Today, Israel Electric Corporation (IEC) (TASE: ELEC.B22) reported to the stock exchange that it has received a first NIS 590 million payment, which begins covering the Palestinian Authority's NIS 2 billion debt. The remaining debt will be repaid in 48 installments. This payment has been transferred following a memorandum of understandings signed last month by Minister of Finance Moshe Kahlon, Coordinator of Government Activities in the Territories General Yoav Mordechai, Ministry of Finance Director-General Shai Babad and the Palestinian Authority's Civilian Affairs Minister Hussien Ash-Sheikh.
As part of the agreement, it had been decided that IEC would stop working with private parties in the PA, from which it had had problems collecting payment so far. Instead, a central PA entity will be established and be responsible for continuous power supply to all Palestinians in its territory and payments to IEC. Earlier this year, as part of the efforts to collect the debt, the government and IEC agreed that a portion of the PA's tax money will be used to repay the debt, but prohibited IEC from cutting power out of concern over harsh international community responses.
In early April 2016, IEC cut power supply to Bethlehem, Hebron and Jericho by half, as part of a plan to reduce supply to a different area of the West Bank every day. The East Jerusalem electric corporation, which buys power from IEC and is responsible for its supply to large areas of the PA, has paid IEC NIS 60 million, in order to buy time for negotiations. In parallel, the East Jerusalem corporation submitted a plea to the High Court of Justice, which issued a warrant barring a reduction of power supply, despite debts to the IEC.
Published by Globes [online], Israel business news - www.globes-online.com - on October 5, 2016
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