Former Ministry of Finance chief economist Yoel Naveh submitted the final report of the team he heads for examining the government's actions on the expiration of the Dead Sea mineral concession. The report recommends a framework for preparation by government ministries for a new concession tender for mining minerals at the Dead Sea. The current concession, held by Idan Ofer-controlled Dead Sea Works, expires in 2030.
Among other things, the report recommends a series of revisions in the new concession deed, setting a minimum price, and the founding of a government company that can constitute a default option if the tender fails. The team also believes that termination of the concession should be brought forward in order to shorten the period of uncertainty for both parties. Uncertainty causes problems with continued investment in the franchise properties, especially salt harvesting, a multi-billion dollar project that Israel Chemicals (TASE: ICL: NYSE: ICL) undertook to finance with help from the government.
The team's main concern was that Israel Chemicals, Dead Sea Works' parent company, would have a big advantage in the future tender, which could deter possible competitors from bidding, leaving Israel Chemicals with the franchise. Israel Chemicals has so far made no specific respone to the report's recommendations, saying merely that it had "material objections," which it will raise only after the recommendations are implemented.
Simultaneously with the report by the Naveh team, a study prepared by former Accountant General Michal Abadi-Boiangiu was submitted to the current Accountant General. The study contains a method of calculating the compensation that the state will pay Israel Chemicals for its investments in infrastructure for producing resources from the Dead Sea.
Sources on the team told "Globes" that early elections would have no immediate significance for implementation of the report, since the Accountant General was responsible for most of the implementation. Legislative changes will be required for the new franchise regime. It is clear that government support is needed in order to ahead with the main recommendations, principally the founding of a government company.
An intermediate report was submitted to the minister of finance in May, but submission of the final report was delayed until it was signed by members of the teams representing government ministries. The team has 10 representatives from the Ministry of Finance, the Ministry of Environmental Protection, the Israel Tax Authority, and the Attorney General's office.
Published by Globes, Israel business news - en.globes.co.il - on January 22, 2019
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