More than a year late, the Sorek private power plant has started to operate. The power plant was constructed by a consortium of IDE Technologies (owned by Israel Chemicals (TASE: ICL: NYSE: ICL) and Delek Group Ltd. (TASE: DLEKG), controlled by Yitzhak Tshuva), and Hutchison Whampoa. The plant will supply 140 megawatts, half of it for the adjacent desalination plant, owned by IDE and Hutchison Whampoa unit Hutchison Water, and half for factories in the area.
The plant was built at an investment of $200 million. The financing was led by Bank Hapoalim (TASE: POLI), with other financial institutions. The desalination plant will buy power from the new power plant more cheaply than from Israel Electric Corporation. The cheaper power should of course bring down the price of the desalinated water as well.
The power plant will be fueled by natural gas from the Tamar reservoir. According to the contract between the power plant developers and the owners of Tamar (of which Delek Group is one) signed in March 2014, the plant will consume 3.3 billion BCM of gas over the contract period. The Tamar partners estimated the value of the contract at $750 million.
The commissioning of the power plant was delayed because the Electricity Authority refused to recognize the gas supply agreement on the grounds that the base price in the contract was too high, and that the index-linking would lead to an unjustified rise in the price.
Published by Globes [online], Israel business news - www.globes-online.com - on July 12, 2016
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