"The price of electricity in Israel is relatively low, compared with other countries," said Ministry of Finance energy coordinator Oren Moshe today. "Prices are at a level that cannot meet the needs of whoever builds the grid. Israel Electric Corporation's (IEC) (TASE: ELEC.B22) capital has eroded and it struggles to raise capital. You are paying for this through taxes, because the Israeli government allows IEC to raise government-backed debt, and you pay for the risk."
Moshe added, "The damage to IEC's ability to carry out its job as the provider of a critical service is our motivation for reforming the utility."
Moshe declined to say whether the IEC reform will result in lower electricity tariffs, saying only, "Having a market of independent power producers is justified to reduce the range of regulations on the price. At the end, there are 2-3 or 10 skilled officials whose ability to build rates that will cover costs is very limited. In some cases, someone will make a lot of money, and in other cases, someone's capital will fall."
Moshe added, "In the natural gas supply sector, we appear to be headed for a market with few competitors." He hinted that the government was considering allowing the Shimshon licensees to use the infrastructures of other suppliers to make gas field's development worthwhile. He said that the government hoped that gas would be found at the Ishai and Yoad wells in the Pelagic licenses.
Published by Globes [online], Israel business news - www.globes-online.com - on February 4, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013