Israel, PA sign deal on massive Palestinian electricity bill
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Israel, PA sign deal on massive Palestinian electricity bill

Ramallah to hand over quarter of NIS 2b debt, take control of West Bank power lines, in end to 10-year crisis

From left: Head of of COGAT Maj- Gen Yoav Mordechai,  Palestinian Minister of Civil Affairs Hussein al-Sheik, Israel's Finance Minister Moshe Kahlon and Israel's Ministry of Finance Director-General Shai Babad sign an agreement to resolve NIS 2 billion of debt owed by the Palestinian Authority to the Israel Electric Corporation, September 12, 2016. (Facebook/COGAT)
From left: Head of of COGAT Maj- Gen Yoav Mordechai, Palestinian Minister of Civil Affairs Hussein al-Sheik, Israel's Finance Minister Moshe Kahlon and Israel's Ministry of Finance Director-General Shai Babad sign an agreement to resolve NIS 2 billion of debt owed by the Palestinian Authority to the Israel Electric Corporation, September 12, 2016. (Facebook/COGAT)

Israel and the Palestinian Authority signed an agreement on Tuesday to resolve the Palestinians’ outstanding debt of almost NIS 2 billion ($530 million) to the Israel Electric Corporation.

Under the agreement, the PA will pay Israel NIS 570 million ($132 million), putting an end to the 10-year debt crisis. The balance of NIS 1.5 billion ($397 million) will be paid in 48 installments, according to AFP, which added that a portion of the debt — likely interest accrued over the years — is expected to be waived.

In a statement on Facebook, COGAT (Coordination of Government Activities in the Territories), the Israeli Defense Ministry body responsible for implementing government policies in the Palestinian territories, said the deal “will also assist in reforming and developing the PA’s electric and energy sector.”

A joint Israeli-Palestinian committee will be formed to oversee the transfer of responsibility to the PA of power lines that supply electricity to Palestinian cities in the West Bank.

The agreement was signed by the head of of COGAT, Maj- Gen Yoav Mordechai, Palestinian Minister of Civil Affairs Hussein al-Sheik, Israel’s Finance Minister Moshe Kahlon and Israel’s Ministry of Finance Director-General Shai Babad.

After a decade, the electricity debt crisis in the Palestinian Authority (PA) has been resolved. This afternoon, the…

Posted by COGAT – Coordination of Government Activities in the Territories on Tuesday, 13 September 2016

The IEC began to scale back the electricity flow to Palestinian cities in late May and early April due to the debt. Power supplies to Jericho and Bethlehem were limited, causing some blackouts, and the company threatened to do the same in other West Bank areas.

At the time, the state-owned electric company said Palestinian authorities in the West Bank had at that point racked up a debt of NIS 1.74 billion ($460 million). Israel has in the past forced the IEC to keep providing electricity out of concern for the Palestinian population, but the Electric Corp. said earlier this year it could no longer absorb the debt and would take measures to prevent it from growing further.

Officials also said they were not informed by the IEC of the planned cuts at the time. The IEC also cuts power to Israeli homes over unpaid debts.

Under an economic agreement signed with the PA in 1994, Israel collects around NIS 600-700 million ($159-$185 million) each month in customs duties, which are levied on goods destined for Palestinian markets that transit through Israeli ports.

It transfers the money after deducting approximately NIS 100 million ($26 million) for expenses such as Palestinian hospitalizations in Israel, sewage treatment and covering part of the electricity debt, which has remained largely stable in recent months.

In January 2015, the IEC cut power to Palestinian cities for a number of hours every day over a similar debt, only to permanently renew the electricity supply a few weeks later.

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