RAMALLAH, West Bank — The financial crisis has weighed heavily on Palestinian citizens, who are finding it difficult to pay for essential services. The institutions that provide those services are suffering as well as they await payment.
Israel says the Palestinian government has stopped making payments to Israel Electric Corp. Ltd. (IEC), and Israel is threatening to deduct the money in question from tax clearance funds it collects for the Palestinian Authority, according to the Israeli Broadcasting Corporation, also known as Makan.
The PA denies it has stopped payment, though over the years it has accumulated substantial debt to the IEC. The figure has reached around two billion shekels ($554 million), according to Makan, though the PA says that amount is greatly exaggerated.
Israel also alleges the PA instructed local councils in the West Bank not to pay.
However, a source in the Palestinian government told Al-Monitor on condition of anonymity, “The news spreading in Israeli media that we decided to stop paying [our electricity bills] is not accurate. And no one in the PA could venture to issue a decision to the local councils not to pay the price of electricity to Israel. Everyone knows that nonpayment would mean cutting off electricity from Palestinian cities.”
Makan's report said the PA stopped transferring money to the IEC to make up for the amount Israel is deducting from its tax revenues. Since March, Israel has withheld 42 million shekels ($11.6 million), the amount the PA earmarks for the families of Palestinian prisoners and those killed or wounded in resistance activities. Israel considers those payments to be terrorism funding.
But adding to the PA's financial crisis, it has been refusing to accept any tax revenues whatsoever from which deductions have been made. As a result, it's only able to pay many civil employees half of their monthly salaries.
Five companies distribute 70% of the electricity supplied to the West Bank. Meanwhile, 114 municipal entities that are not served by these companies provide electricity to citizens directly from the IEC, making up the remaining 30%.
On April 24, the Palestinian Ministry of Local Government issued a circular urging those 114 municipalities to begin providing financial help for public sector employees. Under the ministry's recommendation, the employees are being provided with water, electricity and waste disposal services, but will pay only a fraction of their cost until the clearance funds dispute is settled and the employees’ salaries are being repaid.
Hisham Omari, director of Jerusalem District Electricity Co. (JDECO), which supplies Jerusalem, Ramallah, Bethlehem and Jericho, told Al-Monitor that the company is having a hard time collecting its money, as thousands of PA public employees are receiving only part of their salaries and have difficulty paying their bills.
“The [money] collected from citizens is directly transferred to the IEC,” he said. “JDECO has 300,000 subscribers and in light of the salary crisis, monthly collection of electricity bills decreased by 10 million to 15 million shekels [$2.7 million to $4.1 million]."
In 2016, the PA signed an agreement with the Israeli Ministry of Finance to settle the debts of West Bank cities that distribute electricity directly and the five Palestinian electricity distribution companies, which amounted to 636.5 million shekels ($176 million) for the preceding years.
They agreed to divide the debt over 48 equal installments. However, this agreement was never implemented because of unresolved differences, so the debt that had accumulated before 2016 remains unpaid.
Zafer Melhem, chairman of the Palestinian Energy and Natural Resources Authority, which governs the energy sector in Palestine, told Al-Monitor that the PA issued no instructions to stop paying the electricity bills, saying, "We are committed to fully paying the financial dues.” He added the debt is far less than Israel's claim of $554 million.
Melhem said, “The total Palestinian debt as of June 1 is 1.468 billion shekels [$406.5 million] divided into two parts. The first is the debt owed before September 2016, amounting to 636.5 million shekels [$176 million] and the debts accumulated after 2016 to this date of 835 million shekels [$230.5 million].”
Negotiations on repayment of electricity arrears are currently stalled. The Palestinian side is awaiting answers from Israel on customs tariffs and other issues.
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