China Harbor among buyers of Alon Tavor power station

Alon Tavor power station Photo: Yossi Zamir, IEC

Alon Tavor is the first of five Israel Electric power stations to be privatized under the electricity sector reform.

MRC Alon Tavor Power is the winner of the tender for buying the Alon Tavor power station. The consortium, a partnership between Chinese Harbor, Rapac Communication and Infrastructure Ltd. (TASE: RPAC) unit Rapac Energy, and Mivtach Shamir Holdings Ltd. (TASE:MISH), will buy the power station for NIS 1.9 billion. Israel Electric Corporation (IEC) (TASE: ELEC.B22), the seller, said that the price was NIS 1 billion higher than the power station's book value. The tenders committee, headed by IEC CEO Ofer Bloch, announced the winner, which was one of 11 consortia that tried to buy Alon Tavor in the nine-month tender.

Following the sale of the power station, IEC employees will have NIS 150 added to their annual pensions under the reform agreement signed with the state. This agreement made the pension additions contingent on milestones for the first time. The next milestone is sale of the power station at Neot Hovav. The total amount of NIS 1,700 will be paid only after the fifth power station, Eshkol in Ashdod, is sold.

Alon Tavor is the first power station sold to the private sector by IEC in the framework of the electricity reform passed in July 2018. The company undertook to sell the power stations according to a fixed timetable in compliance with a plan for gradually decreasing IEC's share of total electricity production in Israel to 40%.

"All the money received from the sale of the power station and the next power stations will be returned to the consumers," Public Utilities Authority (electricity) chairperson Dr. Assaf Eilat says. Minister of National Infrastructure, Energy, and Water Resources Yuval Steinitz said that the proceeds would make it possible to cut the electricity rate by 2-3% in the coming months, in the hope of additional revenue.

Asked whether the sale of the power station to a Chinese company would cause Israel problems with the Trump administration, Steinitz answered that coordination with the US was excellent, and that he did not believe that the sale would create problems, first of all because it was a sale of electricity, and second of all because the Chinese company would not be the controlling shareholder in the power station.

"The tender results are evidence of success in the historic reform in IEC and the electricity sector. It is a vote of confidence by the business sector in the reform implementation process. The excellent price already obtained in the privatization of the first power station at Alon Tavor, and the hope that this trend will continue in the future, will make it possible to cut electricity rates in the coming years," Steinitz commented.

"IEC is relinquishing its production monopoly and beginning a new path of competition. This is a seminal moment in the life of a 95 year-old company. It is an amazing achievement in professional management of the process, an unprecedented timetable, and the results," IEC chairperson Yiftah Ron-Tal added.

"The tender committee evaluated seven bids. All of them without exception indicate investors' great confidence in the power stations and employees of IEC. We held one of the largest and most complex tenders in Israel in recent years, with an unprecedent timetable and a stringent proceeding conducted in the best possible way by professionals. The company's management and employees are committed not only the success of the sale, but also to implementation of the entire reform that is remaking the company," IEC CEO Ofer Bloch declared.

Participants in the tender included local energy companies, international companies, and leading business and financial concerns.

The professional team leading implementation of the reform in IEC and the sale of its power stations is headed by IEC head of the restructuring and organizational process Amir Livne. Providing financial advice to IEC in the sale were Goren Capital Group, law firms S. Horowitz and Herzog Fox & Neeman, and TASC Consulting and Capital.

Published by Globes, Israel business news - en.globes.co.il - on July 2, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

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Alon Tavor power station Photo: Yossi Zamir, IEC
Alon Tavor power station Photo: Yossi Zamir, IEC
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