Lower prices seen as household gas reforms pass

New legislation to increase competition in local market.

By MATTHEW KRIEGER
December 25, 2007 10:04
3 minute read.
gaz biz 88 224

gaz biz 88 224. (photo credit: Ariel Jerozolimski)

 
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With global commodities prices surging and household gas prices up some 40% since September, Israelis may be in for some much needed relief after the Knesset Economic Affairs Committee on Monday approved Infrastructures Minister Binyamin Ben-Eliezer's gas reforms bill, which is aimed at opening the local market to increased competition and reducing prices. "This bill is a very important bill for consumers as it will lead to greater competition in the local market," said MK Gilad Erdan, Economic Affairs chairman. "I believe that the reforms will lead to many changes in the gas industry and to lower prices for customers," he said. Ben-Eliezer applauded the committee for passing the bill, but simultaneously cautioned that there is still work needed to be done. "The passing of the bill is only the beginning of the journey and we will continue to work hard to monitor consumer affairs in order to bring greater protection to the country's consumers," he said. The reforms bill, which was constructed by a joint team of representatives from the Infrastructures and Finance ministries, is aimed at easing the process by which consumers can switch gas suppliers as well as restricting the largest companies from infringing on the customer bases of smaller operations. According to Infrastructure Ministry calculations, although there are some 33 companies that supply gas to consumers, 92 percent of the market is dominated by only four companies - Isragas, Amisragas, Supergas and Pazgas. The smaller companies have been successful only in penetrating the balloon-supplied gas market, as 80% of sales of gas balloons have come from the smaller enterprises. Sales of gas balloons, however, only account for 30% of the overall home-gas market, while 70% of gas sales are from pipeline supplied gas. Once the bill comes into effect on January 1, following second and third readings before the Knesset, it will be illegal for companies to target customers of other gas companies for at least the first six months after a customer has signed a new contract. Customers in newly constructed apartment buildings will have their choice of gas supplier, as opposed to today when companies sign agreements with the building contractor to supply every tenant with gas. Additionally, consumers will not be obligated to sign year-long contracts requiring them to stay with one supplier. Representatives from the country's smaller gas companies hailed the bill as "long overdue." "This bill is excellent for us - it is wonderful and it will allow us to really be able to compete against the larger gas companies such as Amisragas and Isragas, something that until now we have not been able to do," Ori Ganay, marketing manager of Jerusalem-based Gaz-Yagel Ltd., told The Jerusalem Post. "But really, the most important part of this bill is that it is great for the customers." "We are talking about something which is going to lower by some 40% the gas bills that customers have to pay each month," said Uriel Lynn, president of the Federation of Israeli Chambers of Commerce. "This bill is the result of hard work on behalf of the Infrastructures Minister and the members of the Economics Committee and their refusal to cave in to the strong lobbying efforts put forth by the country's biggest gas companies." Meanwhile, on Monday, the Manufacturers Association of Israel called on the government to retake control of gas prices from the refineries, claim that since the Industry, Trade and Labor and Infrastructures Ministries ceased setting gas prices in October, industries have been faced with a steady increase in the price of gas, with prices today standing some 40% above October rates. The price hikes are expected to cost manufacturers some NIS 140m., the Association said.•

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