Knesset Committee passes reforms to break IEC monopoly

After five hours of debate the reform program received the support of 10 ministers, while one minister voted against the plan and one abstained.

By SHARON WROBEL
February 26, 2007 08:24
1 minute read.
Ofer Eini (R).

ofer eini biz 88 298. (photo credit: Ariel Jerozolimski)

 
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The Knesset Economics Committee on Sunday passed the unilateral electricity sector reforms aimed at breaking the monopoly of the state-owned Israel Electric Corporation in an effort to boost competition in the energy market. "This reform is good for the country, the Israel Electric Corporation, and its workers and any delay in the process would come to nothing," said Infrastructures Minister Binyamin Ben-Eliezer, who last week threatened to privatize the Israel Electric Corporation on March 3 when the IEC licenses expire, if the Knesset did not pass into law the reforms to break the electricity monopoly. After five hours of debate the reform program received the support of 10 ministers, while one minister voted against the plan and one abstained. The Knesset plenum is expected to vote on the proposed reforms on this week. "The Knesset members showed national responsibility for the future of Israel's electricity market and showed that they are guided by the good of the Israeli consumer," said Finance Minister Avraham Hirchson. Reacting to the move, the Histadrut Labor Federation said workers' representatives were disappointed that the government was acting without the engagement of the workers. The reform, however, has not yet dealt with employee rights, nor has it dealt with one of the most crucial problems in the IEC - the company's huge NIS 45 billion debt. "The current reform legislation does not provide a response to the issue of creditors," said Moshe Gavish, Chairman of the IEC, who warned that it would be a catastrophe if the creditors did not receive guarantees that their rights would not be harmed. Under the proposed reforms of the IEC reforms, which were approved by the cabinet last Sunday, the company is supposed to be split up into a number of firms handling electricity production, distribution and transport by 2009. By mid-2013, the production and distribution firms should be 49-percent privately owned. In a last ditch attempt, the Histadrut Labor Federation and IEC employees, over the weekend, submitted a compromise proposal to the Ministries of Finance and National Infrastructure relating to electricity sector reform. According to the proposed compromise, the workers would agree to the IEC being split into three subsidiary companies, which would be responsible for the production and electricity distribution segments. The Histadrut and the workers, however, expressed opposition to privatizing 49% of the subsidiary companies' share capital. The BizPost contributed to this report.


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