Teva Pharmaceutical Industries Ltd.’s (Nasdaq: TEVA; TASE: TEVA) new plant in Jerusalem will begin using liquid petroleum gas (LPG) for the drying process for tablets production. Pazgas Ltd. installed the LPG power plant for free, in exchange for a seven-year commitment to consumer a certain quantity of LPG, which will cover the installation cost.
Teva estimates that its Har Hotzvim plant will consume 2,000 tons of LPG a year, making it one of the largest energy consumers in Israel. The LPG power plan has been operating at partial capacity, and is expected to run at full capacity within a few months.
The power plant at Vishay Intertechnology’s fab in Migdal Ha’Emek, which used diesel until recently, yesterday implemented a contract with Pazgas, signed a week ago, to convert to LPG. Use of LPG is expected to cut Vishay Israel’s energy costs by 25%. It will consume 1,400-1,500 tons of LPG a year.
Israeli industry has begun converting from diesel to LPG over the past year. Rising diesel and gasoline prices have accelerated the conversion in recent months. The cost of diesel rose by NIS 965 per ton between July 1 and October 1, a rise of 65%, and is expected to rise another 20-25% by the end of the year.
Converting to LPG also significantly lowers maintenance costs, compared with power plants run on other fuels, such as crude oil or diesel. In addition, the Ministry of the Environment has tightened regulations for factories’ power plants, which also serves to promote conversion to environmentally friendly fuels.
Published by Globes [online], Israel business news - www.globes.co.il - on October 11, 2005