Sources inform ''Globes'' that Ofer Holdings Group unit OPC Rotem Ltd. is about to sign a contract to supply power to Israel Electric Corporation (IEC) (TASE: ELEC.B22) from the company's planned Mishor Rotem power station, after delays of over a year. The power purchase agreement (PPA) is estimated at more than NIS 3.5 billion over the contract period. This is largest-ever such agreement between IEC and a private power producer.
A dispute between IEC and the Public Utilities Authority (Electricity) delayed by a year the signing of the PPA between IEC and OPC. IEC demanded the right to receive recognition of all the cost of buying electricity from OPC, which the Public Utilities Authority opposed, stated that this deviated from standard policy.
The deadlock was broken at a meeting between Accountant General Shuki Oren, his deputy Avi Dor, and Public Utilities Authority chairman Amnon Shapiro. They agreed that, barring a last-minute obstacle, the PPA would be signed in a few weeks.
Last week, the board of Israel Corporation (TASE: ILCO) approved the parties at interest deal to acquire 80% of OPC from Ofer Holdings' unit Ofer (Energy Holdings) Ltd.
Meanwhile, OPC is continuing its preparations for building the Mishor Rotem power station. The company has published a $400-500 million engineering, procurement and construction (EPC) tender for the project. Bidders include Siemens AG (NYSE: SI; XETRA: SIE), Alstom SA (Euronext: ALO), General Electric Company (NYSE: GE), and Mitsubishi Power Systems Ltd. (TSE).
The Mishor Rotem power station is due to come online by the end of 2012. Israel Corp. also plans to build power stations at its subsidiaries Oil Refineries Ltd. (TASE:ORL) in Haifa and Israel Chemicals Ltd. (TASE: ICL) unit Dead Sea Works.
Published by Globes [online], Israel business news - www.globes-online.com - on September 23, 2009
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