The Knesset Finance Committee today unanimously approved NIS 2.4 billion in government guarantees for Israel Electric Corporation (IEC) (TASE: ELEC.B22). The approval came after Minister of Finance Yair Lapid announced that he had ordered IEC employees to move forward on reforms at the utility, and IEC chairman Yiftach Ron-Tal promised the committee that the utility would connect the power stations of independent producers Dorad Energy Ltd. and Dalia Power Energies Ltd. on time.
Finance Committee chairman MK Nissan Slomiansky (Habayit Hayehudi) retracted yesterday's threat to reject the request for guarantees, following the agreements.
The guarantees are intended to enable IEC to repay debts taken in the past two years to buy fuel for the generation of electricity. Without the guarantees, IEC would have had to raise the capital at much higher interest rates, and pass the cost on to consumers.
Ron-Tal told the Finance Committee that postponing the request for guarantees would be suicide. Slomiansky tried to take the opportunity to call for moving forward on reform at IEC, and protested against IEC worker committee's order not to connect Dorad and Dalia Power's power stations to the national grid. Connecting Dorad is very important, because its power station will be ready within a month, while Dalia Power's power station is still only in the initial stages of construction.
Despite IEC worker committee chairman Miko Zarfati's presence, Slomiansky demanded that Ron-Tal promise that the two private power stations will be connected on schedule. However, the final decision to connect the power stations is not in Ron-Tal's power at this time, but is in the hands of the labor court, which will announce its decision in a few days.
Published by Globes [online], Israel business news - www.globes-online.com - on June 4, 2013
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