Shraga Brosh: Leviathan delay costing Israel NIS 15b

Shraga Brosh

The Manufacturers Association president said that 57% of the cost will be in lost tax revenues and state royalties.

Manufacturers Association of Israel president Shraga Brosh warned of the huge loss the Israeli economy would suffer from a delay in development of the Leviathan natural gas reservoir.

Brosh announced the he strongly opposed Israel Antitrust Authority director general Prof. David Gilo's decision to delay development of the Leviathan reservoir until after the elections. According to Brosh, the proposals brought before Gilo, the Ministry of Finance, and the Ministry of National Infrastructure, Energy, and Water Resources, which include the exit of Delek Group Ltd. (TASE: DLEKG) from the Tamar natural gas reservoir and the transfer of marketing to a third party independent of the reservoir owners, are enough to achieve the objective of bolstering competition, while generating different interests for different controlling shareholders in Tamar and Leviathan, the two main reservoirs.

Brosh said, "An examination by the Manufacturers Association Research Department of the macroeconomic effects of a delay in development of the Leviathan reservoir found that already in 2018-2019, the economy will lose NIS 15.5 billion from a delay in development of the reservoir. 57% of the loss will consist of lost state tax revenues and royalties. The remaining 43% will result from extra energy costs resulting paid by the economy."

Brosh added, "The government decided to combat bureaucracy and excess regulation only a few months ago, but by 2018, the current regulators will probably no longer be in their positions, while we, the citizenry, will be left to pay the prices of their irresponsibility. Which of the regulators took into account the economic and social consequences of this step? The obvious result of this behavior is harm to the citizens of the country, particularly in view of the rise in the cost of living and the loss of the ability to pay for a broad range of essential public services that the government could provide to its citizens with the revenues from natural gas."

The Manufacturers Association probe also shows that due to the conduct of the governmental agencies on the natural gas issue, including the Antitrust Authority director general, the Ministry of Finance, and the Ministry of National Infrastructure, Energy, and Water Resources, companies that were granted a concession in the reservoirs have discontinued their investments and discharged the hundreds of workers who were to have developed the Tamar and Leviathan gas fields. Development has been halted as a result, and enormous damage has been caused to the economy that will lower growth by 0.4% in 2018 and 0.47% in 2019. The economy will also lose the chance to gain 16,000 new jobs in 2019.

Published by Globes [online], Israel business news - www.globes-online.com - on March 1, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

Shraga Brosh
Shraga Brosh
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