Israel Electric Corporation (IEC) (TASE: ELEC.B22) will ask the government for a NIS 500 million budget supplement because of its cash-flow problems. The utility will have to increase its purchases of diesel to make up for the faster than planned depletion of Yam Tethys's natural gas reservoir.
In addition, electricity demand during summer was less than projected, reducing the utility's cash flow by NIS 400 million.
IEC says that gas production at Yam Tethys is down by more than 25%, and is expected to continue to decline.
"IEC expects an additional NIS 100 million in expenses, due to the use of more expensive fuels (especially diesel) through the end of 2011," IEC said in a notice to the TASE today. "The company intends to hold a bond issue to improve its cash flow, and has asked the Israeli government and Public Utilities Authority (Electricity) for aid for the cash flow, as the company has successfully done in the past."
The gas reserves of Yam Tethys, owned by Delek Group Ltd. (TASE: DLEKG) and Noble Energy Inc. (NYSE: NBL), are being depleted more quickly than planned as pumping was increased to make up for the halt in gas deliveries from Egypt this year.
Published by Globes [online], Israel business news - www.globes-online.com - on October 5, 2011
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