Israel Weighs Dividend Payout Amid Haifa Port Control Dispute

Israel's Accountant General, Michal Abadi-Boiangiu, is expected to rule soon on a proposal that would allow the Indian Adani Group and Israel's Gadot to withdraw 1 billion shekels ($270 million) in dividends from Haifa Port's cash reserves. The port, which holds approximately 2.5 billion shekels, was acquired by Adani (70%) and Gadot (30%) in 2023 under a 30-year concession. The current dispute arises because the winning bid in the tender committed the consortium to refrain from accessing the cash until significant port investments were made.

Adani-Gadot is now seeking to alter these terms and has pledged to deposit 1 billion shekels into a trust managed by Israel Ports Company. This fund could be used for constructing a deep-water quay by January 2030, if no new directives are issued. Israel Ports Company estimates that a new quay is not immediately necessary but is part of future infrastructure planning. The decision requires the re-convening of the tender committee that originally approved the concession, which has held five meetings and gathered various opinions. The board of Israel Ports Company has supported the move, and the former economic accountant had previously agreed, but the current Accountant General's signature is now needed.

Critics argue that allowing the dividend withdrawal contradicts the tender's core principles. They suggest that other bidders, including Israel Shipyards, Shapir Group, and Dubai's DP World, might challenge the tender in the High Court, claiming the terms were retroactively changed. These companies might argue they would have submitted higher bids had they known about potential access to the 2.5 billion shekel cash pile.

However, the Companies Authority disputes this, pointing to a 1.4 billion shekel gap between Adani-Gadot's winning bid and DP World's second-highest offer of 2.65 billion shekels. They also contend that the agreement will improve Israel's position by resolving prior disagreements between Adani-Gadot and Israel Ports Company regarding the new quay's construction, specifically Adani-Gadot's desire to use a private contractor, which Israel Ports Company opposed.

The situation is further complicated by strained labor relations. The Histadrut labor union has criticized Haifa Port's management, stating that despite commitments to increase operations and hire new workers, activity has stagnated, leading to a surplus of staff relative to work. Delays in early retirement agreements for veteran employees are also attributed to disputes over frozen funds between the port and the state. The union highlights operational deficiencies, such as limited container capacity and shortages of essential equipment, warning that the situation is unsustainable and demanding an immediate plan for operational improvement.

Haifa Port responded that the agreement will enable the port to realize its full potential as an international hub and a key element in Israel's economy. The port will fulfill its infrastructure expansion commitments by depositing funds into a trust managed by Israel Ports Company, which will execute the construction. The three-year timeline aligns with the port's existing certification, and the development, along with new hires and retirement plans, will enhance Haifa Port's status as a modern, efficient, and competitive international port.