The Prime Minister's Office issued the approval after the Palestine Investment Fund (PIF), led by a confidante of President Mahmoud Abbas and former deputy prime minister Mohammed Mustafa, submitted a request through the Coordinator for Government Activities in the Territories (COGAT).
The Palestinian power station, which will take four years to build, will provide the Palestinian market with 450 mega watts at full capacity and will be fueled by Israeli gas, coming from the Leviathan reservoir.
If at first Israel could not provide the station with gas because of the uncertain future of the gas deal, the station could operate on diesel fuel.
In the long term, the station is supposed to get its gas from a reservoir off the coast of Gaza which belongs to the Palestinian Authority, but such a plan cannot come to fruition because of a variety of geopolitical factors.
The power station will be both publically and privately owned. Along with the PIF, its private investors include the Bank of Palestine, Padico, an investment holding group owned by Palestinian billionaire Munib Al-Masri, and others.
The Israel Electric Corporation can currently provide the Palestinian Authority with up to 1,000 megawatts a day. This is approximately in line with the current Palestinian demand, but that demand is growing, which results in power supply problems.
The power station is expected to mostly provide for the needs of the northern West Bank, while other parts of the West Bank will also receive electricity from the station, but use the existing Israeli infrastructure.
In the near future, the Palestinians will issue a tender to build the power station and they are not opposed to the Israel Electric Corporation making a bid.
For the Palestinians, building a power station is very significant: Production of electricity will be cheaper than buying it from Israel, and annual saving is expected to stand on $40 million. Additionally, building the station will directly and indirectly add 1,000 new jobs to the Palestinian economy. The power station will also bring in about $100 million in additional tax revenue to the PA every year.
The Palestinians also hope to build a smaller power station in the Hebron area.