Israel Electric Corporation

Palestinians to centralize electricity sector

With plans to construct four new high-voltage substations, Palestinians take step towards energy, economic independence. Goal is to produce more electricity, lessen dependence on Israel, says Palestinian deputy prime minister

Palestinians are set to announce a new program to reorganize their electricity sector, which will enable costs to go down and local production to increase. Four new high-voltage substations are under construction at a total cost of $90 million in two phases, and are meant to streamline operations.



“The new established company, the power transmission company (PETL), will be in charge of all of the transmission network, and will also be the sole buyer from all of the suppliers – from Israel, Jordan, Egypt and any new power generation companies,” Dr. Mohammed Mustafa, Palestinian Deputy Prime Minister told The Media Line. “There will be one buyer of electricity on behalf of Palestine and they will have to do the financial and technical arrangements.”


Almost all of the electricity for the West Bank’s 2.5 million Palestinians comes from Israel. Mustafa says there are 230 separate collection points – some just one farmer – where electricity is taken from Israel.


 Both because of transmission losses and the fact that the electricity grid is not maintained, there are significant losses of power. The four new substations are expected to save the Palestinian Authority millions of dollars a year, savings that will eventually be passed on to the consumer.


In the Gaza Strip, there is a direct line from the Israel Electricity Company, which provides the electricity. Gaza needs 350- 450 megawatts per year. It gets about 120 megawatts from Israel, and 20 megawatts from Egypt. Gaza’s own power station is supposed to provide 140 megawatts, but only manages to produce 80 megawatts per year.


Most Gazans have gotten used to electricity blackouts of up to 12 hours per day. The situation in Gaza has deteriorated further because Egypt has destroyed hundreds of smuggling tunnels that used to provide cheap gasoline. Many gas stations in Gaza have shut down.


Palestinians also say that they see centralizing their electricity, and eventually producing more of their own as a step toward independent statehood, and a way of showing the international donor nations that they can be fiscally responsible and run their own state.


“We don’t have to be 100 percent independent but we should have a capacity of at least 50 percent,” Dr. Samir Abdullah of the Palestine Economic Policy Research Institute told The Media Line. “That will also give us more leverage when we come to bargain with Israel, which charges us a high price for electricity.”


He said that if there is a shortage in Israel, such as during this year’s early winter snowstorm, Israel cuts the supply to the Palestinian Authority in order to provide for its customers in Israel first. Becoming more energy independent will also ensure a constant supply, he said.


Dr. Mustafa says that Palestinians currently spend some $2.5 billion dollars (about a quarter of the total GDP) on the energy sector, with $700 million going to electricity and the rest for petroleum and gas products. Beyond building these new substations,


Palestinians hope to produce more of their own electricity. That is the reason, he said, that the PA has signed a deal to buy natural gas from Israel, once the large Leviathan gas field becomes operational.


“The idea is to increase our production capacity in Palestine and reduce our dependency on Israel,” Mustafa said. “We believe that if we get the natural gas we can increase the capacity of generation in Gaza, finish the power plant in Jenin and build a third one in Hebron.


The total capacity would be at least 1,000 megawatts which is half of our needs in the next ten years. That is a significant step forward and it would lead to a reduction of cost to business users and customers by 30 or 40 percent.”


The PA owes the Jerusalem electricity company some $300 million for unpaid electricity debt. Part of the problem is that Palestinians living in refugee camps in the West Bank and Gaza Strip have never paid for their electricity. Others tap into the grid illegally and the PA has not prosecuted them. Centralizing the electricity sector will also make it easier to stop theft and see exactly how much money they are spending.


Israel has begun deducting some of the money owed from the $100 million that Israel collects in Palestinians customs and tax revenues each month according to the terms of the 1993 Oslo Accords .


In the long term, however, Palestinians see their future in natural gas. The PA has become the first customer of the Leviathan gas field, which has a huge reserve, which is expected to be producing in the next few years.


Dr. Mustafa said that once that gas begins flowing, the PA will complete a $300 million power station in Jenin in the northern West Bank, already under construction.


Article written by Felice Friedson and Linda Gradstein


Reprinted with permission from The Media Line


The Media Line

פרסום ראשון: 02.02.14, 20:07
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