Israel Electric Corporation (IEC) (TASE: ELEC.B22) posted a net loss of NIS 785 million in 2011, compared with a net profit of NIS 2 million in 2010. Revenue from electricity sales rose 23.7% to NIS 24.3 billion in 2011 from NIS 19.6 billion in 2010.
Electricity consumption rose to 53 billion kilowatt/hours in 2011 from 52 billion kw/h in 2010, and IEC's average income per kw/h rose 21.3% to NIS 0.4574 from NIS 0.377. However, fuel purchases rose 41% to NIS 12.8 billion in 2011 from NIS 9.1 billion. Financing expenses rose to NIS 478 million in 2011.
This morning, the Public Utilities Authority (Electricity) raised the electricity tariff by 8.9%. The rate hike is due to IEC's cash flow problems caused by the need to buy more expensive diesel and fuel oil for the generation of electricity to make up for the shortfall in natural gas caused by the disruption in deliveries from Egypt by East Mediterranean Gas Company (EMG). This is only partly offset by higher gas deliveries from Israel's Yam Tethys, owned by Delek Group Ltd. (TASE: DLEKG) and Noble Energy Inc. (NYSE: NBL).
IEC CEO Eli Glickman said, "I hope that the good progress made in talks on IEC's restructuring will stabilize its finances in the long term. IEC faces an especially challenging period, and, as a government company, we welcome the measures by the government, which is aware of the critical condition of the electricity sector, to help IEC as much as possible. These measures will help strengthen IEC's financial soundness and ability to deal with the crisis facing Israel's electricity sector. IEC's management is doing its best to promote internal streamlining in order to stabilize the company's financial situation."
IEC chairman Yiftach Ron-Tal said, "IEC is struggling with a very severe cash flow problem, which is too big for it to deal with alone. I welcome the government's decision to help with the cash flow problem faced by the company, proving that it is behind IEC in these difficult times."
Published by Globes [online], Israel business news - www.globes-online.com - on April 1, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012