Electric company worker
Electric company worker Flash 90

Israel and the Palestinian Authority (PA) will sign an agreement on Tuesday that will resolve a long-standing dispute over the PA’s enormous debts to the Israel Electric Corporation (IEC), Haaretz reported on Monday night.

A senior Israeli official quoted by the newspaper said the agreement will involve erasing hundreds of millions of shekels of the debt, which currently runs to around 2 billion shekels ($530 million).

The senior official, who asked to remain anonymous, said the PA will agree to pay about 500 million shekels to the IEC immediately.

In addition, said the official, it will commit to paying another billion shekels in installments spread over a long period of time. The remaining 500 million shekels will be erased, so the PA will never have to repay it.

The PA acquires 95% of its electricity in Judea and Samaria and 75% of its electricity in Gaza from Israel. The Israeli supply to the PA-assigned areas has continued over the years despite the huge debt and despite the fact that Hamas continues to carry out terror attacks aimed at Israeli forces and civilians alike.

Last year, the IEC issued a final warning to the PA to pay its debts within three days or get disconnected. The threat was not carried out until a year later when the IEC intermittently limited electricity to the PA – a move which raised the ire of the State Department.

“As with every debt rescheduling that banks do with their customers, sometimes you give up on a small portion of the debt in order to get most of it back,” the official said Monday night.

The agreement also requires the PA to set up a mechanism for collecting unpaid electricity bills from Palestinian customers in Judea and Samaria, something that doesn’t currently exist, noted Haaretz. The PA will then become the only Palestinian agency the IEC has to deal with, and will assume full responsibility for paying the electric company.

Currently, the IEC has to collect payments from several different local electricity companies in Judea and Samaria, and those payments have often been delayed because the local companies had trouble collecting from customers.

The senior official said this situation is one of the main reasons the IEC ran up such enormous Palestinian debts. Israel hopes the new agreement will solve this problem, or at least significantly reduce it.

The agreement will be signed by Maj. Gen. Yoav Mordechai, Israel’s coordinator of government activities in the territories, and PA Civil Affairs Minister Hussein al-Sheikh. It was achieved after almost a year of negotiations involving Finance Minister Moshe Kahlon, senior Finance Ministry officials, COGAT officers and Palestinian representatives.