Israel Electric Corporation
Threatens West Bank Power Cuts

The Israel Electric Corporation (IEC) management appealed on August 14 to the East Jerusalem Electricity Company, threatening to take "sharp legal measures" against it due to an outstanding debt of close to $175 million. (700 million shekels) [The debts of the PA and of the refugee camps’ to the East Jerusalem Electric Company alone reach 370 million shekels. But the PA hardens to pay off its debts, facing its worst financial crisis since its 1994 establishment].

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Summary : The Israel Electric Corporation management threatened to take “extreme measures” against the East Jerusalem Electric Company for unpaid debts of nearly $175 million. If the debt goes unpaid, the company is considering power cuts and confiscating assets of the Palestinian Electric company. Publisher: Calcalist (Israel) Original Title: First exposé: The Israel Electric Corporation threatens to implement initiated power cut-offs in the west bank Author: Lior Gutman First Published: August 14, 2012 Posted on: August 15 2012 Translated by: Hanni Manor Categories : Israel   Palestine

It has thus been learned by the Israeli daily business newspaper Calcalist.

It is a first of its kind official appeal, made following a previous attempt by the Israel Electric Corporation about half a year ago to enlist the help of the Finance Ministry in the collection of a debt of some $86.5 million (350 million shekels) due to unpaid electric bills. Furthermore, last May, the IEC Chairman of the Board, Yiftach Ron-Tal appealed to Minister of Energy and Water Resources, [Dr. Uzi] Landau, asking him for help in the matter.

As exposed by Calcalist on August 5, the IEC appealed to the Finance Minister, asking for an immediate fund streaming at the amount of nearly $742 million (3 billion shekels) to enable it to carry on its operations through the summer. The need for funds surfaced when it transpired that there was a significant difference between the anticipated cost of the fuels purchased by the IEC, as estimated in the last spring, and the actual purchase costs in the present summer, a period over which an increase of 10% to 15% has been recorded in national consumption. Funneling the [debt] sum of almost $175 million  (700 million shekels) to the IEC coffers would cover about a quarter of the funds required by the IEC [for continued operation] and thus reduce the financial aid extended to the corporation by the State.

Initiated power cut-offs in Nablus and Hebron

In an emergency meeting convened on August 14 by the IEC CEO, Eli Glickman, following which the IEC appealed to the East Jerusalem Electricity Company, it emerged that the Palestinian Authority's accrued debt amounted to nearly $175 million (700 million shekels). Just for comparison, the debt has reached an order of magnitude equivalent to a 3% cut in the electricity rates.

Glickman instructed the IEC senior executives to examine four possible scenarios for collecting the debt. The first option raised for discussion is the foreclosure of property owned by the East Jerusalem Electricity Company. The company, set up some one hundred years ago, buys electricity from the IEC and supplies it to the West Bank residents.

A preliminary legal examination carried out by the IEC has shown that since the East Jerusalem Electricity Company is actually situated in Israel proper, there is no problem taking [debt] collection measures against the company or resorting to property foreclosures. However, the distinct disadvantage of this solution is the time that would pass until the actual realization of foreclosed property, so that this move cannot really be of help to the IEC in its present cash flow distress.

Under the second option suggested the IEC will implement initiated power cut-offs in various areas in the West Bank and for specified periods of time. Such a step is liable to meet with criticism both on the domestic front and in the international arena. However, the IEC plans to implement it only in specific residential neighborhoods, so that public facilities will not be affected. A source close to the IEC explains that it does not stand to reason that Israeli citizens who fail to pay their debts to the IEC are cut off from the grid, while the Palestinians enjoy "immunity."

The third option raised for discussion is the foreclosure of the tax money the Palestinian Authority pays the State of Israel, from which the IEC would be able to "draw" the funds it needs. The fourth option is the uniform reduction of the load on the power supply lines to the West Bank and the Gaza Strip, entailing diminished power supply to these regions.

The IEC CEO, Eli Glickman, instructed the IEC senior executives to exhaust the solutions proposed, so that in the next 30 days, the IEC would succeed in collecting at least half the debt payable. The IEC declined comment on the Calcalist report.