Israel Electric Corporation (IEC) (TASE: ELEC.B22) chairman Yiftah Ron Tal has warned Prime Minister Benjamin Netanyahu about what will happen to IEC's debt and development in the electricity sector if the state does not take immediate measures to deal with financial situation of the company, whose debts exceed NIS 70 billion.
"We are issuing a warning that the immediate addressing of the company's financial situation must not be neglected, with or without reform, on account of the risk to economic development and the company's debt, with all the ensuing consequences," Ron Tal wrote in a letter also addressed to Minister of Finance Yair Lapid and Minister of National Infrastructures, Energy, and Water Silvan Shalom.
Ron Tal's warning comes a week after IEC CEO Eli Glickman announced his resignation, after the reform process reached a dead end. Lapid vetoed the arrangement reached in negotiations between the state, through the Yogev Committee, and the Histadrut (General Federation of Labor in Israel) and IEC workers committee. Lapid said the arrangement constituted a bribe to the country's strongest workers committee. At Lapid's instructions, the state issued a take it or leave it offer lowering the pension supplement offer to workers remaining in the company in exchange for their consent to reform, from NIS 2,000-2,500 a month to only NIS 1,000. The offer lowers the total cost to the state of the reform by NIS 2 billion. The Histadrut rejected the offer the same night. The IEC board severely criticized the offer, but refrained from taking a decision rejecting it. At the same time, the Haifa District Labor Tribunal issued a ruling allowing IEC workers to renew their sanctions at the company, subject to restrictions.
In his letter, the IEC chairman warned of the strategic consequences of halting reform of the IEC. "There is no practical alternative policy of 'sit and do nothing,' " Ron Tal wrote. "The electricity sector is in turmoil, and refraining from significant and essential measures is liable to cause a loss of operative, planning, and economic control in one of the most critical areas for daily life in the country."
Published by Globes [online], Israel business news - www.globes-online.com - on September 30, 2014
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