Israel Electric Corporation (IEC) (TASE: ELEC.B22) chairman Yiftach Ron-Tal spoke about utility's condition, the progress of its reforms, and other issues at the Eco Energy Ltd. energy conference yesterday.
"Those who have called the reform a patchwork reform are wrong. In fact, we are opening the market to competition. This is a historic act. It's going to happen… It is part of the natural gas revolution, which is expediting the reform. This is a competitive and unprecedented reform and it needs to be done wisely, because it's a process that is liable to destabilize us," said Ron-Tal.
"There were position papers ready, but the government called elections, and a new government was elected, the relevant ministers were chosen, and the energy minister decided that energy use by the electricity economy was the top priority, and the finance minister agrees. The Government Companies Authority director was appointed as head of the committee, and it includes the heads of all the relevant departments. We're on the main playing field, the referee has blown the whistle, and we're holding serious discussions, and by every criteria, the reform's principles will be settled within months, and during 2014, all the principles will be signed.
"The gas discoveries made competition possible," said Ron-Tal. "We're talking about 20-30% of electricity production in the coming years being generated by independent producers. IEC will keep most production, and heaven help us if this will not be the case. An important core activity is being spun off from IEC, and a grid management company will manage this matter. We'll at least keep transmission and distribution. We'll honor every committee decision - this must stay with the company, especially the transmission, otherwise it will be a historic mistake. It will disrupt the quality of electricity. The same principles apply to distribution."
As for the trading arrangements for electricity transmission, Ron-Tal said, "Nothing will happen if this is privatized and there is competition. The other day, I met the number 2 man at France's EDF. We summarized a document, which we are just now signing at this moment, a feasibility study on Project D, which will normally use gas, but can always switch to coal as backup. It is critical to keep 5,000-6,000 megawatts of generation by coal. We might open additional power stations with them, we might work with them on projects around the world, and there might be cooperation beyond that, in that they will buy our shares, which we have an interest in."
Commenting on Cyprus, Ron-Tal said, "Electricity is a unique product. It cannot be stored. You generate what you consume. One solution is to hook-up with Europe. Led by the energy minister, we've completed a feasibility study to build an electricity conduit between Israel and Cyprus in the first stage, and to Crete and Greece in the second stage, and from there, to the European grid. It's a vision, but we're men of vision. This vision could become reality."
Published by Globes [online], Israel business news - www.globes-online.com - on November 21, 2013
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