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December 6, 2015 12:32 pm

Egypt Ordered to Pay Israel Electric Corp $1.76 Billion for Breach of Gas Contract

avatar by Ruthie Blum

The El Arish-Ashkelon pipeline. Photo:

The El Arish-Ashkelon pipeline. Photo:

Egypt is being ordered to pay the Israel Electric Corporation (IEC) $1.76 billion for losses accrued as a result of the political upheavals in that country since the ouster of president Hosni Mubarak in 2o11, the Israeli news site nrg reported on Sunday.

According to the report, the Israeli company originally sued Eastern Mediterranean Gas Company (EMG) and Egypt’s national gas companies Egyptian General Petroleum Corporation and Egyptian Natural Gas Holding Company (EGAS) for more than $4 billion, but following mediation, the lower sum was reached.

IEC’s suit began following the ouster of former President Hosni Mubarak and rise to power of the Muslim Brotherhood’s Muhammad Morsi, who was elected president in 2012.

The problem began, according to the report, in February 2011, when the El Arish-Ashkelon pipeline was first bombed by individuals Egyptian officials called “saboteurs,” at the time.

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Egypt had begun exporting natural gas to Israel in 2008 through that pipeline, which was blown up in the northern Sinai. For the period during which transfers ran smoothly, Egyptian gas made up 18% of the national Israeli utility’s fuel supply. The explosions temporarily put the pipeline out of commission.

Later in 2011, there were at least 10 additional attacks on the pipeline — each of which disrupted the flow of gas — and in April 2012, the Egyptian government announced that it was breaching its side of its gas contract with Israel, purportedly over debts owed it by EMG.

This affected the IEC, which had no choice but to resume running its power plants on diesel fuel, that is 10 times more expensive than natural gas. As a result, the Israel Electricity Authority was forced to raise the price of electricity to Israeli consumers. According to nrg, since August 2011, the cost of electricity has jumped by more than 32%.

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