"The failure of Israel's electricity market justifies granting state guarantees to private electricity producers. Obviously, under ordinary circumstances, such a measure would be wrong," Accountant General Shuki Oren told "Globes" today.
Oren said that the government's interest in fostering competition in the electricity market by encouraging the entry of private power producers justified the extraordinary measure, in view of Israel Electric Corporation's (IEC) (TASE: ELEC.B22) total control of all aspects of the market: production, transport, and distribution.
Oren rejected the claim that the Ministry of Finance's threshold conditions enable only one private power producer - Dorad Energy Ltd. - to be eligible for the guarantees. He said that there were already several provisional electricity production licenses, which could meet the threshold conditions.
Oren added that the proposed conditions were aimed at preventing a situation in which "every producer with a few kilowatts on the roof could apply for guarantees." The decision to set a deadline for applying for guarantees was intended as an incentive to private power producers to quickly secure financing. "Electricity production is one of the most suitable sectors for the introduction of private players, in the same way as has happened in desalination in the past few years."
On Monday, the Ministry of Finance asked the Knesset Finance Committee to approve the granting of NIS 7 billion in government guarantees to private electricity producers. Sources inform ''Globes'' that this is the amount of credit needed to build two private power plants: Dorad's plant in Ashkelon, and Dalia Power Energies Ltd's plant at Tel Tzafit. Each power plant needs a credit line of about $1 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on April 14, 2010
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