Palestinian Authority Agrees to Partial Debt Payment to Israel Electric

(Flash 90) An Israel Electricity Company worker performing maintenance on a utility pole.
An Israel Electricity Company worker performing maintenance on a utility pole. (Flash90)

A deal has been struck to resolve the massive outstanding debt owed by the Palestinian Authority to the Israel Electric Corporation, according to media reports.

Under the agreement, expected to be signed on Tuesday, the PA will pay Israel 500 million shekels ($132 million) of the total debt of 1.5 billion shekels ($397 million). A senior Israeli official quoted by Haaretz said the agreement will mean writing off hundreds of millions of shekels of the debt.

“As with every debt rescheduling that banks do with their customers, sometimes you give up on a small portion of the debt in order to get most of it back,” the official said Monday night.

Last year, the IEC issued a final warning to the PA that if the debts weren’t paid within three days, they would cut off electricity. That didn’t begin to happen until months later, though, when the IEC intermittently limited electricity to the PA in April and May. Blackouts ensued in Jericho and Beit Lechem, and that drew a condemnation from the U.S. State Department.

The agreement also requires the PA to establish a mechanism for collecting unpaid electricity bills from Palestinian customers in Yehudah and Shomron, something that doesn’t currently exist, Haaretz added. The PA will then become the only Palestinian agency the IEC has to deal with, and will assume full responsibility for paying the electric company.

Until now, the IEC has had to seek payment from several different local electricity companies in the region, which were in arrears. The system contributed to the pileup of debts, and Israel hopes the new agreement will lead to more reliable payment.

The agreement marks the culmination of almost a year of negotiations involving Finance Minister Moshe Kahlon, senior Finance Ministry officials, COGAT officers and Palestinian representatives. It was slated to be signed by Maj. Gen. Yoav Mordechai, Israel’s coordinator of government activities in the territories, and PA Civil Affairs Minister Hussein al-Sheikh.

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