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Israel’s Finance Ministry deducts withheld tax funds from part of the NIS 731 million the Palestinian Authority owe the Israel Electric Corp

By Lior Gutman, Calcalist


The Finance Ministry transferred NIS 273.5 million (about $71.35 million) to the Israel Electric Corporation in recent days to cover 37% of the Palestinian Authority’s electricity debt, which has reached NIS 731 million ($190.7 million) over the past year.

Israel Electric Corp. Complaining about PA’s growing debt as Electricity is on the way to the Palestinian Authority – Photo: IsraelandStuff/PP

The source of the funds transferred to the Electric Corp is the deduction of tax revenues collected by Israel on behalf the PA and transferred to the cash-strapped authority on a monthly basis.

The said arrangement stems from an appendix to the Oslo Accords, under which Israel transfers some NIS 500 million ($130.4 million) on average every month.

The Electric Corp has been complaining about the PA’s growing debts since the beginning of the year, especially in light of the company’s current financial troubles.

According to the third quarter financial reports released about two weeks ago, the Electric Corp recorded a negative cash flow of NIS 779 million ($203 million). The company’s negative cash flow in the first nine months of 2012 totaled NIS 2.27 billion ($590 million).

Energy and Water Resources Minister Uzi Landau has even implied that should the PA fail to pay its debts, Israel would be forced to initiate controlled power cuts to Palestinian households and provide electricity to essential facilities only.

And yet, despite the warnings, not a single governmental body has worked to disconnect the power to the PA, including during Operation Pillar of Defense.

In a punitive measure against the PA following its recognition as a non-member state by the United Nations General Assembly, Finance Minister Yuval Steinitz decided last week to withhold Palestinian tax revenues and transfer them to the Electric Corp instead to deduct part of the PA’s accumulated debt.

In response to a Calcalist inquiry, an Electric Corp official said the funds would be used “for the company’s current expenses, including the purchase of fuels.”


View original Ynet publication at: http://www.ynetnews.com/articles/0,7340,L-4317639,00.html