Steinitz: Gas discoveries will provide NIS 500b revenue

Finance Minister Yuval Steinitz called for an end to the persecution and criticism of Israel's tycoons by the media and MKs.

Minister of Finance Yuval Steinitz today called for an end to the persecution and criticism of Israel's tycoons by the media and MKs. Speaking at the Israeli Institute Of Energy And Environment conference in Tel Aviv today, he said that he expected NIS 500 million state revenues from gas discoveries by 2040 - an estimate that is more optimistic than the estimate the Bank of Israel provided at the conference.

"Israel is beginning to feel a credit crunch, especially in the residential, commercial, and infrastructures construction industry," Steinitz said. "We have another problem; it is the problem of the morale and motivation of Israel's business leaders. An atmosphere has been created that is critical, but sometimes negative and over-harsh, among the public, in some of the media, and in the Knesset, against developers, investors, and CEOs in Israel. I am a great believer in free debate, and there needs to be give and take with businessmen. It should be remembered that businessmen are just like us - people."

Steinitz said that Ministry of Finance measures in recent years had greatly increased investment in the economy, by 35% in 2011, but that this growth was now in jeopardy. "I must tell you that, after 35% growth in investment for two years, the finance minister is suffering from vertigo. The great fear is how to maintain this level of investment. I declared 2012 as a year of investment, because an immense effort is needed to maintain the level of investment, and the Ministry of Finance has been focused on this effort in the past few months.

"My trips to India and China primarily focused on efforts to encourage investment in the Israeli economy. I can tell you that, in the past two years, Chinese investment in Israel has increased multifold. The most famous investment is ChemChina's $2.5 billion investment in Makhteshim Agan Industries Ltd., but there is also billions in other investments, some which are low profile."

As for the gas discoveries, Steinitz said that the government's take from taxes and royalties would reach NIS 400-500 billion by 2040. "40-50% of the government's take from the gas discoveries will go directly to the state budget for investment in infrastructure. The rest of the money will go to the sovereign wealth fund, which will ensure the economic future of our children and grandchildren," he said.

These figures are very different from the ones Bank of Israel senior manager Barry Topf presented earlier in the day. He said that the government's take from the gas discoveries would gradually rise from $2 billion in 2022 to a peak of $8 billion in 2040.

Steinitz said that he raised the issue of gas exports during his visit to India, adding, "We'll first use the gas for the domestic market."

Published by Globes [online], Israel business news - - on March 14, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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