Finance Committee chairman Gafni demands competition, price controls in gas sector

Antitrust commissioner: 'Companies have enormous power over the government'

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June 3, 2015 19:30
3 minute read.
Hadera

A man points as he stands on a tanker carrying liquified natural gas, ten miles off the coast from Hadera. (photo credit: REUTERS)

 
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The government must introduce both competition and price controls to the natural gas sector, Finance Committee chairman Moshe Gafni (United Torah Judaism) declared on Wednesday.

“Gas prices in Israel are double those in countries developing gas,” he told the committee.

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“We must dismantle the monopoly or supervise prices.”

Gafni was leading a discussion about the natural gas sector, in light of the stalemate that has overtaken the field in the past several months. The deadlock is the result of disputes between the country’s natural gas companies and the government, which began after Antitrust Commissioner David Gilo said he would review whether the dominance of the Delek Group and Noble Energy constitutes an illegal “restrictive agreement.”

“The coalition is uncomfortable with this debate,” Gafni, whose party is part of the opposition, said. “We demand competition and not a monopoly, price controls and the supply of gas to factories, especially in the periphery.”

Gilo tendered his resignation a week ago, due to disagreements with other government officials regarding the terms of a compromise plan with the country’s gas companies.

The recently proposed compromise outline would require that the Delek Group’s subsidiaries Delek Drilling and Avner Oil Exploration exit the offshore Tamar reservoir entirely, selling their assets there within six years. Houston-based Noble Energy would only need to dilute its assets from its 36-percent share today to 25 percent, and could remain the basin’s operator.



Both companies would be required to sell their holdings in two much smaller offshore reservoirs, Karish and Tanin. Unlike the previous draft of the compromise outline, which Gilo had supported, this version revoked a mandate that all of Leviathan shareholders market their gas to the Israeli market separately and posed weaker restrictions on Noble in Tamar.

Acknowledging that the government has priorities aside from competition, such as concern that the gas companies could prevent the development of the resource, Gilo said at the Finance Committee meeting that he and the other officials had “reached different conclusions.”

While the earlier draft of the outline “was far from ideal,” Gilo stressed that it provided a “real chance” to allow for competition.

“Even in a market with only a few players, there is a chance for competition,” he said. “The companies have enormous power over the government, because their hand is on the tap.”

Criticizing the “harassment of the Antitrust Authority,” MK Shelly Yacimovich (Zionist Union) said that the country is facing “a war with big money.”

“It is unfortunate that the finance minister is refraining from getting involved and the narrative of the gas companies is the same as the narrative of the government – that it is forbidden to monitor prices,” she said, referring to Finance Minister Moshe Kahlon’s recent announcement that he would not become involved in the issue.

MK Rachel Azaria, from Kahlon’s Kulanu party, meanwhile said that the gas debate represents “a very complex situation.”

“This is not a matter of coalition- opposition – it is the goal of every member of the committee to ensure that the country’s citizens will benefit from this gift we received,” she said.

Meanwhile, the Knesset TV Channel reported on Wednesday evening that Prime Minister Benjamin Netanyahu gave a briefing to Likud members of the Finance Committee, as to how to present the government’s position on the subject of the gas market.

“There is no control on gas prices because it will scare off investors, as has happened in other countries,” the message to Likud MKs said, according to Knesset TV.

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