Palestinians' debt to the Israel Electric Corporation (IEC) (TASE: ELEC.B22) has exceeded NIS 1 billion, states the utility in its financial report for the third quarter of 2013, which were published on Sunday. Palestinian consumers frequently do not pay their electricity bills, and Israel used to deduct the debt from the Palestinian Authority's VAT revenues. This practice was halted at the order of the US, and the Palestinians' debt has since ballooned undisturbed.
Although this debt is negligible compared with IEC's total debt, but the laws of economics state that a person who does not pay for goods will continue to consume them. This means that the Palestinians' electricity debt is becoming a time bomb.
This raises the questions why the Palestinians do not generate their own electricity or built even one large power station, despite receiving the greatest amount of foreign aid in the world on a per capita basis. The questions are good ones, especially given the presence of one small, oil-burning polluting power station in Gaza, which could be operated by natural gas. The Palestinians do not lack for gas: BG Group plc (NYSE; LSE: BG) discovered gas at the offshore Marine Gaza license in 1999. This field could meet the Palestinian's full electricity generating needs for almost 20 years.
On paper, the Palestinians could achieve energy independence within 3-4 years at the most, but nothing has happened on the ground in 15 years. Prime Minister Benjamin Netanyahu is prepared in principle to allow the Palestinians to develop the Marine Gaza field, and his special emissary, Adv. Yitzhak Molcho, is responsible for talks on the subject. However, the Israeli public has not been informed as to why these talks have continued for so long but gone nowhere.
Information indirectly obtained by the media indicate that the Palestinians are largely responsible for the problem. Their conduct, according to this partial information, has been amateurish, if not actually childish, and is mostly defamatory and slanderous.
However, Israel is also to blame. It considers electricity and Palestinian gas as diplomatic bargaining chips, as part of the limited gestures that Netanyahu is willing to make to Palestinian Authority President Mahmoud Abbas (Abu-Mazen).
The time has come for Netanyahu to realize that Palestinian energy independence is an Israeli national interest, because Israeli electricity consumers will ultimately pay the price for the present conduct.
Published by Globes [online], Israel business news - www.globes-online.com - on November 28, 2013
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