Israel's Electricity Authority is expected to renew the operating license of East Jerusalem's electricity company today although it owes NIS 458 million to the financially strapped Israel Electric Corporation. The regulator explains it has little choice in the matter, claiming the move is preferable to allowing the company to continue operating without a license. Furthermore, the debt can't be deducted from taxes collected by Israel for the Palestinian Authority since the East Jerusalem company is defined as private.
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Founded under the British Mandate for Palestine, the Jerusalem District Electricity Company, provides 30% of the electricity consumed by Palestinians and has about 200,000 customers. The company serves East Jerusalem, Bethlehem, Ramallah, Jericho, and a number of other locales in the West Bank. Like the IEC, it is defined as a supplier of essential services and is regulated by the Israeli Electricity Authority.
The company doesn't have its own power stations and buys most of the electricity it supplies from the IEC and from Jordan. The IEC also sells electricity directly to the PA for areas not covered by the East Jerusalem company. The PA itself owes the IEC about NIS 273 million.
Israel's electric company transfers 7% of the power it generates to the Palestinians and receives only partial payment in return despite its own debts amounting to an estimated NIS 72 billion as of the end of last September. Water and Energy Resources Minister Uzi Landau threatened several months ago to instruct the IEC to cut off electricity to areas of the PA for non-payment of debts.
In November, when several Knesset members suggested impounding the amount owed by the PA to the IEC to help the company weather its debt crisis, Finance Ministry director-general Doron Cohen rejected the proposal. "We don't want to cause the PA's collapse," said Cohen. But the treasury reneged. After the Palestinians won observer nation status at the United Nations, the treasury responded by impounding one monthly payment to the PA for the benefit of the IEC and other Israeli creditors.