As Palestinian Authority’s electric bill continues to swell, Israel begins withholding tax transfers

Palestinian Authority already owes Israel’s electric company a whopping NIS2 billion.

By Batya Jerenberg, World Israel News

Israel will start withholding tens of millions of shekels per month from money it is obligated to transfer to the Palestinian Authority (PA), in order to service a debt to the electric company that has grown to two billion shekels ($527 million) over the last three decades, Israel Hayom reported Tuesday.

Finance Minister Bezalel Smotrich (Religious Zionist Party) instructed his staff three months ago to find a way to start collecting the money, the report said.

While the PA has occasionally made payments towards its decades-old electric bill, the accumulated sum was too much for the right-wing minister to ignore.

The whopping debt also endangers the financial health of the Israel Electric Corporation (IEC), the country’s sole integrated electric utility, according to a report written by the State Comptroller two years ago.

Under a law passed as a result of the Oslo Accords, the finance minister can deduct money the PA owes to such companies as utilities from the tax funds the government collects from Palestinian employees working in Israel, which Israel then transfers to the Palestinian Authority each month.

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The plan to implement the law was complicated by several details of the Israel-PA electricity distribution arrangement, however, as such an offset could only be implemented from corporations under the PA’s direct control, and there was a middleman company that actually bought the electricity from the IEC.

Legal minds at the finance ministry worked on the issue, and found links proving that the core of control of the East Jerusalem Electric Company could be traced back to the PA. This included the fact that seven out of 18 directors on its board are members on behalf of Palestinian municipal authorities.

Smotrich has now signed off on the first monthly deduction, which will be transferred straight to the IEC. The amount is expected to range between NIS20-30 million each month.

This will only pay for the Palestinians’ current electricity usage, the report pointed out, with the 2 billion shekel hole that was already dug being something that will require attention at the highest political levels, probably necessitating outside aid.

Whether the political echelons will be willing to take it on, considering that it has become such a problem due to past governments ignoring the issue, remains to be seen.