The committee of ministry directors general examining the future of the petrochemicals plants in Haifa Bay has been working for the past several months on its conclusions, and is due to hold a final meeting on the matter today. Meanwhile, however, the newly appointed director of the Israel Land Authority, Yaakov (Yanki) Kvint, has decided to freeze the Haifa Bay urban renewal plan, without which evacuation of the petrochemical plants is not economically viable.
Under the original plan, 100,000 housing units and two million square meters of commercial and industrial space were to have been constructed on the land vacated by the petrochemicals plants. Now, it is doubtful whether the plan will go ahead.
A letter from Kvint to Avi Simhon, chairperson of the National Economic Council, states, "This is a complex plan, particularly in its economic aspects, and I am currently studying the matter. Because of the opposing positions that have been presented, I shall review the Authority's stance. In view of its complexity, I estimate that at least 45 days will be required to review the matter and formulate a position."
Sources closely familiar with the details say that, despite Kvint's request for 45 days to study the issues, he is in effect demanding that the "Bay of Innovation" plan should be frozen. When he took up his post, Kvint convened the senior people at the Israel Land Authority who had worked on the plan for two years and informed them that he did not believe in its ability to return the investment, and that therefore the Israel Land Authority would not deal with the plan until further notice. If the Israel Land Authority will not promote the plan, it would seem that a decision by the directors general committee at this stage will be futile.
Kvint took up his post in December, and this is his first significant decision. Kvint's appointment was controversial, and a hearing on it was held in the Labor Court following an appeal filed by the second-placed candidate, Yair Maayan, who claimed that it was politically motivated and was approved by a committee biased in favor of his rival. The state argued that the appointment was properly made, and the court confirmed it on Sunday.
Finance Ministry: Inflated state revenue projections
In the final stage of the battle over the future of the petrochemicals industry in Haifa Bay, the Ministry of Finance Budgets Division enlisted on the side of the petrochemicals plants. On Thursday, acting Budgets Division head Yogev Gardos wrote to the directors general committee that the calculations of state revenues from the Israel Land Authority plan were skewed upwards.
In a sharply worded letter, sent at the last minute even though the committee has been working for nearly three months, Gardos also argued that there was a fear that the economy would be left without a regular supply of fuel, and that the factual basis of the plan was flawed and that it was not supported by a professional assessment on which a decision could be based.
According to the figures presented by Gardos, the National Economic Council and the Israel Land Authority assume revenue of NIS 300,000 per housing unit for the land to be sold for residential construction in Haifa Bay, whereas in nearby Kiryat Bialik an Israel Land Authority auction of land for building 1,214 housing units had recently closed at just NIS 50,000 per unit. Even according to the plan itself, Gardos points out, each housing unit will yield only NIS 130,000 revenue for the state, less than 50% of the revenue estimates on which the plan is based.
"Despite our request that the committee should be presented with other options for redeveloping Haifa Bay, as is appropriate for a committee considering such a weighty matter, this was the only plan that was discussed. Experience of previous projects, such as the evacuation of Pi Glilot, demonstrates clearly that there is a delay in the receipt of revenue in relation to execution of expenditures. The cash flow deficit over a substantial portion of the timetable of the plan will reach a level that the Israel Land Authority will not be able to sustain, and it will have to be supported by the state budget," the letter says.
Environmental organizations reacted angrily to the news that the plan was being halted. Although the committee paid considerable attention to the representations of the petrochemical industry itself, not one of the directors general bothered to attend the meeting allocated to hearing the stance of the public.
Environmental organizations in Haifa said in a statement this morning, "The legitimate campaign for clean air has reached the implementation stage, and, predictably, the industrialists are bargaining over the level of compensation. As far as we, the environmental organizations, are concerned, the plan is a matter of promoting the improved health of people who are daily risk to their health and safety because of polluting industries dealing in explosive substances, and for the industrialist it's a matter of making an economic return.
"The state must intervene for the benefit of the public and put an end to this circus in which the wealthy harm the quality of life of ordinary people. Every year in which installations of the oil refining industry are next to residential neighborhoods in the Krayot costs the economy nearly NIS 1 billion because of diseases caused by air pollution."
The Chemical Pharmaceutical and Environmental Industries Association division of the Israel Manufacturers Association said in a statement: "The time has come to tell the truth and put populism aside. Anyone who rushes to make critical decisions that will affect the stability of the entire Israeli economy, the country's security and independence, and thousands of people who will be left without a livelihood, and does so in haste, seeks solely to promote his own interests.
"In every major city in the world, strong and stable industry exists side by side with residential areas. An orderly plan therefore needs to be formulated, incorporating strategic and responsible planning for the long term, that will enable industry to operate."
Published by Globes, Israel business news - en.globes.co.il - on January 12, 2021
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