Finance Minister Yuval Steinitz decided, on Sunday, to lower the excise tax and purchase tax for diesel fuel used to produce electricity in an effort to minimize a threatened rate hike by the Israel Electric Company. The company has had to use relatively expensive diesel following sabotage to the Egyptian pipeline bringing natural gas to Israel. Under the 69 percent cut, the electric company will pay the same 31 percent charged other industrial customers.
The Treasury said the reduction is part of an emergency order, in effect until the end of 2011. It is expected to cut an anticipated 16-percent rate hike in half. Additional savings could be drawn from temporary use of "Mazut", a different kind of fuel oil that is not as clean as diesel, subject to the approval of the Environmental Protection Ministry..