Sources inform ''Globes'' that the Ministry of Finance will give Israel Electric Corporation (IEC) (TASE: ELEC.B22) an additional NIS 1.5-2 billion in guarantees. The addition will bring the guarantees to NIS 6 billion since the beginning of the year, in line with the financially troubled utility's request.
The Ministry of Finance said today that the guarantees were due to the government's wish to prevent electricity rate hikes, which would further burden the public and manufacturers. The ministry is also worried that if it does not extend the guarantees now, IEC's credit rating was liable to be downgraded.
IEC is raising debt to cover its cash flow deficit caused by the halt in Egyptian natural gas deliveries. The natural gas shortage has forced IEC to buy more expensive diesel and industrial oil to generate electricity. The price of diesel is six times the price of gas.
IEC says that the cost of fuel for generating electricity reaches NIS 100 million on peak demand days, and is NIS 60-100 million a day during the summer. IEC needs an additional NIS 10 billion in 2012 to finance its extra fuel bill.
The natural gas shortage is due to end in April 2013, when the Tamar gas field comes on line.
Published by Globes [online], Israel business news - www.globes-online.com - on August 16, 2012
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