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Electrical Power in Palestine

Background: Palestine is located in the middle east20 years of autonomy, in result Palestinian National authority was establishedLarge land still occupied by IsraelSegregated pieces of lands (West Bank & Gaza)Lower Middle Income W.B. classified, GDP per capita (2014) $2992OECD political risk indicator (2015) 74.8 million of population, 3% growth rate:

GazaWest bank2.9m in the west Bank1.9m in GazaExpected to become 6.45m in 2025

Palestine Electrical Power Profile: 87% of the power supply is imported from Israel1% from Jordan and 4% fromEgyptRemaining (8%) is locally produced by the only generation plant in GazaWest Bank rely 99% on Israel elec. Com. (IEC)West Bank consumption is 6121 gWy (Ava. 700 mWh)6.08% annual growth rate in demand on power0.704 mWh per capita (it is 10 times in Israel 7.2mWh)Three main distribution companies in the West Bank, most of local authorities purchase directly from IsraelConsidered as the highest prices in the region (tariff = $0.17/kWh which is 20% higher than Israel and 3.4 times of Jordan)

*All data sources are PEA, PCBS, World Bank, and unpublished research by PWC and the EU

Power Issues: Three main issues* with addition to others:Firstly, as a small energy market with no developed domestic resources of commercial energy, it is almost entirely dependent on imported energy supplies, specifically electricity and oil products. Because of political and logistical factors, nearly all of these supplies at present come from Israel.

*Report No. 39695-GZ. (2007) By the W.B. most of the available data on this sector is back to 2007, No researches were published after that yearData Source: 2013 PCBS statistics

Power Issues (cont'd): fragmentation into two distinct geographical zones with divergent economic characteristics. The West Bank and Gazaconstraints imposed by Israeli policies and actions on the ability of the Palestinian Authority (PA) to operate and develop its energy systemsThe Electricity network is a combination of medium voltage and low voltage distribution systems. These networks are currently flooded and cant provide more power227 connection points with IsraelLack of high voltage transmission grid (161Kv and above)High technical losses (35% 22.5% is the worlds aver.)

Opportunities: Discovery of Gaza gas marine, which can be used for domestic power generationDomestic Resource Mobilization (Private Sector) considered for power generation investments.Government will issue tenders for 11 solar farms (each has the capacity of 10mWh)Potential for 9 Municipal Solid Waste-to Energy production plantsPower and Energy Acts were issued, with a special section for renewable energy.

The Problem: Issues cannot be solved, nor opportunities can be captured because simply there is no transmission grid available in the country.

All power generation initiatives (conventional and renewables) will not be able to evacuate generated power without the national grid.

Missing inthe Power System

The Solution: Simply!Construct the National Grid

Impact of the Solution: Reduce the tariff to affordable level Satisfy growing demandReduce technical and non technical losses Effect on national economy and worlds ClimateUnlock domestic power production projectsUnlock Power Green technologies porjectsEnabler for economical growthPromote Peace between Palestine & Israel

Obstacles facing the Solution: Israel RefusalLack of legal frameworks (Regulation, PPPs)No institutional capacity within the Government PALack of knowledge among the governmentLack of Governance on the groundDespite the good returns, but the environment is very risky for the investors

Overcoming the Obstacles: Israel Refusal

This project is technically a need for Israel. it will provide backup for IEC network, also it will increase the imports as the Palestinian national grid will be connected with Jordan and Egypt, the grid will provide a close circuit for Israel single route network, and it will reduce the technical losses for IEC, and finally this grid can provide the needed power for the Israeli territories located rear from the IEC grid.

Overcoming the Obstacles: Government should be innovative and abandon the classical roles of Gov., by not doing everything rather than regulating and monitoring everything

Palestine profile on aidflows.org shows that around 42% of ODAs and OOFs money is directed into the security sector, another great chunk is allocated for Budgetary Support and for humanitarian response, small amount for infrastructure projects for the communities, and almost nothing for institutional and knowledge building within the government. In addition, according to the Prime Minister (Dec. 2015) ODAs to Palestine had been reduced by 53%

Overcoming the Obstacles: The solution for the Gov. should not be particular to this project only. Gov. should build a strategic transformation that will create enabling environment for all development sectors including private investments in these sectors

UtilitiesHousingEducation & Health

TransportWaste & RecyclingScientific researchIndustryAgriculturePrivate Sector BusinessesClimate

Overcoming the Obstacles: De-Risk the investment environment

The project needs Five activities to be financed: last one is the construction itself, which will cost around $550m-$600m.Off course Gov. cant afford this cost, and sustainability reasons; nor the ODAs should.International and local investors had shown interest in this project, but the countrys risk remains high.To de-risk the environment, the other Four activities are needed:Invest in the Rule of Law and Gov. legislation arms to issue laws, regulations and acts that would attract investments, and protect the customersBuild the Gov. institutions, enhance their monitoring capabilities

Overcoming the Obstacles: De-Risk the investment environment (Contd)

Invest in detailed researches on the energy sector to contribute to the national development planBuild Sovereign Guarantee systems to reduce the risks for the investors

Money needed for these four activities can be allocated only from ODAs, and this is the ultimate objective of these ODAs, which is sustainability

give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime

How to allocate funds:

CapabilitybuildingStrong Delivery SystemsRule of LawRegulation & MonitoringLegislationsKnow how / Best PracticesHard and soft Infrastructure

% of Private Investments which goes into systems% ODAs & OOFsInvestments which goes to enabling the environment and reducing the risk

For this Enabling Environment to be achieved

This is neededRobust Financial Pipeline

Investments allocation in the pipeline

We have to change how we do things, because we all owe these kids

Gazan Students studying on candle as result of Gaza electricity crises