There is growing opposition among the Israel Electric Corporation (IEC) (TASE: ELEC.B22) board of directors to the approval of the $15 billion natural gas deal with the Tamar partners. Sources inform "Globes" that three members of the board have expressed reservations about the terms of the agreement that has been approved.
One of the three IEC directors is Shimon Eckhaus, the only one who has so far expressed public opposition to the agreement, and demanded that the mechanism within the deal be reconsidered by which the price of gas is linked to global prices.
"Globes" has already revealed that last Thursday's meeting of the IEC board of directors was cancelled. At the meeting, the board had been due to vote on the agreement with the Tamar partners. But the meeting was called off on the pretext that Eckhaus would be in breach of conflict of interest because he serves as the CEO of a company belonging to IDB Holding Corp. Ltd. (TASE:IDBH). Eckhaus who pointed out that the company is only a stock market shell refused to disqualify himself from participating in the vote. Consequently, the vote was postponed until the legal position could be delved into regarding conflict of interest.
Sources close to the IEC board of directors have told "Globes" that the number of board members with reservations about the agreement with the Tamar partners is in fact more than three. Those sources say that there is a feeling that opposition is being silenced by IEC's management headed by chairman Yiftah Ron-Tal.
One of the sources told "Globes,"It is strange that nobody raised the issue of Eckhaus's conflict of interests during discussions that preceded his stated opposition to the agreement."
Other sources on the IEC board of directors responded that in the case of Eckhaus, the information about his conflict of interests was only brought to the attention of Ron-Tal on the night before the vote, and as a point of principle the chairman was bound to announce that he had learned about the matter. Four directors have not been a part of the discussions about the Tamar agreement due to potential conflicts of interest.
The IEC board approved the terms of the Tamar deal in December regarding price and quantities of gas. However, they refused to approve the entire deal until it was clarified whether it was possible to add two clauses which are problematic in terms of antitrust matters. The first is a "Most Favored Nation" clause which guarantees a basement price comparable with that offered to any other Israeli company in the future. The second clause would enable the price to be lowered in the future, if supervision is imposed on gas prices. Antitrust Authority director Prof. David Gilo has said that both clauses are apparently a restrictive arrangement.
The Tamar partners are also in talks to sell $4 billion worth of natural gas to Israel Corporation (TASE: ILCO).
The Tamar partners are Tshuva-controlled Delek Group Ltd. (TASE: DLEKG), Noble Energy Inc. (NYSE: NBL), Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), and Alon Natural Gas Exploration Ltd. (TASE: ALGS).
Published by Globes, Israel business news - www.globes-online.com - on February 2, 2012
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