The socioeconomic cabinet, headed by Prime Minister Benjamin Netanyahu, today approved a plan by the Government Companies Authority and the Ministry of Finance to issue shares in government companies on the Tel Aviv Stock Exchange (TASE).
The proposal, with Netanyahu's support, was approved after Prime Minister's Office director general Harel Locker convened the ministers opposed to the initiative for a meeting outside the socioeconomic cabinet. During this two-hour turbulent meeting, understandings were reached that allowed the Finance Ministry's proposal to be approved.
Among other things, it was agreed that the issue of shares in the companies would require cabinet approval, not merely the Finance Minister's approval. It was also agreed that the authority of the government ministers responsible for the companies would not be affected.
At the insistence of Minister of Transport Yisrael Katz, it was agreed that issuing shares in the Ashdod and Haifa port companies would not affect the construction of the two private ports. On the subject of issuing shares in Israel Railways, it was decided to establish a ministerial committee to consider the need to issue shares in the company.
The initiative aroused extensive opposition among ministers having government companies under their responsibility. The opponents included Katz (the ports companies, Israel Railways), Minister of National Infrastructure, Energy, and Water Resources Silvan Shalom (Israel Natural Gas Lines (INGL), Mekorot National Water Company, Israel Electric Corporation (IEC) (TASE: ELEC.B22)), Minister of Environmental Protection Amir Peretz (Environmental Services Company), and Minister of Communications Gilad Erdan (Israel Postal Company Ltd.). As a result of the many objections to the plan, the socioeconomic cabinet meeting was postponed for two hours. With Locker's mediation, intensive discussions were held with the ministers opposing the plan in order to find an agreed formula for a decision.
The initiative is designed to produce NIS 15-20 billion in revenue for the state over the next three years, including NIS 4 billion during the 2015 budget year from the issuing of shares in INGL, one of the two ports companies, and four small government companies in Tel Aviv.
Under the plan initiated by Government Companies Authority director general Ori Yogev, minority stakes up to 49% will be offered in seven large government companies, and the Environmental Services Company and the ports companies will be completely privatized. To this list can be added Israel Military Industries; the complete privatization of the company through sale to a strategic investor by 2016 has already been agreed with the state.
The socioeconomic cabinet meeting is being held two days before the decisive cabinet meeting to approve the budget. The ministerial legislation committee also met today for a preliminary discussion ahead of the cabinet meeting, and approved the proposed amendment to the Angel Investors Law. The proposed bill for extending the price control authority was not discussed today; that discussion will take place in the framework of the cabinet meeting.
Published by Globes [online], Israel business news - www.globes-online.com - on October 5, 2014
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