"The upcoming water price cut is welcome, but the rate could be cut much more if Mekorot National Water Company were streamlined," water corporations forum chairman Adi Sternberg told "Globes" today.
He added, "You hear complaints all the time that the price of water is high because of the water corporations. These assertions are demagogic, and show a lack of understanding of the sector. Fingers should be pointed at the government monopoly, which refuses to cut its costs."
The Israel Water Authority last week announced that the water rate would be cut by 3%, starting in January. The Water Authority said that lowering the rate was made possible by a 16% cut in the electricity rate and streamlining by the water corporations, which replaced old infrastructure and reduced their water depreciation.
"Over the past two years, the price of water has been cut by 15%, and the only reason is cost cutting by the water corporations," Sternberg asserted. "Before the water corporations were set up, water depreciation was 25%, because no local authority invested in infrastructure."
Sternberg went on to say that lowering the water rate was also assisted by relatively high collection rates, compared with the period when there were no water corporations. "Some water corporations had a collection rate of 70% only 8-9 years ago, and now these rates are almost 100%," he claimed.
The recommendations of the Belinkov Committee, which spent two years discussing ways of streamlining the water sector in general, and Mekorot in particular, included legislative amendments, reforms in s production fees paid by water producers, restoring Mekorot's control of the National Water Enterprise company, and more. Implementation of the recommendations was to have led to a 7-8% cut in water rates, but the recommendations were never implemented.
"There's no need to reinvent the wheel," Sternberg said. "All you have to do now is put them into practice."
Mekorot said, "This is misleading. The Belinkov Committee issued two reports: one dealing with reducing the number of water corporations, and the second with long-term regulation in Mekorot. The report dealing with reducing the number of corporations was approved by the Water Authority Council, but is not being implemented for political reasons. Its implementation will lead to a very substantial reduction in the water rate - NIS 1 billion."
Published by Globes [online], Israel business news - www.globes-online.com - on November 1, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015