Many poor families in Armenia face the daily struggle to heat their households given the high costs of connecting to gas networks or buying expensive heating equipment that can cost around US$550, or about two months of income. Even with the small monthly stipend that poor households receive under the Government's Poverty Family Benefit Program (PFBP), many families often go cold in the harsh Armenian winters.
To help solve this problem, the World Bank and the Global Partnership on Output Based Aid (GPOBA) partnered to fund a program within the scope of the Urban Heating Project that provided targeted capital grants to thousands of families for connecting their apartments to the gas network and installing a gas heater.
For Rima Avanesyan, 68, a single pensioner living in an old hostel in a Yerevan suburb, the gas heater has been a long-awaited gift. "I had no heating whatsoever in the past. As a pensioner I couldn't afford the high cost of electrical heating – the only time I used it was to cook food or make tea, no more. Now I use my gas heater when I need it, and it has so far cost me about 4,000 drams (US$10) a month. I am very grateful for this. And, you know - the attention and nice treatment I received from the project people [Renewable Resources and Energy Efficiency Fund] means a lot more to me – they have warmed my heart just like this heater warms my apartment."
Gas-based heating offers a clean, efficient, and low-cost heating solution to these poor, urban households. "We used to burn wood before, but gas is so much cleaner and convenient. It's a great improvement in our life and it has eased our daily problems," explains Sara Badalyan, a housewife residing in a small, one-room apartment in Masis town (Ararat region) with her husband and 18-year-old daughter. As project beneficiaries, they have been using gas-based heating since September 2009.
Armenia is a country with long and severe winters. With a cold season of up to 180 days in some areas, heating claims a large share of the household budget for poor families, who devote a sizeable portion of their expenditures to heating during the winter. This contributes to poverty, especially in urban areas.
Shoghik Khachatryan is an unemployed single mom with four children living in Masis. The family used electricity before to heat the house and it took away a big chunk of money from the sparse family budget. "We used to pay over 15,000 drams a month – it was a big financial burden on my shoulders. But gas heating is quite convenient. I have paid only 10,000 drams since the time we started using it in January of this year. Besides, the electrical heater wouldn't warm the house properly – whether on or off, we used to feel cold, and my kids would often get sick. But see how well it warms the apartment now!"
Many of the poor families unable to afford the cost of connecting to gas networks and heating facilities or the cost of heating equipment use no space heating of any kind – in some regions, this is over 15 percent of poor households. Others rely on costly electricity or polluting solid fuels for heating solutions, or – even worse – on hand-made heaters that are an eminent health and safety hazard to the family as well as the entire apartment building they reside in.
Sima Adyan's large family of six from the town of Abovyan in the Kotayk region had to get by without heating last season. "We used to use a hand-made heater, which was illegal and dangerous. The exhaustion fumes would stay in the house, and you could always smell gas – very bad for the kids. The gas inspectors banned us from using it, and we lived with no heating at all. We are so grateful to have received this big assistance. We have had gas for space and water heating as well as cooking since November 2009, and all three together cost us up to 15,000 drams a month. But what's more important – my kids don't feel cold anymore."
Armenia has undertaken a series of structural reforms in its energy sector since 1995, among which it restored the gas supply and connected more than 100,000 new gas customers in recent years. Although the urban heating strategy estimated that gas-based heating is the least-cost heating solution, access to it was low among poor households.
According to Ani Balabanyan, Project Task Team Leader, "To help these families adopt safe, affordable, gas-based heating solutions, the Government of Armenia requested US$3.1 million in GPOBA support, complemented by US$3 million in funding from one of the components of the World Bank-financed Urban Heating Project. Despite the recent rise in gas prices, by the time the Project closes, a significant share of poor urban households will have access to safe and affordable gas supply."
The funding for the OBA program is disbursed in a way that creates incentives for the service providers to ensure timely service. In the case of households who receive gas heaters, 20 percent of the grant is paid in advance when the gas company signs a contract with the service contractors, 70 percent upon independent verification of service delivery by the gas company, and 10 percent upon proof of 12 months of satisfactory service delivery.
