02/17/2011 04:47

Knesset Economic Affairs Committee tackles issue of water corporations, and if they just raise the cost of water.

The Knesset Economic Affairs Committee on Wednesday tackled the issue of water corporations, and the debate centered around whether they are necessary to improve infrastructure, or whether they just raise the cost of water.

Prime Minister Binyamin Netanyahu has set up a committee to reexamine the issue.

The price of water – myth and reality

The local authorities say the corporations should be dismantled and control over water returned to them.

Up until 2001, water was controlled by the local authorities. However, “after dozens of years in which the administration of the water economy was in the hands of the local authorities, the government decided in 1999 that the system had completely collapsed and therefore a reform was in order,” Yisrael Einav, water corporations supervisor at the Water Authority, told the committee.

Einav added that the water corporations had conserved 60 million cubic meters of water a year by reducing water loss, which represented a savings of NIS 600 million.

The government reform that created the water corporations was meant to keep the revenue from water sales in a closed circle, wherein it would be used to upgrade infrastructure. Einav provided statistics showing that in 90 percent of the areas having water corporations, water loss had shrunk.

The water corporations would spend NIS 1 billion on infrastructure this year, he said. Before the advent of the corporations, local authorities were adding the revenue to their general budget and then using it for the needs of the municipalities.

Einav acknowledged that the original goal of the reform was to create just 12 water corporations nationwide. Today, there are 52. He added that merging the water corporations and reducing their number to 20 would save NIS 150m. a year. Water corporation overhead added NIS 1.7 to the cost of each cubic meter of water, he said.

Union of Local Authorities water consultant Moshe Avnon disputed Einav’s figures. He said the rate of water loss hadn’t changed at all since 2000.

He said that the price for the Mekorot national water company of a cubic meter of water was NIS 3.1, including VAT, whereas the price for households was NIS 9.5. Avnon said that returning control to the local authorities would shave NIS 3 off the price.

The whole process was designed to privatize the water economy, he said, but when that wasn’t possible, what was left was a “sick law.”

However, Water Authority head Prof.

Uri Shani warned against dismantling the water corporations, and denied there was any attempt to privatize them completely.

“The significance of that would be that the citizens of Israel would then be placed under different rules and price structures and would pay different amounts for water. “Some processes are irreversible,” he said.

“There are no intentions to privatize the water economy, and the Water Authority makes sure there won’t be any initiatives of that sort. That would be a mistake and we need to make sure it doesn’t happen,” Shani said.

MK Ze’ev Bielski (Kadima), a former mayor of Ra’anana, said he was preparing a bill mandating that only those local authorities that could not handle their own water matters would be required to create a water corporation.

Committee chairman Carmel Shama- Hacohen (Likud) said the committee would wait for the conclusions of Netanyahu’s committee before meeting again on this topic.