The state is demanding that the Israel Electric Corporation (IEC) (TASE: ELEC.B22) workers' committee consent to the sale of the company's power stations and production sites, opening of the supply segment to competition, and mass retirement of company employees, Ministry of Finance and Ministry of National Infrastructure, Energy, and Water Resources directors general Shai Babad and Shaul Meridor told Histadrut (General Federation of Labor in Israel) secretary general Avi Nissenkorn and workers' committee chairman Miki Zarfati in their first negotiating session today at the Ministry of Finance.
The mood at the meeting was turbulent. Zarfati attacked the state and IEC management, after company CEO Ofer Bloch also expressed support for separating the power stations from the company. A follow-up meeting has been scheduled for tomorrow.
At the meeting, the state presented its renewed proposal for reforming IEC, replacing the proposal previously presented to the workers' committee and the Histadrut. The previous proposal was submitted by a committee headed by Government Companies Authority head Ori Yogev.
The current proposal is much more comprehensive and aggressive than the agreements approached by the parties in the Yogev Committee framework, because it requires IEC to sell all 17 sites on which power stations are operating, and to completely abandon the production segment, currently the IEC's main source of revenue. IEC still controls 80% of the Israeli economy's electricity production capacity.
Under the proposal presented today, the power stations operating on natural gas will be sold to private parties, while the coal-fired plants, which are considered less efficient, will be transferred to another government company. IEC will continue to be a monopoly in the management of the electricity delivery and distribution system, but the electricity supply segment will gradually be opened to full competition.
At the same time, the state is also proposing a recovery plan for IEC that will include mass retirement of its employees and compensation for those that remain, but the proposal stipulates that payments will be made according to milestones, subject to fulfilling the state's demands.
Published by Globes [online], Israel business news - www.globes-online.com - on March 30, 2016
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