Attack on Sinai gas pipe (archives)
The Israel Electric Corporation is gearing for a financing round aimed at raising enough funds to enable the company to deal with the shortage of gas supplied by Egypt, the IEC announced Wednesday.
The move echoes the company's concerns over the north Sinai gas line's dwindling supply, which forced IEC to resort to the use of diesel and fuel oils, which are costlier.
The company had previously announced that the excess cost would amount to some NIS 3.5 billion ($930,000), which it will not be able to support.
Petroleum minister quoted as saying Cairo about to finish drafting new contract for gas exports to Jewish state that includes big increase in prices
The IEC also warned that the potential tariff hike may propel into a 25% rise in power rates – at which point the Finance Ministry stepped in and ordered provisional, 69% excise tax cut on diesel oil until the end of the year.
The move helped the IEC purchase the diesel fuel but nonetheless failed to block a 10% raise in electricity rates in August.
The IEC added that cut in the Egyptian gas supply, the rapid depletion of Tethis – the corporation’s sole natural gas reservoir - by a rate which exceeded forecasts by 25%, along with low seasonal demands might take their toll on the IEC’s cash flow by as much as a half a billion shekels by the end of 2011.
The recent explosion of the Egyptian gas line led the IEC to believe that these events “affirm our concerns that Egyptian gas (flow) will not be coming back online in the foreseeable future," therefore the corporation announced that it was preparing for a financing round meant to cover its losses, while seeking at the same time turning to the government for assistance.
The IEC has already held three financing rounds, which raised about NIS 4 million ($1 million). The company is likely to pursue another half a billion shekels in financing.
The IEC also plans to appeal to the Israel Electricity Authority for permission to hike rates in order to boost the company’s coffers.
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