Salaries at Israel Electric Corporation (IEC) (TASE: ELEC.B22) are, on average, 25% higher than at other power utilities around the world, and the company should therefore streamline, states a draft report by the World Bank about the utility. It added that IEC cannot service its debt in the medium term in the course of current business.
The World Bank adopted proposals by IEC CEO Amos Lasker for the government to inject NIS 6 billion into IEC and to raise electricity rates by 16%. The report says that the amount of the rate hike could change, but that it would be necessary to change the amount of owners' capital injected into the utility.
Electricity market sources called the draft report's conclusions a "wake-up call" for the government, and said that implementation of the recommendations would prevent a crisis in the electricity market.
IEC commissioned the report in view of the lack of communications and confidence between the utility and the Public Utilities Authority (Electricity). Lasker commissioned the report with a view to finding an independent and professional organization that would express an opinion about IEC's condition.
Published by Globes [online], Israel business news - www.globes-online.com - on July 11, 2010
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