The government has unanimously approved the program for a structural change in Mekorot.
The proposal was submitted to the government today (Sunday) at the government meeting, by the Ministry of Finance and the Ministry of National Infrastructure. The aim of the structural change is to advance the implementation of a change to the structure and activities of Mekorot and the companies associated with it.
The Minister of National Infrastructure, Binyamin (Fouad) Ben Eliezer, at the government meeting today (Sunday), presented a proposal that addresses the implementation of the structural change in Mekorot. The aim of the joint proposal of the Minister of Finance, Roni Bar-On and the Minister of National Infrastructure, Ben Eliezer, is to promote the implementation of a change to the structure and activities of Mekorot and the companies associated with it.
In the last two decades, several government decisions have been taken regarding the implementation of structural change in Mekorot; the last was in 2002. However, the structural change that was decided on in the past was only partially implemented, despite the real need to change the structure of activities in Mekorot and the companies associated with it, in order to ensure orderly operation of the water economy, and the development of this economy.
During the discussions held in recent months between representatives of the government and the management of Mekorot, an alternative was formulated to the previous proposed structural change, which would give the government with a greater ability to achieve its aims regarding the structural changes in the company, while incorporating internal incentives for Mekorot to act in accordance with the desired structural changes.
The proposed structural change is based on the same aims as in the previous proposal, while improving the organizational model on which it is based, and the economic incentives for its implementation.
For your convenience, here are the main points made by Minister Ben Eliezer at the government meeting:
"Mr. Prime Minister, fellow ministers,
Placed before you is a government decision, proposed jointly by my friend Roni Bar‑On, the Minister of Finance, and me, which addresses the implementation of a structural change to Israel's national water company, Mekorot. The aim of this proposal is to promote the implementation of changes to the structure and activities of Mekorot and the companies associated with it.
Mekorot operates as a government company in various sections of the water economy, in which it supplies more than 1.4 billion m3/year to the various water consumers, representing more than 65% of the total national water supply, with an income turnover exceeding NIS 2.2 billion. In addition, Mekorot operates and develops the National Water Carrier, and thus operates the major water conveyance channel.
In addition to the aforesaid water supply activities, Mekorot has for several years engaged in auxiliary activities of the water economy, including the operation of municipal water systems, the operation and ownership of wastewater treatment plants (WWTPs), agreements with water projects abroad, and the development of water technologies as part of the WATECH center.
During the last two decades, several government decisions have been taken regarding the implementation of structural changes in Mekorot. The last of these was taken in 2002.
However, the structural change that was decided upon in the past was only partially implemented, and did not achieve the goals on which it was based, in spite of the real need to arrange the structure of the activities in Mekorot and the companies associated with it, in order to ensure the orderly operation in the water economy and the development of this economy.
Consequently, during the discussions held in recent months between representatives of the government and the management of Mekorot, in light of accumulated experience, an alternative was formulated to the previous structural change, which would supply the government with a greater ability to achieve its aims regarding the structural change in the Company, while incorporating internal incentives to Mekorot to act in accordance with the desired structural change.
The proposed structural change is based on the same aims as in the previous structural change, while improving the organizational model on which it is based and the economic incentives for its implementation, while ensuring the achievement of additional aims, such as facilitating free competition in competitive sections of the water economy in Israel, and reducing government involvement in these sections.
The details of the structural change will be presented to you by Koby Hever, who in recent years has headed the Budgets Division in the Ministry of Finance, and who, I regret to say, has recently announced his intention of leaving his position in the near future. Koby and the members of his staff have worked with us, shoulder to shoulder, together with the General Comptroller's Division in the Ministry of Finance, the Government Companies Authority, the Water Authority and the Employees Organization, in order to reach the decision placed before you today.
In conclusion, members of the government, I ask you to approve the structural change presented to you, which has been agreed on by the Ministry of National Infrastructure and the Ministry of Finance and the management and employees of Mekorot, for the advancement and benefit of the water economy in Israel."
Background
In addition to the aforesaid water supply activities, Mekorot has for several years engaged in auxiliary activities in the water economy, including the operation of municipal water systems, the operation and ownership of wastewater treatment plants (WWTPs), agreements with water projects abroad, and the development of water technologies as part of the WATECH center.
The chairman of Mekorot, Eli Ronen: "I welcome the structural change that has been approved by the government, which will divide Mekorot into a parent company, Mekorot Holdings, and its subsidiaries, the water provider, Mekorot Water, and Mekorot Enterprises, and will enable them to advance the development of a more efficient and competitive water market in Israel, and to realize the business potential of Mekorot globally."