The Knesset Economics Committee today began preparing for the final approval of the natural gas economy bill, which will regulate the natural gas infrastructure and distribution networks. The tender for the pipeline system will be published simultaneously with the start of the legislative process.
Deputy Attorney General Davida Lachman-Messer said the bill will be appended as a condition to the tender. Ministry of National Infrastructures Natural Gas Project Management director Ishayahu (Shuki) Stern said a compensation mechanism for the winner of the franchise has been set up in advance, in the event that the final version of the bill, which will become valid after the franchise is awarded, adversely affects its terms. Whatever happens, the franchisee will not be allowed to withdraw after winning.
Stern added that the Ministry of National Infrastructures believed the tender should not be halted until after the law is passed. He said the tender will not bypass the Knesset, but was published with the approval of the High Court of Justice, which ruled the legislation and tender can proceed simultaneously.
Stern said the franchisee will have a monopoly for 30 years. The winner will be chosen by the end of the year. The network will consist of 580 kms. of land and 180 kms. of undersea pipelines, plus 50 distribution stations. Total investment will be $370 million.
The bill being debated now is based on the legal precedents of the Oil Law and other laws. It is the third version the government has submitted to the Knesset.
The government stated that the new proposal has been adjusted to meet the new realities created by the natural gas discoveries off Israel’s coast. The Economics Committee was informed that the franchisee will not have exclusive marketing rights and distribution licenses will be awarded to anyone meeting the conditions. Transportation rights will be supervised.
Oil Refineries general manager Yashar Ben-Mordechai was furious at the legal restrictions preventing the Oil Refineries from marketing natural gas.
Ministry of National Infrastructures director general Yaacov Efrati said the Israel Electric Corporation will be ready to use natural gas only at the end of 2002.
Yam Thetis co-CEO Dr. David Cohen claimed the pipeline monopoly enshrined in the law is unjustified, and several companies should be allowed to operate in the sector, including the gas exploration companies. Otherwise, international exploration companies might flee Israel. Avraham Peer of Clal Industries leveled similar criticisms.
Published by Israel's Business Arena on 24 July 2001