Construction of Palmachim desalination plant will begin at end of October

The plant will be set up by the Via Maris consortium at an investment of $80 million.

Sources inform "Globes" that, at the end of this month, the foundation stone of the desalination plant at Palmachim will be laid. The plant will be set up by the Via Maris consortium, which comprises Granite Hacarmel Investments (TASE:GRNT) (26.5%), Tahal Water Planning for Israel Ltd. (26.5%), Ocif Investments and Development (TASE:OCIF) (21%), Middle East Tube (METCO) (TASE:TUBE) (21%), and Oceana Advanced Industries (5%).

The cost of the plant, which will produce some 30 million cubic meters of desalinated water a year, is $80 million. Bank Hapoalim will provide financial coverage for the project. The plant is due to begin supplying desalinated water in June 2006.

The Palmachim desalination plant is being set up as part of a tender published by the Accountant General two years ago for the construction of desalination plants under the BOT (build, operate, transfer) method along Israel's Mediterranean coast.

The government's plan is for desalination capacity of 350 million cubic meters a year. So far, construction of one desalination plant has begun, at Ashkelon. This plant will produce 100 million cubic meters a year, at a cost of $0.52 per cubic meter.

A few weeks ago, Ministry of Finance Accountant General Dr.Yaron Zalika announced that, in October, his ministry would publish a tender for the construction of an additional desalination plant in Hadera, but the tender has yet to appear. The cost of this installation is estimated at NIS 850 million. It is believed that the cost of the water produced at Hadera will be higher than at Ashkelon, because of the cost of energy and of land there.

The fate of Mekorot National Water Company's desalination plant, planned to produce 40 million cubic meters of water a year, is unclear, because the plant is supposed to be constructed by a Mekorot development company which has yet to be set up. Engineering company Baran Group (Nasdaq:BRAN; TASE:BRAN) announced to the Tel Aviv Stock Exchange a week ago that it had obtained an assurance from the Ministry of Finance and the Ministry of National Infrastructures that they would complete the tender process for setting up the $100 million desalination plant. According to the plan, Baran will construct the plant for Mekorot in the framework of the turnkey tender it won.

Up to now, the ministry of finance has apposed the setting up of the plant by the Mekorot development company, and changed its mind only after the Ministry of National Infrastructures intervened. The Ministry of Finance's objections were that it wanted greater competition in the water economy, and it did not want a government company to set up the plant.

Published by Globes [online] - - on October 12, 2004

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