"We'll have to let 600 workers go as part of the reform in Israel Electric Corporation (IEC) (TASE: ELEC.B22). I see no other choice," IEC chairman Yiftah Ron-Tal said today at the 2015 Israel Energy and Business Conference in Tel Aviv. "We'll have to sell at least one power station. We're making reforms even without reform." The State Comptroller recently stated that IEC had 2,500 unnecessary workers.
Ron-Tal added that IEC may be surviving in the short term, but not in the medium and longer term, saying, "The company's revenue is falling by 10% every year. Furthermore, there is a shortfall of billions of shekels in infrastructure investments in Israel. We saw what happened in the last storm."
According to Ron-Tal, additional sources of revenue can be created. "There are burdensome and completely unnecessary restrictions in Israel, in developing power stations, for example. There's no reason to bring contractors from overseas when the company has a so much know-how. You should let us operate abroad, too. Otherwise, this company will shrink, and won't give the necessary service in an emergency."
Ron-Tal also said that a situation in which the government company's revenue is falling and private electricity producers have a 30% return is unreasonable.
Ministry of Finance deputy budget director Udi Adiri corrected Ron-Tal, saying that the returns were minimal, not 30%. "It's true that industry benefits from a significant discount in the cost of electricity, but the return is nowhere near those numbers," he said.
Published by Globes [online], Israel business news - www.globes-online.com - on November 24, 2015
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