As talks continue between Israel and Egypt over the possibility of a cease-fire deal with Hamas in the Gaza Strip, senior defense officials said Thursday that they are pessimistic that a deal will be reached. The defense officials confirmed reports that as part of the talks - with Defense Ministry Diplomatic-Security Bureau chief Amos Gilad in Cairo this week - Egypt had agreed to invest $32 million in building electrical lines to begin supplying Gaza with 150 megawatts of electricity. This will enable Israel to cut off its supply of electricity, via 10 power lines, to Gaza. "The talks are ongoing but it is unlikely Hamas will abide by it even if we agreed to a cease-fire," said one official involved in the talks. "In addition, if the smuggling doesn't stop from Egypt into Gaza we will not be able to agree to a cease-fire." Egypt would set up a power line from the city of El-Arish, the officials said, but the deal must still be finalized. But when it's complete, Egypt will within two years build a power line to supply 150 megawatts to Gaza. An economic adviser to Salaam Fayad, the prime minister of the Palestinian government in the West Bank, said Thursday that Israel had approved the project. Fayad's administration, Egypt and the Islamic Development Bank in Saudi Arabia had already agreed to the $32 million project, said the adviser, Jawad Al-Naji. "We signed the agreement with the Islamic fund and with the Egyptians," Al-Naji said. "Now we have entered the executive phase after the Israeli approval." Despite Egypt's willingness to begin supplying Gaza with electricity, Israeli defense officials said it was unlikely that Egypt would begin playing a larger role when it comes to facilitating the transfer of supplies in and out of Gaza. Also Thursday, two Hamas men were killed in an explosion at a Hamas training base in the central Gaza Strip, Palestinian officials said. Hamas blamed Israel for the blast, which it said was caused by an Israeli airstrike. The IDF denied the reports and said it was not involved in the explosion. AP contributed to this report.