The Ministry of National Infrastructures and Government Companies Authority director general Yaron Jacobs have notified the ministerial economics committee of their decision to liquidate most of government company PAMA (Energy Resources Development). Responsibility for the company, jointly owned by the Israel Electric Corporation (IEC), Oil Refineries, and Israel Chemicals, lies with the Ministry of National Infrastructures. It was also decided to sell PAMA's tangible assets.
PAMA was founded 21 years ago to engage in R&D on shale oil as an energy source. The state holds a founder's share, which confers the right to appoint five out of the company's 13 directors. The IEC holds 50% of the shares, and Oil Refineries and Israel Chemicals hold 25% each.
The state and the other owners have spent $100 million to date on financing PAMA's research. In 1999, after the company finished its research, it was decided to turn PAMA into a business company operating on a profit and loss basis. The government decided there was no justification for it to continue financing PAMA's research.
Since the company was unsuccessful in developing business activity as a source of financing, the owners decided not to invest any more in PAMA to cover its current deficit accumulated since 1999. In view of this situation, the company board commissioned an economic report from CPA Yitzhak Suari, including a business plan for the PAMA's future activity.
Among other things, the Suari report recommended selling PAMA's assets and closing its installations in Petah Tikva and in Mishor Rotem. The company board endorsed the report.
PAMA's most important asset is the know-how developed over the years. Among other things, it set up a power plant that supplied six megawatts of electricity. In May 2000, the government decided to transfer the power plant to the Rotem plant belonging to Israel Chemicals.
PAMA's remaining assets are the PAMA center in Mishor Rotem, which includes a leasing agreement with the Israel Land Administration for 39 dunam (9.75 acres), various buildings used for laboratories, a plant for producing organic material, and intellectual property - its know-how.
PAMA will continue to hold the know-how as intellectual property, which will not be sold at present, and which can be exploited when a concern is interested in it. PAMA will also hold the rights to the power plant it operates in Mishor Rotem. It was decided to sell its oil installation as an active plant.
Published by Israel's Business Arena on February 20, 2002