A report recently published by the World Bank assesses the reasons for the systematic lack of payments to the Israel Electric Corporation (IEC), the largest supplier of electricity to Palestine, and puts forward an action plan with specific recommendations to improve payments.
Palestine is fully dependent on energy imports from neighboring countries due to the absence of domestic sources of electricity under occupation. In 2013 as much as 88% of total electricity consumption was supplied by the IEC for the value of 2.4 billion NIS ($660 million). In the same year, the total non-payment by the Palestinian electricity distributors including distribution companies, municipalities, and village councils reached 1.4 billion ($381.3 million), or 58% of the total cost. As a result, outstanding payments owed to the IEC are either deducted from the clearance revenues which the Israeli Ministry of Finance collects on behalf of the PNA or registered as net lending or accumulated debt. This seriously impacts the fiscal situation of the PNA as, according to the World Bank, in 2012 net lending reduced the revenues available to the PNA by 13.5% (1 billion NIS, $280 million).
The recent report identifies the main sources of non-payment, including flaws in the IEC’s invoice cycle, high electricity losses, poor bill collection from end users, problems with tariffs, and non-payment in special areas (mostly refugee camps). After isolating the reasons, the report focuses on specific recommendations on how to improve the payment rates targeting various stakeholders and steps in the process.
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