Gov’t allows IEC to use NIS 500m. for fuel

National Infrastructures Minister Uzi Landau budgets money for the construction of power lines.

power lines 311 (photo credit: Ben Dury/NPA)
power lines 311
(photo credit: Ben Dury/NPA)
Israel Electric Corporation has received permission to use NIS 500 million to buy diesel in August. Minister of National Infrastructures Uzi Landau has budgeted for the money for the construction of power lines.
Sources inform Globes that IEC CEO Eli Glickman asked Landau for the money last week, because the utility’s diesel reserves will run out by the end of July. Without more money, the utility will reach its electricity production limit to meet demand in August.
Landau agreed to the request as well as Glickman’s advice to postpone the power lines construction to early 2012. Landau said that he still expects IEC to meet the timetable for the power lines’ construction.
IEC estimates that it will need NIS 3.7 billion this year to buy enough diesel to replace the shortfall in natural gas caused by disruptions in Egyptian deliveries. Consumers will pay the final bill through rate hikes, but IEC needs interim financing to buy diesel now.
IEC also wants the release of NIS 880 million held by the Public Utilities Authority (Electricity) for the construction of power stations. IEC can also raise NIS 400 million on the capital market – the balance of NIS 4 billion that its board of directors approved to be raised this year.
However, the key factor in this affair is the Finance Ministry, which could save IEC NIS 1.8 billion by foregoing excise on diesel. If it does so, the upcoming electricity rate hike can be lowered from 19 percent to 12%.
The latest attack on gas pipelines in Sinai earlier this month halted deliveries for the fourth time so far this year. Even when the gas was flowing, deliveries were only a quarter of the contracted amounts.