A State Comptroller report published Wednesday says delays in converting units 70 and 80 at the Orot Rabin power station from coal to gas caused at least NIS 4.6 billion in economic damage. The project, part of the electricity-sector reform approved by the government in June 2018, was meant to let Israel Electric Corporation shut down four polluting coal units at the site and replace them with two natural-gas units totaling 1,200 megawatts.
According to the report, Israel Electric Corporation badly misplanned the schedule and risk management. While the company was supposed to finish the project in 30 months, a time frame the comptroller said had no precedent, similar projects in the West had taken 40 months in Germany in 2016 and 43 months in France in 2016. In practice, unit 70 took about 61 months to build and unit 80 about 64 months, creating a delay of roughly 34 months.
The comptroller estimated the NIS 4.6 billion loss as including about NIS 1 billion in extra costs from using alternative fuels and less efficient generating units, NIS 2.8 billion in environmental costs, NIS 494 million in higher project expenses, and NIS 278.5 million in financing costs. The report said these costs were borne by the public and showed the need for lessons to be learned by Israel Electric Corporation, the Energy Ministry, and the monitoring team.
The report also accused Israel Electric Corporation of lacking transparency during the COVID-19 period. Although the company said the pandemic caused a 13-month delay, it did not update the reform monitoring team or the Electricity Authority for about two years, and only in January 2022 did it report a three-month delay in unit 70. The comptroller also said the Energy Ministry and the Electricity Authority failed to monitor the project continuously, did not enforce deadlines, and never completed an analysis of the root causes of the overruns.
A separate finding said the company also deviated from the reform by buying turbines totaling about 1,288 megawatts, about 7.33 percent above the approved capacity and eventually about 9 percent above it, without informing regulators in real time. The government decision was only changed later, about five years after the original approval, when the operating license was requested, by which time the units were already built and synchronized to the grid. Israel Electric Corporation said the report accepted most of its factual data, argued the project stayed within budget with only a negligible overrun, and said the delays stemmed from outside factors, including supply-chain disruptions and emergency-related postponements.
