Amos Luzon Proposes Shutting Down Turbines to Advance Dorad 2 Power Plant Approval

Amos Luzon has proposed a solution to the regulatory deadlock delaying the approval of the Dorad 2 power plant in Israel. At a hearing with the Electricity Authority, Luzon suggested shutting down three turbines at the existing Dorad 1 plant, which currently produces 840 megawatts via 12 turbines. This reduction of 210 megawatts would keep the ownership stake of Adaltak, which holds 18.75% of Dorad 1 and is owned by Uri Adelsburg, below the 20% national production cap that currently blocks Dorad 2’s approval.

The Electricity Authority is considering this proposal and will respond soon. Another major obstacle is a sharp increase in land lease fees demanded by the state’s Eilat Ashkelon Infrastructure Services (S.T.A.A), which owns 37% of Dorad 2 and is asking for 120 million shekels annually, up from less than 4 million shekels. This demand effectively blocks the project’s approval, which Luzon, holding 33.75% of Dorad through Dorad Energy, is eager to advance.

Meanwhile, Luzon’s group announced an agreement to sell 20% of its shares in the power plant, held via its subsidiary Luzon Energy, at a valuation of 4.4 billion shekels. The shares were sold to the investment house Meur through its pension and provident fund, which will hold 6.75% of Dorad for 223 million shekels. A memorandum of understanding has been signed, with due diligence and negotiations ongoing. Insurance companies Harel and Clal may also join the deal after Dorad 2’s financial closing, which is delayed due to the pending regulatory approval.

Luzon previously raised commercial papers from Meur and Clal to finance the purchase of 18.75% of Dorad shares from Alomay about six months ago. The delay in approvals has caused a 32% drop in Luzon’s group valuation over the past three months, as the commercial papers carry interest and must be repaid within a year. However, Dorad’s management remains optimistic that approvals and financial closing will occur by year-end, with Bank Hapoalim involved in the financing.

Additionally, Luzon and Meur co-own a company providing credit to residential real estate developers. The Dorad stock initially rose 2% after the announcement but closed down 1.3%, valued at 1.9 billion shekels. Another future plan involves institutional investors acquiring some of the state’s 37% stake in Dorad once it is put up for sale, a process delayed by the current developments. Dorad has ordered a General Electric turbine for the new plant, expected to arrive in Israel by 2030, hoping regulatory approval will be secured by then.