Contractor Electra Ltd. (TASE: ELTR) today notified the Tel Aviv Stock Exchange (TASE) that it had been selected as chief contractor for the hydroelectric pump storage project at Manara Cliff in northern Israel under the control of environmentally friendly energy company Ellomay Capital (Nasdaq: ELLO, TASE: ELLO).
In the project framework, Electra will perform work amounting to $300 million (NIS 1.05 billion). Electra said that completion of the agreement between the companies "is subject to agreement on a number of commercial matters, as well as financial closing of the license owner, which is scheduled to take place in the first quarter of 2019."
Electra has been involved in the hydroelectric pumping storage business for many years. It is a partner in a similar project based on this technology at Gilboa, and previously also had holdings in a venture at Manara Cliff, which it had to sell at the demand of the Antitrust Authority director general. The production capacity of the project in northern Israel will be 156 megawatts per hour, and investment in it is estimated at NIS 1.3 billion.
Hydroelectric pump storage technology is based on differences in altitude, with water descending from the upper reservoir to the lower one and operating turbines that produce electricity. The upper reservoir at Manara Cliff is planned near Kibbutz Manara, while the lower reservoir, to be based on an existing reservoir, is located south of Kiryat Shmona. As far as is known, the project has already undergone a binding survey by the Israel Electric Corporation (IEC), including an IEC commitment to connecting the project to the power grid. After the project is built, the partners in it will receive a fixed annual payment, plus other amounts for usage of the electricity generated by the project.
Alex Rabinovich in partnership with Ellomay
In recent weeks, medical investor Alex Rabinovich became a partner in the project, after signing a partnership agreement through stock exchange shell GFC Green Field Capital (TASE: GFC-L) with private company Erez Electricity, which indirectly owns 8% of the rights in the project. The entry of GFC as a partner in the Manara Cliff project revealed the existence of advanced negotiations by Ellomay, holder of most of the rights in the project with Erez Electricity, thereby indicating that the parties had reached a compromise that would increase Erez Electricity's percentage of the project, instead of the payment it had demanded for its involvement.
Ellomay Capital is controlled by chairperson Shlomo Nehama, Hemi Raphael, and CEO Ran Fridrich. Ellomay has photovoltaic solar energy production activity in Europe and is a partner in the Dorad private power station next to Ashkelon. The company's market cap is NIS 320 million, following a 7% drop this year in its share price.
Electra, controlled by Elco, whose controlling shareholders are Daniel and Michael Salkind, is one of Israel's most prominent contracting groups. It is active in a number of sectors: construction and infrastructure projects in Israel and overseas, service and maintenance, real estate development and construction, and franchises. The company's share price rose 10% this year, boosting its market cap to NIS 3.3 billion.
Published by Globes, Israel business news - en.globes.co.il - on November 1, 2018
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