Knesset okays breaking up Israel Electric Corporation

The draft law to reform the country's electricity sector passed its second and third reading in the Knesset plenum yesterday. Under the reform, Israel Electric Corporation (IEC) will be split up into three subsidiaries for electricity production and four for distribution, and 49 percent of the company will be privatized in 2013.

A total of 61 MKs voted for the bill, with 12 opposed: MKs Shelly Yachimovich, Avishay Braverman, Ophir Pines-Paz, Ami Ayalon and Yoram Marciano (Labor); Haim Katz (Likud); Nissim Zeev (Shas); Yossi Beilin, Haim Oron and Ran Cohen (Meretz); Dov Khenin (Hadash); and Yitzhak Galanti (Pensioners), who is a retired IEC employee.

"This is a reform in a particularly complex area, and changes of this dimension must be coordinated with the workers, who have expressed agreement to a large part of the changes," Braverman said.

Labor Party Chairman and Defense Minister Amir Peretz was absent during the voting. Minister Isaac Herzog, MK Matan Vilnai and Minister Shalom Simhon (Labor) supported the bill. National Infrastructure Minister Benjamin Ben-Eliezer, who also supports the law, called on IEC employees, the Finance Ministry and the Histadrut labor federation to hold "rapid, intensive" negotiations and then "move forward, with the approval of the workers."

The Chair of the Knesset Economics Committee, MK Moshe Kahlon (Likud), called on the unions to communicate with the government via the committee or by other means. "I am asking them to demonstrate responsibility, not to derail the process or to punish anyone," Kahlon said. "These are dedicated, valued workers who earn a decent wage. I don't think anyone wants to cause them harm."

The bill calls for extending by four months the IEC's operating licenses, which expire on March 3, after which they can be re-extended by the same period if necessary. The licenses can be extended beyond November 1, 2007 only as part of an agreement determining the structural changes to the company.

After the bill was approved by the Knesset yesterday, Ben-Eliezer spoke with Histadrut Chairman Ofer Eini and IEC union chair David "Miko" Tsarfati. The minister asked the two to set up teams to negotiate the terms of the reforms during the next eight months. A statement issued by the National Infrastructures Ministry said: "The minister views himself as obligated to see to the rights and status of the workers and to emphasize that the reform is for the benefit of the state of Israel, the citizens of Israel, Israel Electric Corporation and its workers."

The IEC union refused to comment until after the meeting last night of its central committee in Tel Aviv. Earlier, Tsarfati said the Knesset vote was expected and the union will announce its intentions after the meeting.