Dorad Power Station Expansion Faces Legal Battles Amidst Ownership Disputes
Translated & summarized from Calcalist by baba
Adaletek O&M has asked a court to appoint an arbitrator regarding the operation and maintenance of the Dorad power station's stalled expansion. The expansion faces opposition from the Competition Authority and a dispute over land lease fees demanded by Taa'a. The Luzon group reportedly wants to end its partnership with Adaletek, while Adaletek aims to remain involved in the project.
The story in 6 lines · by baba
- Adaletek O&M seeks court-appointed arbitrator over Dorad power station expansion maintenance contract.
- Dorad power station expansion is stalled due to Competition Authority and land lease fee disputes.
- The Competition Authority opposes Adaletek increasing its share of electricity production.
- Taa'a demands a tenfold increase in land lease fees for the Dorad power station.
- The Luzon group reportedly seeks to dissolve its partnership with Adaletek.
- Adaletek believes the power station expansion will proceed due to electricity demand.
Adaletek O&M, a subsidiary of Adaletek, has filed a request with the Tel Aviv District Court to appoint an arbitrator to resolve a dispute over the operation and maintenance contractor for the planned expansion of the Dorad power station near Ashkelon. However, the expansion itself is stalled due to significant obstacles, including opposition from the Competition Authority to Adaletek increasing its share of electricity production in Israel.
The core of the conflict involves a disagreement between Adaletek and the Luzon group, two of the main shareholders in Dorad. Adaletek O&M claims its existing operation and maintenance agreement grants it the right to provide services for any changes to the station. Conversely, the request for an arbitrator states that some Dorad shareholders have exerted pressure to avoid contracting with Adaletek O&M and to consider other maintenance contractors.
The expansion, intended to add 650 megawatts of capacity at a cost of 3 billion shekels, is hindered by two primary issues. The Competition Authority opposes Adaletek's increased involvement, citing concerns about industry concentration, as Adaletek already holds stakes in five other power stations. This matter is currently under review by the Electricity Authority.
The second obstacle is a demand from the government-owned Eilat-Ashkelon Infrastructure Services (Taa'a), which owns the land the power station sits on, to significantly increase land lease fees. Taa'a seeks to raise the rent from 3.7 million shekels annually to between 50 and 60 million shekels starting in 2038. While the Luzon group agrees to this increase, Adaletek and The Phoenix oppose it. A financial closure for the expansion project requires an extension of the land lease agreement, which is currently stalled due to this disagreement.
Industry observers suggest the Luzon group may be seeking to dissolve the partnership with Adaletek. Adaletek, however, believes the expansion will proceed due to rising electricity demand and wishes to remain a partner.