The Ministry of Finance has notified Mekorot National Water Company subsidiary Mekorot Initiative and Development Ltd. that it will buy desalinated water from the Ashdod desalination plant at just NIS 2.70 per cubic meter. Mekorot will reportedly have trouble meeting this price, jeopardizing the project.
The proximate cause for the price reduction was the results of the tender for the construction and operation of the neighboring Soreq desalination plant. The Soreq Desalination Ltd. (SDL) consortium, comprising of Delek Group Ltd. (TASE: DLEKG) and Israel Chemicals Ltd. (TASE: ICL) joint venture IDE Technologies Ltd. and Hutchison Water Ltd. won the tender with a price of only NIS 2.01 per cubic meter.
The Ministry of Finance said that it believes that Mekorot can meet the price, although ministry sources told "Globes" that there was a real risk that the desalination plant might be cancelled altogether. The 100-million cubic meter a year Ashdod desalination plant would be one of the largest seawater desalination plants in Israel.
The Ministry of Finance has in the past been openly annoyed at the deal reached between the government and Mekorot Initiative, which obtained permission in principle to build the Ashdod desalination plant without a tender. All of Israel's other large desalination plants were built through public-private projects.
Published by Globes [online], Israel business news - www.globes-online.com - on December 22, 2009
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