the Company has participated the Ministerial Conference and Round Table, held on 16-18 November 2005, in Yerevan. PR Department has presented information in Armenian and English on Company activity, which is fixed on a stand of RA Water Economy.

On November 22, 2005, the Director General of the Company held a special consultation in “North- West” Regional Branch.

For the jobs of the Company Head Office was prepared vacancy announcements. That annoncements has been published in “Hayastani Hanrapetutiun” (“Republic of Armenia”) newspaper.

During the quarter a different programs was broadcasted in “H-1”, “H-2”, “Armenia”, “Kentron”, Armenian Television Companies related to the water supply problems of Masis, Chambarak towns, as well as about the investment programs of the water supply sphere implemented in the Republic of Armenia. During the programs was presented an interviews with A. Andreasyan, the Chairman

QUARTERLY REPORT October-December 2005 of State Committee of Water Economy of Regional Management and A. Ghazaryan, the Director of “Water Sector Development and Institutional Improvements PIU” SI.

On Decemeber, 2005, in “Hayastani Hanrapetutiun” (“Republic of Armenia”), “Hayots Ashkharh” (“Armenian World”), “Iravunk’ (“Right”) newspapers was published an interview with the Chairman of State Committee of Water Economy. A. Andreasyan has presented the investment projects, “Municipal Water Supply and Waste Water” Program and expressed opinion about the positive activity of AWSC, in 2005.

The brief content of the above mentioned materials published and broadcasted through mass communication media has been translated and informed the Company General Director, as well as the Regional Branches Directors.

“Sevan” and “Dilijan” Sectors inhabitant-subscribers’ attitude and suggestions towards the water supply services has been generilized. The analysis of the answers of the questionnairies was identified the attitude of the subscribers both to the currently provided services, water quality, calculation process, the planned improvements and the level of the service required by them as a result of the improvements.

The Director General held a consultation in the Company Head Office, on December 27, 2005. During the meeting was discussed the financial results at November, Estimate (Budget) of Incomes and Expenses in 2006, coming interests, as well as a several questions related to the management. After the meetings has been prepared minutes. There are given to the RB Directors. “AWSC Subscribers Awareness and Information” Program in 2006 was developed.

In compliance with the RA Water Code the RA National Assembly has developed the plans of “National Program of Water” and “About Potable Water” laws, the discussion works of which AWSC has presented suggestions.

4th number of “Informational Bulletin” is prepared.

QUARTERLY REPORT October-December 2005

6. LEGAL & INSURANCE

QUARTERLY REPORT October-December 2005

On procedure of covering AWSC CJSC debts receivable by court order and confiscating through Obligatory Implementation of Actions at Law as of 01.01.2006 TABLE-21

Cases delivered to Cases delivered to To be Satisfied In process Rejected Confis- Case stopped Case finished confis- # Branches court Paid TIAL cated cated by Q-ty Amount Q-ty Amount Q-ty Amount Q-ty Amount Q-ty Amount Q-ty Amount Q-ity Amount TIAL 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

1 443 19 723,9 0 0,0 443 19 723,9 0 0.0 0.0 0 0.0 0.0 0 0.0 0 0.0 0.0 2 NORTH-WEST 0.0

3 0 0.0 0 0.0 0 0.0 0 0.0 0.0 0 0.0 0.0 0 0.0 0 0.0 0.0 TOTAL 443 19 723,9 0 0,0 443 19 723,9 0 0.0 0.0 0 0.0 0.0 0 0.0 0 0.0 0.0

1 56 2 878,6 15 413,8 41 2 099,9 0 364,9 215,4 0 0.0 0.0 0 0.0 0 0.0 0.0 NORTH-EAST 2 0.0 3 6 520,7 3 244,8 2 170,7 1 105,2 10,2 0,0 TOTAL 56 2 878.6 15 4 13.8 41 2 099.9 0 3 64.9 215.4 0 0.0 0.0 0 0.0 0 0.0 0.0

1 62 3 399,3 18 658,6 43 2 270,6 1 470,1 225,6 0 0,0 0,0 0 0,0 0 0,0 0,0 2 CENTER-WEST 40 1 829,5 40 1 622,6 206,9 191,6 36 1 431,0 0.0 3 0,0 TOTAL 40 1 829,5 40 1 622,6 0 0,0 0 206,9 191,6 36 1 431,0 0,0 0 0,0 0 0,0 1 431,0

1 1 752 84 144,0 1 102 41 128,6 592 38 346,4 58 4 669,0 4 855,0 972 39 837,8 5 125,6 134 5 307,4 128 5931,2 2 8781,0 SOUTH 2 0.0 3 0,0 TOTAL 1 752 84 144,0 1 102 41 128,6 592 38 346,4 58 4 669,0 4 855,0 972 39 837,8 5 125,6 134 5 307,4 128 5 931,2 28 781.0

CUSTOMERS 2 291 108 576,0 1 157 43 165,0 1 076 60 170,2 58 5 240,8 5 262,0 1 008 41 268,8 5 125,6 134 5 307,4 128 5 931,2 30 212.0 BUDGET ORGANIZATIONS 0 0,0 0 0,0 0 0,0 0 0,0 0,0 0 0,0 0,0 0 0,0 0 0,0 0.0 OTHER 6 520,7 3 244,8 2 170,7 1 105,2 10,2 0 0,0 0,0 0 0,0 0 0,0 0.0

GRAND TOTAL 2 297 109 096,7 1 160 43 409,8 1 078 60 340,9 59 5 346,0 5 272,2 1 008 41 268,8 5 125,6 134 5 307,4 128 5 931,2 30 212,0

QUARTERLY REPORT October-December 2005

7. INDICATORS

QUARTERLY REPORT October-December 2005

INDICATORS RECAPITULATION – Table 22, ANNEX B

Base December # INDICATORS Unit Variation Year 2005

Weighted average number of daily hours of drinking water hours/day 6,04 8,85 74,5% 1 service % of individual subscribers billed on the basis of metered % 39,9 53,6 34,4% 2 consumption 3 Weighted average water bacteriological safety compliance % 93,8 96,07 2,4% 4 Company working ratio % 51,3 67,4 31,4% 5 % of cities with minimal daily hours of services % 36,42 22,15 -39,2% % of block apartment buildings with individual or common % 33,5 56,32 68,1% 6 block meter % of block apartment buildings under contractual % 0 0 0,0% 7 agreement with the company Revenue collected on domestic subscribers per registered Drams/month 166 210 26,5% 8 inhabitant 9 Collection ratio (excluding budget organizations) % 47,9 44,16 -7,8% 10 % of subscriber with more than 4 month debt % 79,5 73,10 -8,0% Average domestic metered consumption per metered Liters/cap/day 81 63 -22,3% 11 registered inhabitant Average price of m3 metered and billed to domestic Drams/m3 100,41 140 39,4% 12 subscribers Growth of the total collected revenue (excluding budget % 114 568 28,25 13 organization) from base year Ratio of water volume billed on the basis of metering to the % 25 32,61 30,4% 14 total metered and normative billed volume Average daily production per equivalent registered Liters/cap/day 668 761 14,0% 15 inhabitant at water catchments levels Average daily supply to distribution reservoir per Liters/cap/day 16 equivalent registered inhabitant Ratio of metered final consumption (m3) to water % 6,8 6,5 -4,8% 17 production at water catchments levels 18 Working ratio for branches with gravity systems % 114,4 96,3 -15,8% Working ratio for branches with pumping stations or % 44,8 60,8 35,7% 19 treatment plants Electricity cost as % of revenue collected in systems with % 72,6 55,7 -23,3% 20 pumping or treatment plants 21 % of water disinfected % 60,9 73,4 20,6% 22 Total staff per 1000 individual subscribers unit 9,45 7,90 -16,4% Staff and assignment contractors total costs as % of % 70,2 63,0 -10,2% 23 collected revenue 24 Electricity specific consumption kw/m3 0,43 0,37 -12,8%

This figures are given for November

QUARTERLY REPORT April-June 2005

ATTENTION

ADDITIONAL INFORMATION

According to the Management Contract, the following Tables and Diagrams from this Report are inconformity with the indicated points in the Part 2, 5.3.4 – “Monthly and Quarterly Report” of Management Contract.

Management Numbers of Tables Numbers of Diagrams Pages of Text Contract Points

1 2 3 4 ANNEX B (Table 1) ANNEX B (Chart 1)

5.3.4 (a) 11,12 6,7,8

4,5 5.3.4 (b) 7

6 3 5.3.4 (c)

11,13 6,9,10,11,12 5.3.4 (d)

11,12 6,7,8 5.3.4 (e) Page 23

5.3.4 (f)

1,2,3,4 1,2, ANNEX A 5.3.4 (g)

11 5.3.4 (h)

5,14,16 13,14,17 5.3.4 (i)

15 15,16,18 5.3.4 (j)

8,9 5.3.4 (k) Page 66

5.3.4 (l)

22, ANNEX B (Tables 2-25) ANNEX B (Charts 2-25) 5.3.4 (m)

QUARTERLY REPORT April-June 2005