Dor-Alon resumes fuel supply to PA

Israeli energy company to renew petrol supply to Palestinians, despite huge debt, after last week PA announced it would sever contacts with firm and start buying gas from competitor Paz

Tani Goldstein |Published: 10.10.06 , 17:57

The Dor-Alon Energy Company has renewed the supply of gasoline to the Palestinian Authority, despite the PA's announcement last week it will sever all contracts with the Israeli energy company and not withstanding the huge debt incurred by the Palestinians to the company.

Ynet has learned that following its announcement it would stop buying fuel from Dor-Alon two weeks ago, the PA has signed a separate supply contract with Paz, another Israeli energy company, to supply and refine petrol for the PA using the Ashdod refinery.

So far, the PA has amassed a debt of NIS 350 million (roughly USD 82 million), and Dor-Alon has refused to ease the terms of the contract. In response, the PA announced they will terminate the contract with Dor-Alon starting January 1, 2007. Dor-Alon immediately stopped supplying the fuel to the PA, which in turn began buying fuel from Paz.

Sources in the energy market said that the PA's "trick" apparently worked, and Dor-Alon quickly returned to supply the PA with fuel. Dor-Alon has also warned the PA that if their debt is not paid off until the end of their contract, they will initiate legal proceedings against the PA.

The PA is the single largest fuel consumer in Israel. According to estimates, the PA consumes about NIS 1.5 billion (roughly USD 350 million) worth of fuel annually, which are about 40 percent of Dor-Alon's annual business. The PA are planning to stop buying fuel from Israel and start buying it directly from the Persian Gulf states and refine it at the Ashdod refinery, which was recently purchased by Paz.

Palestinian Energy Minister Samir Abu-Aisha told Ynet in response that "Dor-Alon is indeed continuing to supply fuel to the PA. They notified us that we are within the terms of the contract and so they are continuing the supply. Dor-Alon is aware that buying fuel from Paz is always an option for us if the supply from them will stop. We are aware of the debt to Dor-Alon and we intend on paying it back. Despite the situation in the PA, we are able to collect money at the pumps, and to pay for the gasoline. "