"The Ministry of Finance is trying to incite the public against us, in order to divert attention away from the rise in electricity rates," claims Israel Electric Corporation's (IEC) (TASE: ELEC.B22) workers committee in response to a "Globes" report about the decision to order the utility to withdraw 90% of the trust fund for employees and pensioners' free electricity and holiday gifts. The NIS 1.8 billion will be used to buy fuel for the generation of electricity.
The workers committee says that the government is trying to cover up its blunders, which have resulted in the latest hikes in electricity rates, amounting to a cumulative 25%. The workers committee claims that the Ministry of Finance is forcing IEC to increase its debt to over NIS 70 billion in order to bring the utility to its knees. "The government is about to make billions from the crisis it has forced IEC into, but isn't prepared to spend a shekel to help the company in its hardest hour," said a source on the committee, referring to IEC's need to increase its spending on fuel by NIS 10 billion because of the severe natural gas shortage. Although the government has "forgiven" fuel excise for IEC, it will still make NIS 1.5 billion in VAT on the fuel purchases.
The Ministry of Finance said in response that the regulatory team's decision on the trust account was made after more than a year's talks, during which several meetings were held with IEC representatives. A ministry source said, "It isn't fair to say that the government isn't helping, after the government prepared a bailout package totaling billions of shekels, including electricity rate hikes, state guarantees by the Accountant General, postponements of tax payments, and reductions on the excise on diesel and fuel oil."
The IEC workers committee does not intend at this stage to intensify its labor sanctions, announced on Sunday. This afternoon, the Haifa District Labor Court accepted IEC's management petition for an injunction against the sanctions, and ordered the workers to suspend them immediately.
The workers committee told "Globes" that it rejects the management's request to allow it complete on time the prospectus for the Israel Securities Authority to raise up to NIS 10 billion in debt on the capital market. The workers committee said that if the prospectus is not filed by noon on April, 1, the offering will be postponed until the third quarter.
Published by Globes [online], Israel business news - www.globes-online.com - on March 27, 2012
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