Launch of Electricity Authority Reform

At the end of last week, the Israeli Knesset approved a historic reform to the electricity sector. As part of the reform, the Israel Electric Corporation (IEC) has undertaken to sell five power plants in the following order: Alon Tavor, Ramat Hovav, Reading, Hagit, and Eshkol. The selling process of the first power plant, Alon Tavor, is expected to begin within a few months and is planned to be completed by December 2019 – 18 months after the approval of the reform.

In preparation for the sale, the IEC contacted this week dozens of potential buyers in Israel and abroad, including banks, investment funds, and energy companies. Buyers’ threshold criteria include, inter alia, proven experience in operating power plants, financial strength, and approval from the Antitrust Authority, if necessary.

The Alon Tavor Power Plant was founded in the 1990s. Since 2004, it has also been operating a combined-cycle gas turbine (CCGT) power plant that provides electricity to northern Israel. The aggregate output of the plant is approximately 600 MW, comprised of about 380 MW from two combined-cycle units and another 220 MW from two gas turbines.

The various government authorities are checking into the possibility of allowing the buyer of this plant to construct additional power generation units. A decision is expected to be reached about the additional capacity and about the technology to be implemented before the tender opens.

As for the fate of the employees at the various power plants, the reform agreement states that the IEC will “loan” the manpower needed to operate the power plants to the buyers for five years. Subsequently, the relevant employees may either become employees of the private companies or, alternatively, may resign according to the terms of the reform agreement.

A roundtable panel to hear public positions on the purpose of formulating the principles for the sale of the Alon Tavor Power Plant and the other power plants will be held at the end of next month.