‘Electricity prices will soar if we don’t get Egyptian gas'

Public Utilities Authority: Electricity tariff could rise 16%.

By LILACH WEISSMAN/GLOBES
May 31, 2011 22:39
2 minute read.
A natural gas pipeline [illustrative].

A natural gas pipeline [illustrative].. (photo credit: Courtesy)

 
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“The price of electricity will soar in the coming months unless gas deliveries from Egypt resume,” Israel Electric Corporation CEO Eli Glickman said Tuesday.

“Natural gas is the best source for generating electricity, and the country must be called up on this matter,” he told the Knesset Economic Affairs Committee, which met to discuss the effect of the halt in deliveries of Egyptian gas on the Israeli economy, at the initiative of MK Robert Tibayev (Kadima).

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Glickman said unless Egyptian gas deliveries resumed, IEC’s expenses for generating electricity would reach NIS 3.5 billion in 2011.

Public Utilities Authority chairman Amnon Shapiro said, “The electricity tariff will rise 16 percent in a scenario of no Egyptian gas by the end of the year.”

Merhav Group senior vice president Nimrod Novik told the Economics Committee the Egyptian pipeline had been repaired, and the Egyptian government had almost completed upgrade work on the pipeline’s security infrastructure to prevent future attacks.

“Our sources in Cairo expect that the gas flow will resume within days,” he said. “The US partner in EMG has notified the Egyptian government that it has filed for international arbitration in Washington.

The Egyptian government has asked to revise the price of gas, but we refused.”



Merhav Group, owned by Yosef Maiman, is the largest Israeli partner in Egypt’s East Mediterranean Gas Company (EMG).

Novik said there has been no decision by the Egyptian government not to resume gas deliveries to Israel, adding that mid-level officials prefer not to make unpopular decisions to renew deliveries without the support of their political superiors.

“There is no doubt that the Egyptians fully understand the statement by President [Barack] Obama that the $1 billion aid package for Egypt, plus a $1 billion write-off of Egypt’s debt, hinges on Egypt meeting all its commitments,” he said. “Obviously the gas agreement, which is backed by the peace treaty with Israel, is one of Egypt’s commitments, and there is no doubt that they know and understand this.”

Novik said EMG’s shareholders were determined to protect their investment.

“The Egyptian government doesn’t want to deal with multibillion-dollar claims – not just from the shareholders, but also from Israeli customers who invested in natural gas-powered facilities,” he said.

In response to the statements, Tibayev asked for an urgent meeting to discuss a scenario of higher consumer electricity prices.

“It seems odd to me that the State of Israel is relaying on ambiguous sources in Cairo,” he said. “Have we reverted to the days when Cairo Radio tried to spread propaganda among Israelis? We want to know in a clear manner what is the future of the pipeline and the gas. I am left with a bad feeling that the future is not at all clear and that the State of Israel should begin to act as if there is no gas now or on the horizon.”

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