Minister of Finance Yuval Steinitz and Minister of National Infrastructures Uzi Landau yesterday approved a format that removes a major obstacle to the construction of private power plants to meet the growing needs of the Israeli economy.
Ministry of Finance director general Yarom Ariav, Accountant General Shuki Oren, and Budget Director Udi Nissan wrote the format with Ministry of National Infrastructures director general Shaul Tzemach. Under the format, the government will cover payments to private power producers if Israel Electric Corporation (IEC) (TASE: ELEC.B22) reneges on its commitment to transfer the payments.
The arrangement will only come into effect if the private power producers secure financing over the next 30 months. The Ministry of Finance said that the government's commitment to make the payments to private power producers does not derogate IEC's obligation to make all the payments stipulated by the Public Utilities Authority (Electricity), nor does it exempt the IEC from legal action against for non-payment.
The Ministry of Finance added that the government back-up will pave the way for private power producers to secure financing for the construction of power plants driven by either fossil fuels or renewable energy. The ministries estimate that power plants for the generation of 2,000 megawatts will be built over the next three years.
Published by Globes [online], Israel business news - www.globes-online.com - on July 20, 2009
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