The Government approved the splitting and privatization of Oil Refineries, Ltd. (ORL), in accordance with the outline established in the resolutions of the Socioeconomic Cabinet on July 29, 2004 and on July 27, 2005 and of the Ministerial Committee for Privatization on December 26, 2004.
In doing so, the government rejected the request of National Infrastructures Minister Benjamin Ben Eliezer to stop the splitting and the privatization of the split ORL and to reexamine the matter, and to prevent the exclusion of the Israel Corporation from ORL's ownership.
Vice Prime Minister, Minister of Industry, Trade and Labor and Acting Minister of Finance Ehud Olmert expressed his support for the government's resolutions involving the splitting and privatization of the refineries. At the meeting, Olmert stated that "the reform of ORL will completely transform the structure of Israel's fuel industry into the form which is standard in Western countries. Today, with oil prices rising, it is doubly important to introduce competition and a move to an efficient market structure."
The Director of the Government Companies Authority and the Budget Director were present at the discussion where they presented to the government the importance of the splitting and the privatization, especially at this time.
Eyal Gabai, Director of the Government Companies Authority, stated that "despite the delays that took place over the past months, the Government Companies Authority has - with the assistance of international refinery experts and capital market experts - worked diligently and carried out comprehensive preparatory work for the splitting of the refineries and for their privatization. The goal is to publish a notice announcing the beginning of the sale of the Ashdod refinery after the holidays. We wish to take advantage of the international energy market upswing which is creating great interest among investors in this field."
The Budget Director, Koby Haber, called on the Israel Corporation to honor the agreement that had been reached between the parties two months ago with the goal of quickly advancing the splitting and privatization process. "Any other alternative will lead the government to exhaust its legal rights and take back all of the assets."
Pursuant to the privatization resolution, the two refineries in Ashdod and Haifa will be split. In the first stage, the Ashdod refinery will be incorporated as a subsidiary of ORL and will be sold in full in a competitive private purchase process. The second stage will take place only after the sale of the Ashdod refinery, which will ensure the existence of competition for ORL Haifa. In this second stage, ORL Haifa will be offered in its entirety on the Tel Aviv Stock Exchange.
The privatization resolution and an announcement by the General Director of the Antitrust Authority have established that the large fuel companies will be permitted to compete in the process for the sale of the Ashdod refinery, but will not be permitted to purchase the Haifa refinery, in order to prevent concentration in the fuel market.
