Today (Monday) the Minister of National Infrastructures, Binyamin (Fuad) Ben-Eliezer, spoke at the Israeli Energy Conference, which was held at Kfar HaMaccabiya in Ramat Gan.

80 lecturers from Israel and throughout the world participated in the conference.

Following are the main points of Minister Ben-Eliezer's speech:

“Ladies and gentlemen, good morning. 

We are at present in the midst of one of the most dramatic periods ever in the energy market in Israel. A series of significant revolutions and structural changes are currently being promoted in all fields, including electricity, natural gas, fuel and water. We are totally motivated to complete all these processes, one by one, for the future of the State of Israel and its citizens.

It seems there is no need to emphasize the matter of the existential dependence of each and every one of us on energy of various types. The world is depleting its sources of fossil fuel, and this is already a fait accompli. According to most estimates, within a few decades, we will find ourselves facing a shortage of oil and natural gas. The world has long ago recognized the fact that the future lies in renewable energy, which, in addition to being available in unlimited quantities, does not harm the environment, which is no less important. Imagine a world where the oil, the natural gas and the coal are running out, technologies for generating electricity by means of alternative energies are not being developed at a level that will meet the demand for energy, and the capability to generate electricity declines, as do the abilities to operate machines, vehicles, etc.

The pessimistic forecasts predict that within approximately 40 years, we will have to deal with a worldwide shortage of oil. Of course this is an extreme scenario. But even less extreme scenarios are not at all encouraging. For example, imagine a drastic rise in the price of fuels, to a level that will constitute a real problem for the proper functioning of the economy. Over the past few years, more and more Western countries are recognizing the importance of creating a proper level of security for the regular supply of energy into their jurisdictions. This is even more true with respect to Israel, mainly due to the problematic geopolitical position of our country on the one hand, and to the fact that the lion’s share of the worldwide energy sources come from Arab states, on the other hand.

The economic growth continues increasing the demand for energy – more coal to operate new factories, more oil to power new cars and more natural gas to heat homes and factories. If  we want to provide a response to the perturbing trend of global warming, we need to take action, as other nations, and to undertake in all seriousness to develop renewable sources of energy.

The Ministry of National Infrastructures, as the authority entrusted with ensuring the supply of sources of energy for our economy, is acting in a number of levels in parallel, in order to decrease the fear that those scenarios I mentioned previously will actually occur. For the past two years, the Ministry has been in contact with the government of Turkey, with a view to establishing an “infrastructure corridor” from the Jihan coast in Turkey to the Israeli coast. Turkey is a strategically important country of the first order to Israel, from both a political standpoint as well as with regard to energy. Due to its location, Turkey has relatively easy access to sources of energy and water. The BTC pipeline that was recently inaugurated is an excellent example. This is huge project for conveying oil through a 1,700 km. pipeline from Azerbaijan via Georgia to Turkey. From there, by means of tanker ships, the oil is marketed to the world, mainly to the USA. The infrastructure corridor that I mentioned earlier is planned to be a continuation project to this project. But beyond that, the infrastructure corridor will include pipelines for the conveyance of natural gas, oil, water and perhaps even electricity, from Turkey to Israel.

The establishment of this project will ensure a regular supply of energy and water to Israel. But more than that, the connection of the infrastructure corridor to the Eilat Ashkelon Pipeline Company's oil pipeline can create an opening for the export of oil via the Gulf of Eilat to the Far East. Inquiries in this matter from Far Eastern countries have recently been received at my office.

With respect to natural gas, Israel is at the height of a revolution, whose main focus is the incorporation of natural gas into the electrical and industrial economy, as an alternative to expensive and polluting fuels such as crude oil and diesel oil. In 1999, the first natural gas deposit was discovered off the coast of Ashkelon. Today, this gas serves the Electric Corporation’s Eshkol and Reading power stations. In addition, the gas recently began flowing though the overland section from Ashdod to Ashkelon, to operate the power station at the desalination plant, and even to the Hadera paper mills in the north. The Netivei Gas company is forging ahead, and this year, it will complete the overland section to the Dead Sea area. The intention is to connect all the large factories in the area to the system.

Our main problem at the present time is the lack of vendors. In May 2005, I signed, in Egypt, with the Egyptian Oil Minister, a memorandum of understanding, which constitutes a framework agreement for the importing of Egyptian natural gas into Israel for the next 20 years. Further to the memorandum of understanding, the Electric Corporation signed a trade agreement with the Egyptian company EMG for the supply of natural gas via a pipeline that is currently being constructed from El Arish, in the Sinai, to Ashkelon. In parallel, the State of Israel is conducting intense negotiations with British Gas, which has jurisdiction over a natural gas field discovered off the coast of Gaza. In addition, in a meeting that I held a few months ago with the President of Azerbaijan, I raised the possibility of importing natural gas into Israel from Azerbaijan's huge reserves.

However, all this is not sufficient. According to the forecasts of the Ministry of National Infrastructures, over the next decade, the level of demand for natural gas in the economy already justifies the exploration for additional sources of natural gas. In light of this, as Dr. Ya’acov Mimran, who is in charge of oil and gas exploration in my Ministry, presented to you yesterday, the Mediterranean Sea has again been opened to the search for gas. There are currently a number of potential reservoirs to be drilled. In addition, for about two years, the Ministry of National Infrastructures has been conduction negotiations with the Russian gas company Gazprom, for the purpose of importing natural gas into Israel.

But this is not sufficient. The Ministry of National Infrastructures is in the final stages of a feasibility study prior to the publication of a tender for the establishment of a facility to liquefy natural gas (LNG), which will enable the import of natural gas into Israel in condensed liquid form by ship from any point on the globe. I hope that a tender on this matter will be published within the next few weeks. In addition, the Ministry is seriously examining the import of compressed natural gas (CNG) by means of tankers into Israel, as a complement to LNG.

With respect to the development of renewable energy – Israel is considered as being one of the leading countries in the world in the development of technologies for the generation of electricity by means of renewable energy, mainly in the field of solar energy. Renewable energy is not something new; it first appeared in the early 1970s as a response to the oil embargo, but in those days, the interest and the support for it did not last.

In addition to the environmental advantages, renewable energy sources ensure the increase of energy security for Israel particularly, and for other countries in the world in general, insofar as we will reduce our dependence on fossil fuels from other countries. The dramatic rise in the price of oil and natural gas over the past several years and the political and economic instability due to geopolitical influences, have only proved more strongly, the need to try and reduce the dependence on these fuels.

Over the past few years, there has been a dramatic change in the performance and economic viability of the use of renewable energy, such as solar cells, wind turbines and biomass such as bio diesel and ethanol, which have recently been given a huge push in the western world, a trend that has not escaped our notice.

We are now facing unprecedented opportunities in the field of renewable energy, so that this is the time to develop energy for the coming generations and to focus on long-lasting development, which has become one of the cornerstones of the Ministry of National Infrastructures.

In order to rise to the challenge, investments of scientific, economic and political resources will be required, and recently the Ministry announced the establishment of a unique start up fund for these issues. The Ministry of National Infrastructures is striving to turn the State of Israel into a center of excellence in the field of alternative and renewable energy, just as Israel has become a center of excellence in other fields of high-tech.

The State of Israel has recognized and admired knowledge and experience in many varied fields that constitute a ticket to the world of energy from a position of advantage – agriculture, biotechnology, solar energy, engineering / electronics / computerization – that are able to serve the world of alternative and renewable energy.

The Ministry is busy at present with the publication of renewable energy regulations, which will grant a premium to those producing electricity with this type of energy. In addition, a solar power station is planned to be established in the Negev within the next few years, which will initially generate about 250 megawatts. Indeed, in the present situation, and taking into account the economic cost of producing electricity by means of renewable energy, the generation of electricity by means of these technologies does not constitute a perfect substitute for the generation of electricity by means of burning fuels. However, I believe that the situation will change for the benefit of renewable energy as the technology advances.

I would like you all to understand, clearly and explicitly, that the State of Israel sees great importance in the investment in this field. The Ministry of National Infrastructures will lead the move in cooperation with entities in other Ministries and bodies, and the Ministry expects and will act to enlist these worlds around it in order to progress.

In conclusion, dear friends, I would like to refer to one of the mot important issues on the table at the present time – the reform in the electricity economy. All of you present in this hall understand, at least as I do, the need for the structural change. The question is not whether there is a need for the change, but rather what is the correct way, and this has already been understood and internalized in the Electric Corporation itself and the in the Workers’ Council.

The electricity economy in Israel started out on its way over 80 years ago, even before the establishment of the State of Israel, when Pinhas Rutenberg established the Land of Israel Electric Company. Since then, the State of Israel in general and the electricity economy in particular, have undergone many changes. Today we find ourselves in a situation of an electricity economy at risk – and this is a situation that I cannot take responsibility for.

This is not the place to ask how did we get into this situation, and who is to blame – the Electric Corporation or the State, which let it get into a situation where the corporation has a debt of over 10 billion dollars, and has reached the furthest extent of its ability to supply the demand for peak time electricity. We are here to find solutions and not to provide excuses and explanations.

More than a decade has passed since the reform in the electricity economy was brought before the Government, and since then it has undergone many alterations. Dozens of experts acting on behalf of the State on the one hand, and the Electric Corporation and its employees on the other, have tried and are still trying to convince each other as to why the other party is wrong and why there is a need to carry out the reform or not, and if so, then how.

This, dear friends, is already history. We are already at the next stage. The Israeli government and the Knesset have long ago taken a decision for the benefit of the electricity consumers in Israel, to execute the structural change in the Electric Corporation. As we speak, government ministry teams together with the Electric Corporation and its employees are working diligently to implement the reform that has been decided upon, a reform that, when completed, will give us a different electricity economy from that we have been accustomed to till now.

There is no doubt that there are differences of opinions on many issues, but I am confident that the parties will succeed in executing the most crucial reform in the history of the of the State, and in agreement.

The matter of the structural change in the Electric Corporation is not foreign to you and, as you know, the change means dividing the corporation according to the various activity sectors and the incorporation of companies in such a manner that will enable the creation of competition in this market.

I believe that the Electric Corporation is a good company and that it has excellent and loyal employees. However, the execution of the structural change at the Electric Corporation is an undeniable necessity. The structural change will bring increase efficiency in the company, will enable the raising of capital and will enable the increase of competition, through the integration of private electricity manufacturers in the electricity market. Make no mistake, not even for a moment: the Israeli electricity economy is a strategic asset, and as such it should remain under State control, but this does not mean that it is not possible to privatize part of it in order to let capital flow in on the one hand, and to make the company more efficient, on the other.

The electricity economy in Israel is a unique market, and any comparison between it and any other electricity market in the world is basically erroneous. Indeed, statistics are not on our side with regard to reforms in electricity economies in the world, but it is difficult to make a comparison with reforms executed throughout the world, as this is complex and intricate reform and whoever does so is pulling the wool over the public’s eyes. From short-term failures, the price of electricity is even expected to rise. Every intelligent person knows that the price today does not reflect the true cost of producing electricity. I don’t think that there is one person in this hall who does not agree, that should the reform not be executed, the price of electricity will rise even further, and the Electric Corporation will collapse financially.

The State of Israel cannot continue to prop up the Electric Corporation, whether directly or indirectly, over time. There are no perfect reforms, there will always be one problematic point or another, but the reform that we are leading is the lesser evil, compared to the future expected for the electricity economy without any reform at all.

Over the course of the next few months, negotiations will be conducted between the State and the employees regarding their rights, which are undisputed. Napoleon Bonaparte once said that “a man will fight harder for his interests than for his rights”. I think that interests are important but rights are far more important.

I made sure that I personally will head the negotiation team and I will be constantly updated regarding progress in the negotiations, and every problem will be brought to me for a decision. The negotiations will be conducted with the company employees with the objective of reaching a compromise in all matters related to the structural change and to the employees’ rights, and I am confident that we will attain the objective. As I have often declared, I have no intention of compromising, and the workers’ rights, within the framework of the structural change, will not be infringed upon.

By the end of the next decade, according to forecasts, there will be a demand for an additional 8,000 megawatts. Half of this I designate for supply by the Electric Corporation, including through two additional coal power stations – D and E, and the rest, for supply by the private market.

The private sector is an inseparable part of this reform and the advancement of the private electricity producers is one of the pillars of the reform. The Ministry that I head constantly examines ways to increase the production capacity of the electricity market and this is evidenced in the license regime that we recently announced. I would like to clarify unequivocally that this regime is the basis for all the other steps, and that all those entrepreneurs who are already in the midst of the process, will be given the full backing of the State in accordance with the licenses that they have received and perhaps even beyond that. At the same time, we are constantly examining how to continue increasing the generating capacity even further.

Dear friends, I am sure that you will all agree with me, that the reform in the Electric Corporation is to the benefit of the State of Israel, the citizens of Israel, the Electric Corporation and its employees. All that remains for us now is to execute it.”