Following months of delay, the Israel Electric Corporation on Monday signed an agreement with Israel Corporation's OPC Rotem unit for the supply of power in the largest-ever deal with a private power producer.
"For too long there has been only talk about the entry of private power producers," National Infrastructures Minister Uzi Landau said at the signing ceremony Monday in Jerusalem. "This is an important moment for the Israeli electricity market. The National Infrastructures Ministry will continue to hasten the entry of other private producers into the electricity, advanced-technology and clean-energy market."
The natural-gas-driven Mishor Rotem power plant is to be built in the Negev and is expected to start operating and supply electricity sometime in 2013. Under the terms of the deal, which is worth an estimated NIS 10 billion, the plant will supply 400 megawatts of electricity to the IEC.
The signing ceremony was attended by Israel Electric Corporation CEO Amos Lasker, OPC Rotem CEO Giora Almogy, Israel Corporation CEO Nir Gilad, Finance Ministry Accountant General Shuky Oren, Veolia Environment Israel CEO Uri Starkman and Israel Electricity Authority chairman Amnon Shapira.
Landau said the agreement was important in light of an expected electricity shortage and would herald the entry of more private power producers into the local electricity market.
At the end of September, Israel Corp. bought an 80-percent stake in OPC Rotem from Ofer Energy, owned by the Ofer Brothers.
In 2003, OPC won a National Infrastructures Ministry tender to build and operate a 400-MW natural-gas-driven power station in Mishor Rotem in the Negev, but disagreements between the IEC and the Public Utilities Authority and other bodies delayed the signing. The new power station is expected to cost $300 million to $400m.
OPC Rotem was seeking a partnership with an international energy firm for the plant, Almogy said.
"OPC Rotem has already started to advance the power plant project," he said. "Two months ago we published an international tender for building a power plant. A few of the largest international energy companies in the world have already indicated interest and are, for the first time, prepared to compete in such a tender of this magnitude in the Israeli market.
"For the purpose of the construction of the power plant, these companies will need to employ metal-factory and other workers in the South, which will create many jobs during the building period. We expect the power plant to start to operate in 2013," Almogy said.