Electricity workers (illustration)
Electricity workers (illustration) Flash 90

Gaza's sole power plant has halted production, the Hamas-run energy authority said Tuesday, in the latest dispute with the Palestinian Authority (PA) over fuel tax.

Relations between Islamist movement Hamas and the PA, which is dominated by bitter rivals Fatah, are at rock bottom despite an April 2014 agreement that installed a unity government and was meant to centralize administration of the two.

"The levying of fuel taxes by the finance ministry in Ramallah is preventing the (Hamas) energy authority from running the power station," a statement from the authority said, according to AFP

The PA must "lift all taxes on fuel" to get the plant up and running, it said.

Hamas pays the PA for fuel imported to Gaza, but is short of cash and had been unable to cover the additional costs in tax. 

Hamas's energy authority chief, Fathi al-Sheikh Khalil, told Hamas's Palestine magazine on Wednesday that the government should completely cancel the VAT and excise tax for a year in order to keep the plant running. 

Khalil added that Gazans have not paid their electricity bills throughout the month of Ramadan, and that has added to the strain. 

Gaza needs an electricity supply of 440 MW, he said - of which it imports 120 megawatts from Israel and 27 megawatts of electricity from Egypt. The rest is produced at the local power plant. 

In December, Qatar stepped in and donated $10 million (nine million euros) to the PA to cover the tax, effectively exempting Hamas from paying it.

But that money has dried up, and the PA is insisting Hamas begin paying the tax again, the Islamist movement says. Hamas shut the power plant in March over the same dispute.