This project will improve water use, hygiene and sanitation in rural areas of Armenia by rehabilitating and upgrading water supply networks, improving the performance of water services and improving the operations of the water utility in 18 towns and 92 villages. Using a loan equivalent to $40 million, it will construct 600 kilometers of new mains and pipe networks to connect 110,000 new and existing customers; rehabilitate five pumping stations, three chlorination stations, one water treatment plant and 15 daily regulation reservoirs; and install meters for 20,000 commercial and residential customers. This builds on a project approved in 2007, which upgraded and rehabilitated water supply and sanitation systems in 21 towns and 97 villages.