The government's troubled plan to privatize Oil Refineries (Bazan) has been hit by another setback, with Israel Corp. saying on Thursday that it is backing out of a deal to sell its 26% stake in the company to the state. In early June, Israel Corp. agreed to a price of $120m. in a transaction that would have increased the state's holding to 100%. Once this deal would have been completed, the government planned to sell the monopoly's refineries in Ashdod and Haifa separately to encourage competition. Israel Corp. blamed the Treasury's "two and half a years of fickle behavior," for its decision, saying that the government went back on two agreements and failed to fulfill its commitments under the deal agreed in June. "Even after the meeting with (then Finance Minister) Binyamin Netanyahu, the state continued to drag its feet and didn't obtain the approvals it needed despite the minister promising that these approvals would be obtained within a few days," Israel Corp. said. At the time of the agreement, Netanyahu gave his staff three months to settle on a price of not more than $120m., a deadline that ran out at the start of this month. Israel Corp. said that the deal isn't binding and that it would rather the matter was decided in court. "Israel Corp. doesn't see itself as obligated to sell its shares in Bazan to the state and prefers that the matter will be decided in a qualified legal forum," the company said. In June, Attorney General Menahem Mazuz warned the government not to become embroiled in a legal battle. "A legal dispute is liable to last for years and its outcome is uncertain. In addition, it would probably cause damage to Bazan and to the economy, including preventing the reform of the fuel industry," he said. On Thursday, the Finance Ministry declined to comment on Israel Corp.'s actions, while the company declined to comment on reports that it is backing out of the deal because the sale price is too low, especially given that Bazan's income has surged following a rise in oil prices. In the second quarter, net profit jumped to NIS 400m. from NIS 270m. in the same period a year earlier and revenue rose to NIS 6.8 billion from NIS 4.29b. The deal between Israel Corp. and the Treasury values Bazan at around $460m. but Idan Ofer, who controls Israel Corp. with his brother, was reported to have said the company is worth $3b. Even in June, Israel Corp. chief executive Yossi Rosen wasn't happy with the agreement. "We are not satisfied with the price offer, which reflects between 15% and 20% of Bazan's current value," he said. Despite withdrawing from its agreement with the government, Israel Corp. said on Thursday that it still supported the privatization of Bazan. "Israel Corp. makes clear that as a Bazan shareholder it won't put obstacles in the privatization process that the government is carrying out," the company said. Israel Corp. may not be trying to block the privatization but Infrastructure Minister Binyamin Ben-Eliezer is. On Sunday the cabinet will discuss an appeal he made to halt the process after the inter-ministerial committee on socio-economic affairs approved it in July. Ben-Eliezer has argued that the division of Oil Refineries' Haifa and Ashdod facilities into two competing companies would create a "duopoly" and lead to a rise in prices.