Ministry Slams Electric Corp. Operating Criteria, Misuse of Resources

By Zvi Zrahiya and Sharon Kedmi
Published in Haaretz - October 20, 2006

The Israel Electric Corporation (IEC) operates according to inefficient criteria and does not properly use all the resources that the state has given it, National Infrastructures Ministry director general Hezi Kugler said yesterday during a meeting of the Knesset Economics Committee.

Kugler further attacked the IEC, saying that if the company were to adopt the management tolls that the ministry had offered it, it would save millions of shekels on fuel purchases.
He also added that the company must adopt managerial tools that would facilitate the establishment of new power stations to meet demand over the next five to seven years.

When the natural gas pipelines are completed and there is gas from other sources, it will be possible for private producers to build additional power plants using cheap and efficient energy, Kugler explained.

This would raise the level of electricity reserves to 15-20 percent, which is the state's target, he added.

According to National Infrastructures Minister Benjamin Ben-Eliezer, "The IEC is a strategic brand. The company is important to me like the Israel Defense Forces, and therefore I have no intention of transferring it to private hands.

"The State of Israel is an island state - not like the United States or Europe, which have the ability to take electricity from their neighbors. We cannot allow ourselves a situation of electrical blackouts," the minister explained.

"I have no intention of privatizing the company, and it will remain under government control - control of 51 percent, and 49 percent will be floated on the stock market," he added.

"We need to understand that the minute we privatize the company, we will no longer be able to reverse course. It is a process that if we discover we have made a mistake, we will not be able to correct it." Ben-Eliezer protested he favors reforms, adding, "the IEC needs to become more efficient."

The CEO of the IEC, Uri Ben-Nun, claimed that the delays in building new power generating stations were a result of delays in the receipt of licenses from the statutory planning bodies.

As to electricity reserves, he added that "Israel is well above the world average in electricity reserves, and they will reach 4-5 percent. We are not in Switzerland, but still in a good position above the average - and we disagree with the goal of 15-20 percent reserves."

The head of the Economics Committee, Likud MK Moshe Kahlon, demanded a document explaining the contradictory figures concerning reserves. Other MKs claimed that Ben-Nun had told the committee three months ago that Israel's electricity reserves would be only 1 percent in 2011.

Kahlon also called on the treasury to complete its negotiations with the IEC as soon as possible, and start implementing the structural changes in the company. He also added that according to forecasts, an electricity shortage is expected already in 2009.

MK Eliahu Gabbay of the National Religious Party proposed privatizing the IEC immediately. He complained about the atmosphere of the meeting, saying that the other MKs had almost completely taken the IEC's position. "I feel as if I am at a party of the IEC's union," Gabbay explained.