By Jafar Sadaqa

RAMALLAH, January 7, 2014 (WAFA) – Omar Kittaneh, the head of the Palestinian Energy Authority, said that even though the Palestinian government is not party to the contract signed on Sunday between privately-owned Palestinian and Israeli power companies, yet the government role is to guarantee that electricity prices remain low.

The Jenin-based Palestinian Power Generating Company and the joint American-Israeli Delek Drilling-Noble Energy signed a contract in Jerusalem to supply the Palestinian company with natural gas to generate electricity from a power plant that will be built in Jenin.

Under the terms of the agreement, Delek-Noble will supply the Jenin plant, which is expected to be ready in two years, with one billion cubic meters of natural gas worth $1.2 billion over a period of 20 years.

“This is the first time an agreement between two private companies bound by commercial specifications and international criteria is signed to purchase a product, taking into account the rights and obligations,” said Kittaneh.

“We did not intervene in the price agreed on by both companies, and we were not part of the contract,” he said. “Still, we insisted that the agreement should ensure lower prices that enable the company to produce energy at a cheaper cost than that we buy from other sources.”

He said he expects to see “a noticeable cut in the price of electricity, which will relieve the burden of the high cost of electricity from both the government and the people.”

Kittaneh stressed that cost of the gas will be paid by the Palestinian company directly to the American-Israeli company, which means Israel cannot deduct any outstanding debt, if there will be one, from the Palestinian tax revenues it collects on behalf of the Palestinian Authority on imported goods intended for the Palestinian areas.

He further highlighted the importance of the agreement to ensure stable gas supply for 20 years as stipulated in the contract, which is the normal time for the work of power generating stations.

Moreover, he said the agreement is considered “a corner stone” on the road for the independence of the Palestinian energy sector.

“Ensuring stable and sufficient supply of fuel should precede the construction of the power generating plant in order not to encounter the same problems we faced with the power plant in Gaza,” he said.

The Gaza power plant built in the late 1990s gets its diesel fuel needs every day from Israel after the Palestinian Authority pays for it. This supply is nevertheless constantly interrupted due to political or economic reasons leaving the 1.8 million residents of the Gaza Strip and its facilities without electricity for many hours every day.

Construction of the new Jenin power station is expected to start soon and will continue for two- and-a-half years during which a pipeline to transfer gas from Israel to the station will also be built.

The station will produce 200 Mega Watt of electricity annually, which is enough to cover the needs of the northern West Bank districts. The electricity will be bought and distributed through companies owned by the local councils, which are anyhow shareholders in the power plant as recently decreed by the cabinet.

“This will be the first power plant in the West Bank,” said Kittaneh, “which will be followed by other plants that will be expected to meet the needs of the central and northern West Bank areas until we reach complete independence of the energy sector.”

He said the gas will be bought from the American-Israeli company and has nothing to do with the Palestinian gas field off the Gaza shore.

He said there is progress in the issue of drilling gas from the Palestinian field, which is estimated to have gas reserves at around 30 billion cubic meters capable of supplying the Gaza Strip with natural gas for more than 30 years.

Answering a question regarding supplying the West Bank power plants with the Gaza gas, Kittaneh said that “for us, we are interested in seeing the Gaza power plant get gas extracted from the Palestinian field. But in case an agreement is reached to transfer the Palestinian gas through the Israeli pipelines, which is one option among many to market the Palestinian gas, then we will enter into the equation of mixing in this network since the Palestinian side will become one of the suppliers to this pipeline.”

He said that in this case, “the revenues will be divided among the supplies based on the amount each one pumps into the pipeline.”

J.S./M.N./M.S.