IDE wins Sorek 2 desalination tender amid US pressure

Sorek desalination plant

Israel's IDE will build the world's largest seawater desalination plant after the Trump administration let it be known it did not want China's Hutchison to win the project.

Israeli water treatment company IDE Technologies and Bank Leumi (TASE: LUMI) have won the Israeli government's PPP tender to build and operate the Sorek2 water desalination plant. IDE triumphed over the bid of Hong Kong based Hutchison Water. Last week the Trump administration put major pressure on Israel not to let Hutchison with its Chinese links win the tender.

IDE has now won four of the five tenders to operate desalination plants in Israel. The bid proposed an unprecedented price of NIS 1.45 per cubic meter of water, NIS 0.65 lower than the lowest price per cubic meter paid for water in Israel today. According to the Ministry of Finance, this price will save Israel's water grid up to NIS 3.3 billion for the period of the plant's operations. Sorek 2's plan calls for the annual production of 200 million cubic meters of water, which will make it the world's largest seawater desalination plant, and increase Israel's desalination production capacity to 35% of the country's water needs.

Hutchison Water is part of the Hong Kong based Hutchison Holdings controlled by Hong Kong billionaire Li Ka-shing. Earlier this month US Secretary of State Mike Pompeo came to Israel and reportedly asked the Israeli government not to award the Sorek 2 tender to Hutchison. The demand came after escalating US-China diplomatic tensions and amid Us dissatisfaction with Chinese involvement in building and operating major Israeli infrastructure projects including the new Haifa and Ashdod ports and the Tel Aviv light rail Red Line.

Back in 2010, IDE and Hutchison teamed up to win the tender for the first Sorek desalination plant but IDE was forced to leave the partnership in order to bid for Sorek 2. "Globes" revealed last year that in running Sorek 1 both companies had hidden data about excessive salinity in the water produced by Sorek 1. The desalination plant was forced to provide the state with NIS 75 million worth of free water but the courts dismissed a petition to disqualify IDE and Hutchison from the Sorek 2 tender.

According to the terms of the tender, water is scheduled to flow from the Sorek 2 desalination plant in 2023. Financing for the project will come from Bank Leumi and German bank KFW while the EU will invest in the project through a loan of NIS 150 million from the European Investment Bank (EIB), which will save Israel's water grid NIS 100 million.

IDE is owned by Alpha Water Partners, controlled by Avshalom Felber and Amir Lang together with Clal Insurance, Ayalon Insurance, Meitav Dash, and other institutional investors.

Published by Globes, Israel business news - en.globes.co.il - on May 26, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Sorek desalination plant
Sorek desalination plant
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