Last update - 00:00 03/10/2006
PA deals blow to Dor Alon, ending fuel contract in 2007
By Sharon Kedmi
Dor Alon informed the stock exchange yesterday that the Palestinian Authority will cease purchasing fuel starting at the beginning of 2007 after the company refused to meet demands to improve the conditions of their contract. The move constitutes a major blow to Dor Alon, which supplies the majority of the PA's fuel and all of its refined products and comprises some 40 percent of the company's revenue. Dor Alon has been the PA's primary supplier since 1994, which industry experts value at NIS 1.5 billion annually.
Several disputes erupted over the past few months between the sides during which Dor Alon halted the flow of fuel to the PA, which defaulted on payments worth hundreds of millions of shekels. However, in each instance, Dor Alon restored the supply after the PA arranged its debts. According to energy experts, this is not the reason Dor Alon refused to meet the PA's demands. The main reason was that the new conditions desired by the PA substantially differentiated from the current ones.
The last reports by Dor Alon continue to be flattering, but ending the PA contract is liable to change the picture. In 2005, company profits skyrocketed 556 percent from its 2004 results to a record of NIS 858 million. The triple-digit profit surge was tied primarily to the IPO of Alon US, which garnered half a billion shekels profit, and Alon Energy's IP in Tel Aviv, which brought in NIS 60 million in profit. In contrast, its second quarter results for 2006 slid down 31 percent from the parallel quarter in 2005 to NIS 106 million.
Dor Alon's main shareholder is the Bielsol Group, which controls 37.2 percent. Shraga Biran owns 80 percent of Bielsol and David Wiessman 20 percent.