Historic agreement:
PA electric debt settled

PA to pay Israel Electric Company NIS 915 million in unpaid debts under new agreement.

Arutz Sheva Staff ,

signing the agreement
signing the agreement
Yossi Weiss

The Palestinian Authority settled its outstanding debt to the Israel Electric Company in a historic agreement Tuesday.

The agreement, which was signed between the Israel Electric Company (IEC) and the Palestinian Authority's Electricity Transmission Company, regulates the sale of electricity to the PA for the next 15 years.

The PA had built up a debt of NIS 915 million (approximately $253 million) to the IEC. Under the new agreement, the debt will be paid in full.

The IEC is expected to sell to Petel electricity and auxiliary services through four high voltage substations that were set up by the Israel Electric Corporation for the Palestinian Authority, as well as high and low voltage connection points for distribution and supply by PETL or anyone on its behalf to consumers in the Palestinian Authority.

Distribution, supply and ownership of the four substations will be owned and operated by PETL.

The financial scope of the agreement was estimated at NIS 2.8 billion per year ($775 million).

The payment of the debt will be transferred in 48 payments for electricity consumption for the period prior to September 12, 2016, as stipulated in the Agreement of Principles signed between the Government of Israel and the Palestinian Authority on September 13, 2016.

For the first time, a mechanism to guarantee payment for electricity was established to secure all payments due to the IEC by virtue of the agreement, including in respect of past debt. The Company will be provided with a bank guarantee and a guarantee of the Palestinian Authority, in addition to the other existing collection mechanisms available to the IEC.

Finance Minister Moshe Kahlon said that "the signing of the commercial agreement is a historic step that complements the agreement signed by the governments in September 2016. Strengthening economic cooperation between Israel and the PA is first and foremost an Israeli security interest. The agreement will secure future payments to IEC and strengthen its financial strength. I congratulate the negotiating teams on completing this task."

Energy Minister Yuval Steinitz said, "In my meeting last year with Palestinian Prime Minister Hamdallah in Jenin, we agreed on the need to arrange the debt and to arrange relations between the IEC and the PA. The arrangement signed today is a breakthrough, both in terms of the steps to return the Palestinian debt to the IEC and the State of Israel, and also in terms of arranging future relations, in a manner that will prevent the formation of debts in the future."

"With the signing of the agreement, we will be able to move forward with the Palestinians to develop a modern electricity grid, according to the model of the secondary station that we inaugurated in Jenin," added Steinitz.

The chairman of the IEC, Major General (res.) Yiftah Ron Tal, said that "this is a historic event. In this agreement, the IEC has solved for the first time the historical distortion of the accumulation of debts without guarantees, without the ability to collect and control the volume of the debt."

"This anchoring agreement not only constitutes an unprecedented financial achievement, it represents a significant milestone in the regulation of the commercial-electric relationship between the Israel Electric Corporation and the Palestinian Authority."

Coordinator of Activities in the Territories Maj. Gen. Yoav Mordechai said that "from today, a resident of Nablus, Hebvon, and Jericho is no longer working with Israel but with the Palestinian Authority, and we have also provided assurances and guarantees to the IEC that all Palestinian consumption will be paid in full."

"This is a historic agreement that constitutes a significant milestone in the path of consolidating Israel's security interests while safeguarding the interests of the Israel Electric Corporation and the defense establishment," he stressed.

Chairman of the Electricity Authority, Dr. Assaf Eilat, said that "the Electricity Authority has taken an active part in the negotiations, at the end of which the rate will be approved by the Authority plenum, paving the way for the implementation of the agreement to provide regular electricity to the Palestinian Authority.