Ministerial Privatization Committee Approves Proposal to Privatize Israel National Oil Refineries Co

The Ministerial Privatization Committee, chaired by the Minister of Finance, Benjamin Netanyahu, approved (26/12/04) a resolution for the privatization of Israel National Oil Refineries Co., Ltd. (INOC), in accordance with a proposal from the Government Companies Authority.
 
The privatization resolution was adopted pursuant to a resolution by the Socioeconomic Cabinet on July 29, 2004, to split up the refineries. The resolution instructed the Director of the Companies Authority to present the Ministerial Privatization Committee with a detailed draft resolution for the privatization of the refineries.
 
According to the privatization resolution, Israel’s two oil refineries, one in Ashdod and the other in Haifa, will be split. In the first phase, the refinery in Ashdod will be incorporated as a subsidiary of INOC and will be sold in its entirety in a competitive private sale proceeding. The sale of the Ashdod refinery will be administered by the Companies Authority in order to make sure that INOC’s involvement in the sale will not have a negative effect on the existence of two strong and independent refineries that will be able to compete with each other. The acquirer of the Ashdod refinery will undertake to run the facility for at least ten years. In the second stage, which shall take place only after the Ashdod refinery is sold (in order to ensure competition with INOC-Haifa), the Haifa refinery will be fully issued on the Tel Aviv Stock Exchange.
 
According to the privatization resolution and a statement by the Director of the Antitrust Authority, Israel’s large fuel companies will be allowed to compete in the sale procedure of the Ashdod refinery but not to acquire the Haifa refinery. The purpose of the exclusion is to prevent concentration in the fuel industry.
 
The Minister of Finance, Benjamin Netanyahu, said, “This is another privatization action meant to expose monopolies to competition—a step that will lead to lower prices, for consumers’ benefit, and to greater efficiency in industry.”
 
The director of the Government Companies Authority, Eyal Gabbay, said, “It is essential to split up and privatize the refineries in order to create competition, and this reform will affect the structure of the entire energy system. The Authority, with the assistance of professionals abroad, has been preparing for months to implement the resolution and is taking action to do so quickly.”
 
A translation of the draft resolution that was approved by the Ministerial Privatization Committee could be attained upon request.