The regulatory team overseeing Israel Electric Corporation (IEC) (TASE: ELEC.B22) last night decided to require the utility to withdraw NIS 1.8 billion from the fund for employees' free electricity and holiday gifts, 90% of the money deposited in the trust account. The figure is triple the amount that was mentioned in the bailout package agreed last week.
Sources inform ''Globes'' that the regulatory team, headed by Government Companies Authority deputy director Aharon Goldman, made the decision on the recommendation of the Public Utilities Authority (Electricity). The Authority, chaired by Orit Farkash, does not recognize the trust account, which guarantees IEC employees lifelong free electricity and holiday gifts even if the company goes bankrupt.
In October 2011, "Globes" revealed that the regulatory team also does not recognize the trust account, in which NIS 2.04 billion is currently deposited.
Yesterday, IEC's workers committee launched a series of labor sanctions to force the cancellation of the NIS 600 million that was withdrawn from the trust account. Presumably, if the regulatory team's decision is implemented, the labor sanctions will intensify. The measures threatened include stopping all work on IEC's prospectus for raising NIS 4.5 billion, which are critical for the purchase of fuel for the generation of electricity.
IEC has been depositing money in the trust account for years, camouflaged as "additional pension commitments". It says that it has the right to withdraw the NIS 600 million from the trust account. The workers committee agreed to the withdrawal to a budget fund to offset a NIS 1 billion debt, which it claims that IEC owes the company's pension fund.
Published by Globes [online], Israel business news - www.globes-online.com - on March 26, 2012
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