Court resolution places Eshkol energy station sale again in play

Sep 19, 2023 | blog

At the tip of final week, the Tel Aviv District Court, sitting because the Court of Administrative Affairs, dismissed the petition of the OPC-Noy Fund consortium in opposition to the Israel Electric Corporation (IEC) tenders committee, looking for cancellation of the choice to reopen the tender for the sale of the Eshkol energy station.

The courtroom confronted the dilemma whether or not to permit a brand new bidding course of, with a minimal worth of NIS 9 billion, after the corporate that gained the tender, Dalia Energy Companies, provided NIS 12.4 billion, after which modified its thoughts and made a brand new provide of NIS 9 billion, although it already knew what the opposite bids have been. Against this stood the general public curiosity in a worthwhile deal and a discount in electrical energy tariffs.

Four bidders entered the tender: Dalia Energy Companies, with a bid of NIS 12.4 billion; the OPC-Noy consortium, with a bid of NIS 7.1 billion; and two others with decrease bids. Dalia’s bid was thus NIS 5 billion larger than that of OPC-Noy.

Dalia was declared the winner, however the hole between its bid and that of the under-bidder brought about the banks to refuse to finance the deal. Dalia didn’t hand over; it submitted a revised bid of NS 9 billion and elevated the ensures that it offered.

IEC was in a quandary, and held conferences with the bidders and with the financing banks in an effort to resolve the best way to act. In the tip, it determined to cancel the tender, and proposed one other spherical of bidding, this time with a minimal worth of NIS 9 billion. The OPC-Noy consortium refused, demanded that it ought to be awarded the tender because the under-bidder, and appealed to the courtroom.

OPC-Noy argued that the brand new tender was tailor-made to Dalia Energy Companies necessities and contravened tenders legislation. It claimed that Dalia’s unique bid was intentionally inflated in an effort to safe its win, with the intention of making an attempt to scale back the value afterwards. “If this situation is approved and considered a permissible step by the tenders committee, that will be a critical blow to tenders law and to future tenders,” OPC-Noy claimed.

Judge Kobi Vardi, an professional on tenders legislation, dismissed the petition. He accepted the stance of IEC that there have been indications the ability station was value at the least NIS 9 billion, in order that there was a niche of least NIS 2 billion between OPC-Noy’s bid of NIS 7 billion and the estimated worth. Vardi due to this fact dominated that there was no bar to setting this valuation because the minimal worth in a brand new spherical of bidding, even when it was Dalia’s revised bid.

The decide additionally dominated that OPC-Noy had no vested proper to win the tender because the under-bidder, because it was a posh tender the phrases of which allowed very broad discretion.

He discovered no violation of the fundamental ideas of tenders legislation within the conduct of the tenders committee, and rejected the declare that Dalia had filed a tactical bid. His impression was that its bid was filed in good religion, and that Dalia couldn’t uphold it solely due to an absence of finance attributable to circumstances past its management: an unrealistic bid by OPC-Noy, and even perhaps meddling by OPC-Noy that led to the failure to lift finance.

The decide talked about in his resolution that Noy Fund managing associate Ran Shelach had mentioned that Bank Hapoalim had promised him that it could not give Dalia a greater proposal than it had given OPC-Noy: “Dalia will not meet its bid, and do you know how I know? Because those that are supposed to finance it are financial institutions that are owners of the Noy Fund, and I won’t let them finance Dalia.” The decide dominated that this amounted to blemished conduct, which will have contributed to Dalia’s failure to acquire finance, and that even when it didn’t, it had penalties for the result of the attraction.

Judge Vardi additionally dominated that if Dalia have been excluded from the bidding, the ability station could be bought for lower than its actual worth, opposite to the general public curiosity and the will to safeguard the general public purse, provided that maximizing the proceeds would most likely result in a discount in electrical energy costs.

What occurs now?

There are numerous attainable situations, and so they depend upon whether or not OPC-Noy information an attraction within the Supreme Court.

Following the dismissal of the petition, IEC intends to resume the bidding course of within the subsequent few days, i.e., to reopen the tender, with a brand new deadline for submitting bids, and a minimal worth of NIS 9 billion.

OPC and the Noy Fund have been stunned by the decide’s resolution. “We are examining the ruling and considering our steps,” the consortium mentioned. Sources near it say that it’s going to attraction. If it does resolve to take action, it can file a request for the tender to be delayed, in order to not frustrate the attraction.

Under the legislation governing the reform of the ability trade, which requires the sale of the Eshkol energy station, possession of the ability station should be transferred by December 3. That is lower than three months away, and so OPC-Noy must make a fast resolution, and it’ll presumably not burn up the 60 days it has through which to file an attraction.

If an attraction is filed, the Supreme Court must take care of Judge Vardi’s discovering that “the basic principle applies that the sale of the power station at a higher price will probably lead to a reduction in the price of electricity for the public, as happened and has been demonstrated in other tenders in which other power stations were privatized.”

Why is the tender essential for the general public?

The Eshkol energy station, within the north industrial zone of Ashdod, is the most important in Israel fueled by pure gasoline, with an put in capability of 1,693 megawatts. It is a very powerful of the IEC energy stations to endure privatization, after the gross sales of the Ramat Hovav and Hagit East crops to Shikun & Binui and Edeltech for NIS 4.25 billion and NIS 1.6 billion respectively, and of the Alon Tavor plant, bought for NIS 1.9 billion to the MRC group.

The sale of the Eshkol energy station, which is able to in any case be for an unprecedented worth, will help in decreasing electrical energy costs. Out of the quantity paid for the ability station, the Israel Public Utility Authority for Electricity will switch to IEC its bills and the price of its land and properties. The the rest will likely be handed on to the general public within the type of cheaper electrical energy.

It is estimated that, of the quantity paid by the successful bidder, NIS 3.5-4 billion will go to IEC, and so, assuming that the ability station is bought for NIS 9 billion, about NIS 5 billion will likely be out there for decreasing electrical energy costs.

Published by Globes, Israel enterprise information – – on September 19, 2023.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.

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