IEC to buy more power from private producers

Purchases will increase 62% over 2007, but are still a negligible proportion of Israel's total electricity sales.

Sources inform ''Globes'' that Israel Electric Corporation (IEC) will increase its electricity purchases from private producers to NIS 130 million in 2008, according to figures from the Ministry of National Infrastructures and the Public Utilities Authority (Electricity). The IEC bought NIS 80 million worth of electricity from private power producers in 2007; this year's purchases reflect a 62% increase. The total amount purchased is still a negligible proportion of Israel's total electricity sales.

The increase in purchases from private producers is because Delek Group Ltd.'s (TASE: DLEKG) power station in Ashkelon has come on line. The 80-megawatt station provides electricity to the Ashkelon desalination facility owned by IDE Technologies Ltd., a joint venture of Delek and Israel Chemicals Ltd. (TASE: CHIM). The surplus power is sold to IEC.

Private electricity producers are due to supply 20% of Israel's power needs, but their entry into the market has been delayed under pressure from IEC, which is financing its own development plan. IEC chairman Moti Friedman and CEO Amos Lasker were recently ordered to improve their cooperation with private electricity producers.

Private electricity producers include Delek Group, Israel Chemicals, American Israeli Paper Mills Ltd. (AMEX: AIP; TASE: AIP), Dorad Energy Ltd., Dalia Power Energies Ltd., Nesher Israel Cement Enterprises Ltd., and Tahal Group.

Minister of Finance Ronnie Bar-On and Minister of National Infrastructures Benjamin Ben-Eliezer recently decided to increase the safety net for private electricity producers in order to facilitate their entry into the market. Last week, the Public Utilities Authority held a public hearing on the subject to increase the guarantee for private producers' set-up costs to 95% from 80%, and a 90% hedge on natural gas procurement contracts.

Published by Globes [online], Israel business news - www.globes-online.com - on January 21, 2008

© Copyright of Globes Publisher Itonut (1983) Ltd. 2008

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