C’tee approves NIS 2.4b in guarantees to IEC

Knesset Finance Committee unanimously authorizes NIS 2.4 billion loan guarantee to the Israel Electric Corporation.

electricity line old370 (photo credit: Marc Israel Sellem)
electricity line old370
(photo credit: Marc Israel Sellem)
The Knesset Finance Committee on Tuesday unanimously authorized a NIS 2.4 billion loan guarantee to the Israel Electric Corporation, to ensure it could keep borrowing at low rates and meet its debt obligations.
The IEC said it needed the guarantees in order to keep electricity rates down, especially given the disruption of natural gas from Egypt and other sources, but committee members voiced their disaffection with the company no less.
"Nobody comes out righteous in this story; not the state, not the company and not the workers," Committee Chairman Nissan Slomiansky said, adding that the committee's decision followed an explicit commitment be Finance Minister Yair Lapid and the company to pursue reforms.
In 2009, IEC's total debt stood at NIS 71b, according to Chairman of the Board Yiftach Ron-Tal, but the geopolitical changes prevented them from bringing down the debt as promised. As a result, Ron-Tal said, it would not be able to pay back some of its loans until 2014, and needed to roll them over, a challenge given the 2012 drop in its credit rating.
"Unless the guarantee is approved, it will collapse like a house of cards. We won't be able to raise funds overseas, we won't be able to fulfill our obligations and that will lead to a collapse of all our financial obligations," said IEC CEO Eli Glickman.
Yesh Atid MK Boaz Toporovsky (Yesh Atid) slammed the company for its failures. "The state is in a NIS 40b deficit and each citizen pays the cuts imposed on him, and here the state is willing to give a NIS 2.4b guarantee, which is like sticking its hand in its pocket, without seeing substantial steps, just negotiations." Ron-Tal promised to jump-start reforms. “The reform is not just a structural change, adding competition, and removing the National Dispatch, but is a profound organizational change, parting with 2000 employees, and improving efficiency”, he said.