Prime Minister Benjamin Netanyahu absconded from the news conference he convened Thursday to present the deal between the government and the companies developing Israel’s offshore natural-gas reserves, leaving the floor to National Infrastructure, Energy and Water Minister Yuval Steinitz. That is exactly what Netanyahu has done in his dealings with the exploration companies.
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In recent months Netanyahu has thrown his full weight behind a framework agreement that harms the Israeli consumers’ interests and undermines the energy security that is vital to Israel’s economy. The deal, which will be submitted to the government for approval on Sunday, perpetuates the Noble Energy-Delek cartel that is already overcharging customers of the natural gas from the active Tamar field.
Not only does the new deal fail to solve the existing problem, it further exacerbates the distortions in natural-gas prices that were caused by far-reaching regulatory concessions. The agreement includes a reduction in the price of natural gas from $5.40 per million British thermal units to $4.70 next year, linked to Israel Electric Corporation’s production costs — thus easing the draconian, inflation-indexed mechanism set down in the Tamar contracts. It also introducing milestones for development of the Leviathan reserve. But these “improvements” are minor, a false show of toughness on the part of the state.
A report by the Electricity Authority whose publication the government tried to conceal shows that under the Netanyahu-Steinitz deal, the Israeli public will pay 7.3 billion shekels ($1.9 billion) more over the next 15 years than under an alternative model proposed by the agency. Until about six months ago the Finance Ministry also supported this option, before caving in to pressure from Netanyahu.
Several regulators have warned about the distortions the deal would perpetuate and demanded that changes be made. They include Bank of Israel Governor Karnit Flug, who nevertheless expressed support in principle for the deal, State Comptroller Joseph Shapira, Antitrust Commissioner David Gilo and Electricity Authority chairwoman Orit Farkash Hacohen. The latter two even paid with their jobs for their opposition. The government ignored them.
Netanyahu and Steinitz tried to sell the public the illusion of bargaining and promises of an economic paradise that will be achieved with the taxes from the natural gas. The truth is that the actual amount of taxes collected does not match the promises, and the slight reduction in the ceiling price will not prevent an automatic, draconian price hike that is not subjected to the market conditions.
Netanyahu has not advanced the economy or Israelis’ welfare with the gas deal, as he claims to have done. Instead, he has knuckled under to the pressures of big business, hurting the economy and jeopardizing Israel’s energy security.
Arye Dery must keep his election promise to the “transparent people” and not waive a Knesset debate on the deal. The Knesset for its part must not approve the deal when it is required to do so.