Government signs off on Mekorot restructuring

The government on Wednesday signed an agreement with Mekorot approving a restructuring process at the National Water Company aimed at making the state-owned company more efficient and competitive.

By signing the agreement, Mekorot committed to execute structural changes and break up the company into a number of smaller operations according to the process presented by National Infrastructures Minister Binyamin Ben-Eliezer, which was approved unanimously by the government on Sunday. The agreement, which was signed in the presence of BenEliezer and Finance Minister Ronnie Bar-On, is for a period of two years after which a water authority and a water tariff system will be set up based on production costs. In addition, a model for the regulation of water suppliers will be established. "I welcome the structural changes that were approved by the government, which will enable Mekorot Water and Mekorot Enterprises to advance in developing a more efficient and competitive Israeli water market and to realize the business potential of Mekorot around the globe," said Mekorot Chairman Eli Ronen. Ben-Eliezer said the restructuring at Mekorot has been under discussion for the past few years but until now it had not been implemented in full and plans to restructure the business for partial privatization had made little progress. In 2004, for instance, it was decided to make a separation between the supply of water, which is a natural monopoly, and activities in competitive spheres that could be in competition with other enterprises in the free market. Under the agreement signed Wednesday, the company and the employees have committed themselves to a process of increasing efficiency, reducing costs and improved service. In the restructuring, Mekorot will become a group of companies at the top of which will sit Mekorot Holdings as the stateowned parent company. Underneath it will be Mekorot Water, which will be the water provider; Mekorot Enterprises, which will work in the competitive sector of the water industry; and National Water Carrier and Assets, which will own the water infrastructure and the company's assets.