Israel Electric Corporation (IEC) (TASE: ELEC.B22) reported this morning that it will receive $1.8 billion compensation from the national gas companies in Egypt EGPC (Egyptian General Petroleum Corporation) and EGAS for the heavy damage caused to it by the failure to supply Egyptian gas. This follows an international arbitration procedure between IEC and the Egyptian companies.
IEC claimed compensation of over $4 billion. The arbitration ruling was given on Friday. IEC will receive $1.8 billion plus interest and part of its legal costs.
The arbitration took place at the International Chamber of Commerce before three arbitrators, behind closed doors.
In 2011, Egypt halted the flow of gas to Israel following a series of terrorist explosions of the gas pipeline in Sinai. The halt in supply forced IEC to buy more expensive fuels to produce electricity. The extra cost, more than NIS 10 billion, brought the company to the brink of collapse. The Ministry of Finance enabled IEC to raise NIS 9 billion with a state guarantee, and electricity prices in Israel were gradually raised by 30%.
In February 2012, IEC's board approved the filing of a claim as part of an international arbitration process against the Egyptian gas companies EGAS and EGPC by EMG, controlled by Yosef Maiman and foreign partners. IEC claimed that there had been a breach of a 2009 tripartite agreement between the parties. The Egyptians claimed that the halt in the gas flow was caused by force majeure.
IEC said it would act to enforce the arbitration ruling through dialogue with the Egyptian companies.
Published by Globes [online], Israel business news - www.globes-online.com - on December 6, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015