After decades of evading its debt to the Israel Electric Corporation (IEC) - decades during which Arabs living in Judea and Samaria enjoyed unpaid-for electricity while Israeli consumers paid electric bills which rose by several percentage points - the Palestinian Authority (PA) may soon pay off its debt.
According to Israel Hayom, the Finance Ministry and Palestinian Authority representatives reached an agreement in which the Authority will pay its debt of two billion NIS.
The debt ballooned over the course of many years, during which time the Palestinian Authority refused to pay for electricity produced by the IEC and which was transferred to PA providers and electricity lines. For years, attempts were made to collect the debt, but the PA denied its existence and claimed that the Israeli electricity does not reach PA-controlled areas.
In Israel as well, there were many who believed that the debt could not be collected, since the company responsible for providing electricity to PA-controlled areas was not itself seen as under PA control, and therefore the PA could not be held responsible for its debts.
At the headquarters of the Coordinator for Government Activities in the Territories (COGAT), officials also opposed the debt's collection, claiming that such a step would endanger the PA's economic stability.
Now, due to a policy change implemented by Finance Minister Bezalel Smotrich, the situation has changed: At Smotrich's instruction, Israel began deducting the cost of the provision of electricity to the PA from the taxes it collects on the PA's behalf and transfers to it. This step prevented the PA's electricity debt from growing, but did not resolve the matter of the previous debt, which amounted to two billion NIS.
Recently, this problem was also resolved: The Israeli Finance Ministry found a way to hold the PA responsible for the debt, while at the same time meeting with PA representatives and showing them that the Israeli electricity lines do reach Arab populations in Judea and Samaria.
With Smotrich's support, the Finance Ministry clarified to PA officials that there are two ways to pay off the debt: Creating a payment plan in cooperation with Israel, or unilateral deductions from the monies Israel transfers to the PA. The PA officials chose to create a payment plan, and over the past five months, 50 million NIS were deducted from the tax transfers in repayment of the debt.
The deductions will continue over the next five months, until a sum of half-a-billion NIS has been repaid. In light of this, the Finance Ministry last month transferred 300 million NIS to the IEC. The Ministry is now working to arrange the repayment of the rest of the debt, part of which is comprised of interest and other fees.
A source in the Finance Ministry told Israel Hayom that the repayment of the debts is possible due to the change in policy led by Smotrich: "The problem was well-known for many years, but there was never a serious attempt to return the money. You need to understand that at the end of the day, these debts were passed to the pockets of Israeli citizens, who both paid for the electricity of more than a few Palestinians, and for the price of the IEC's financial debt. Two billion shekels is not small change."
A source close to Smotrich added: "It is all a question of willingness to insist and ability to withstand. The fact is that as a result of his policy, money from the taxes is not being transferred to Gaza, even though the Americans wanted that very much; funds are being deducted for the benefit of terror victims; and now the electricity debt is being repaid. This is something that could have been done a while ago, but there needed to be someone who would demand it."