Israel to shift power supply to PA in $775m. deal

Palestinian officials said the deal would allow Palestinians to regain more control over their affairs and infrastructure.

May 1, 2018 19:50
3 minute read.
Israel to shift power supply to PA in $775m. deal

A worker walks in the new electrical substation near the West Bank city of Jenin July 10, 2017.. (photo credit: ABED OMAR QUSINI/REUTERS)

Israel’s public utility, the Israel Electric Corporation, is set to transfer much of the West Bank’s power supply to the Palestinian Authority, in a deal worth some NIS 2.8 billion ($775 million) that is a step toward granting the Palestinians more autonomy over their affairs.

The IEC signed the 15-year agreement with the PA on Tuesday, making the PA responsible for the power supply. It includes plans to construct four high-voltage power plants.

Most of the three million Palestinians living on the West Bank get their electricity from Israel, with a small area surrounding the city of Jericho relying on Jordan for its power, according to Reuters.

Finance Minister Moshe Kahlon touted the agreement, calling it was a “historic step” that could lead to further diplomatic breakthroughs between Israel and the Palestinians.

“Strengthening economic cooperation between Israel and the PA is first and foremost an Israeli security interest,” Kahlon said in a statement. “The agreement will secure future payments to the IEC and strengthen its financial strength. I congratulate the negotiating teams on completing the mission.”

The deal will see the PA pay off a NIS 915m. debt to the IEC. It includes both collateral and a credit-guarantee mechanism, unlike previous agreements which unraveled as Israel and the PA sparred with one another over repayments.

The IEC has previously faced difficulty in getting some Palestinian customers to pay their debts, however, the High Court of Justice forbid the IEC from fully cutting off power to those customers, according to Globes Business Daily.

After the agreement’s terms are implemented, the IEC will sell power to the Palestinian Electricity Transmission Company through its four power plants, which are to be built by both the IEC and the PA.

The four power plants will be located in the Palestinian towns of Jalama, Nablus, Ramallah and Tarkumiya, the Palestinian news agency WAFA reported.

“The agreement brings about a new reality in the Palestinians’ energy sector, reduces restrictions on power supply and strengthens economic stability,” said Finance Ministry Director-General Shai Badad in a statement. “The fair payment for the electricity supplied to the Palestinians will open a new era in economic relations between the parties.”

Palestinian officials said the deal would allow Palestinians to regain more control over their affairs and infrastructure.
“The agreement... frees the Palestinian electricity sector of complete Israeli control, which has lasted for decades,” said Hussein Al-Sheikh, head of the PA’s civil affairs agency, as quoted by Reuters.

On the Israeli side, Energy Minister Yuval Steinitz said the Palestinians could now more easily upgrade their outdated electrical grid and take responsibility for their own affairs.

“With the signing of the agreement, we will be able to move forward with the Palestinians to develop a modern electricity grid, based on the model of the secondary station we inaugurated in Jenin,” he said, referring to a meeting last year he held in Jenin with Palestinian Authority Prime Minister Rami Hamdallah.

Tuesday’s agreement comes on the heels of three years of negotiations between Kahlon and Hamdallah, with other participants including the Coordinator of Government Activities in the Territories (COGAT) – the Israeli Army branch administering the West Bank – the Palestinian Minister for Civil Affairs, the IEC and the PETC.

The deal also reportedly reduces electric tariffs paid by Palestinian customers who buy power at wholesale prices, according to WAFA.

Given the split between Fatah – the Palestinian faction administering the West Bank – and Hamas, which rules Gaza, the agreement pertains only to the West Bank. Gaza continues to suffer from rolling blackouts and a severely curtailed power supply.

In Gaza, residents are lucky to get between six to eight hours a day of power amid a years-long dispute between Israel, Egypt and Hamas over providing electricity. The coastal enclave has been subject to a partial Israeli-Egyptian blockade for the past decade.

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