After 34 years of discussion, the government may finally be ready to make a decision regarding the splitting of Oil Refineries into its separate facilities.
Prime Minister Ariel Sharon is the latest to step into the breach, and as he supports the split, the move seems about to take a decisive step forward. Not to hurry into anything, the government will discuss the fate of the state-owned oil refining and fuel importer (known by its Hebrew acronym Bazan) next week, in answer to the objections by National Infrastructures Minister Benjamin Ben-Eliezer to splitting the firm.
Sharon's support is in itself a turnaround, as he originally was not convinced of the move. Finance Ministry officials had convinced the prime minister that changing his mind on the splitting up of Oil Refineries at this stage would delay the eventual plan to privatize the company. They argued that as fuel prices are hitting new records world wide, so too are Oil Refineries' profits, and coupled with a booming local stock market, now was the best time to sell.
Nevertheless, Sharon is expected to express his support for the split in the firm's activities, and to move ahead with the privatization.
According to an earlier plan for Oil Refineries, the firm was to be split up and privatized by 2005. But some, like Ben-Eliezer, objected, and the discussions and prevarications delayed any move on the matter.
Ben-Eliezer argued that the firm should be sold "from above," that is, in one go to a buyer or on the stock exchange as a complete unit.
The treasury adopted the position of former finance minister Benjamin Netanyahu, which was to forge ahead with the split (forming Oil Refineries Haifa and Oil Refineries Ashdod), the privatization, and the agreement with The Israel Corporation, which held part of the Oil Refineries together with the state.
This agreement had set a sum of $120 million that The Israel Corp. would be compensated for its 26 percent stake. This sum itself has also been a matter of dispute, and the sum has been changed even after initial agreements. In this scenario, the two refining firms would then be sold to separate buyers.
The Ashdod facility would likely end up in the hands of one of the four fuel groups that have frequently expressed interest, while the Haifa unit would be floated later on the stock exchange.
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