Israel pays PA electricity debts with withheld taxes

Finance Minister transfers of NIS 435 million of Palestinian financial forfeiture to the Israel Electric Corporation.

December 12, 2012 21:10
2 minute read.
Electric lines [illustrative photo]

Electricity lines 390. (photo credit: Thinkstock/Imagebank)


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Finance Minister Yuval Steinitz completed the transfer of NIS 435 million worth of Palestinian financial forfeiture to the Israel Electric Corporation on Wednesday morning, the ministry announced later in the day.

The Palestinian Authority has already accumulated hundreds of millions of shekels in debt it owes to the IEC, the ministry stressed. While during past political crises the Israeli government simply decided to delay the transfer of funds to the PA, in light of the PA’s unilateral request to upgrade its UN status Steinitz and Prime Minister Binyamin Netanyahu decided to transfer the Palestinian assets directly to the IEC.

The money transferred to the IEC comes from income taxes collected by Israel on the PA’s behalf each month. These funds are typically transferred to the PA at the month’s conclusion.

The government can deduct allocations for electricity, water, hospital treatments and other infrastructural services Israel provides to the PA.

In August the IEC warned it might intermittently cut power supplies to the West Bank due to NIS 662m. in unpaid debts from Palestinian consumers – a decision that was postponed due to the Ramadan holiday.

The sum has already risen to nearly NIS 730m., according to Hisham Omari, CEO of the Jerusalem District Electricity Company (JDECO), who spoke with The Jerusalem Post on Wednesday.

JDECO, which provides power to east Jerusalem and the eastern portion of the West Bank, owed the IEC NIS 423m. as of August, and now owes nearly NIS 460m., according to Omari. The remaining amount of debt comes from a combination of the Gaza Strip and areas in the northern and southern West Bank that fall outside JDECO’s jurisdiction and instead are the PA’s direct responsibility.

In August, Omari told the Post that JDECO’s debt to the IEC was primarily due to the tendency by refugee camp residents to refuse to pay their electric bills, but also because government bodies had also failed to pay.

Because the PA is struggling financially it has cut employees’ wages, creating a situation where neither government institutions nor their employees are willing to pay their bills to JDECO. Also, electricity theft is rampant in Area C of the West Bank because the Palestinian police are unable to patrol there, Omari said.

In Gaza, the Hamas government collects fees from residents and businesses for electricity use, but never transfers them to the Palestinian Energy Authority in Ramallah, using the money for its own purposes, Omari explained in August.

All of Gaza, therefore, essentially receives electricity “free of charge,” he said.

As for Wednesday’s NIS 435m. transfer, Omari said he learned about it from the media and had not yet received any “formal news that we can speak about.” There has not yet been any indication as to how the debt coverage would be distributed and whether JDECO would benefit.

“When they give back this amount I don’t know how they will distribute it,” Omari told the Post. “If they will include us or not, I don’t have any real official information.”

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