The Bank of Israel supports the gas outline in its current form but asks that it include milestones for the development of the Leviathan reservoir as well as a mechanism to protect consumers from price gauging said the bank's governor Dr. Karnit Flug.
At a speech held in the Supreme Court on Monday morning, Flug, who also serves as the economic advisor to the government, said "the position of the Bank of Israel is that under these circumstances the new outline provides an adequate answer to the needs of the market, as well as the need to accelerate the connection of another gas pipeline and advance the development of the Leviathan and Karish-Tanin reservoirs."
In response to the criticism of concessions given to the gas companies under the outline, Flug said "as often occurs in negotiations, the outline does not achieve the ideal result but does contain many benefits to the market. As such, the Bank of Israel supports the fundamentals of the outline and the advancement of its implementation."
However, the Bank of Israel governor emphasized that "before the final approval of the outline, it is important that milestones for the development of the Leviathan reservoir and its connection to the Israel gas market be inserted, and that decisions are made about what measures would be taken should the scope and pace of the development not go according to the agreement."
Flug specifically stressed that "if a delay in development prevents the creation of a more competitive structure than the current natural gas market, then alternative measures be defined for such a scenario to connect the reservoirs to the Israeli market as soon as possible, alongside a mechanism to protect Israeli consumers from monopoly pricing."
With these latest remarks, Flug is essentially supporting positions taken in recent weeks by members of National Economic Council chairman's Eugene Kandel's team, including Ministry of Finance Budget Department director Amir Levi.
Flug explained her general support for the outline because it "deals with a variety of issues in the gas market which had been mired in uncertainty, thus allowing more stable regulation of the gas market, which will make it easier to advance the funding and development of the reservoirs, and eventually lead to abundant supply and a more competitive market structure than at present."
She added that the outline also helps attain the government's goal of fulfilling the export contracts with Egypt and Jordan for both financial and political reasons.
Published by Globes [online], Israel business news - www.globes-online.com - on August 10, 2015
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