In a complicated arrangement, the Israel Electric Corporation will buy coal, re-sell it to a foreign company and transport it to the border.
By Avi Bar-Eli  | Dec. 3, 2013 | Ha’aretz, source

A three-way agreement under which Israel will sell imported coal to Jordan via a group of private companies is expected to get underway in about a month, although some question marks remain about the details.

Two years in the making, the arrangement was approved yesterday by the National Planning and Construction Board. In a pilot program over the next four months, coal will be transported from Israel Electric Corporation’s Orot Rabin power station in Hadera to Jordan.

IEC will buy some 60,000 tons of coal for about $5 million during the pilot program and it’s environmental impact will be studied.

Under a complicated arrangement, National Coal Supply Corporation, a wholly-owned subsidiary of the state-owned utility IEC, will buy the coal from overseas suppliers. The coal will be sold in Israel to a closely held foreign company, which in turn will arrange to transport it by truck from IEC’s coal unloading pier in Hadera to Jordan.

IEC will be responsible for unloading the coal from the ships, storing it and loading it on the trucks.

The person responsible for bringing the sides together was Maj. Gen. (res.) Israel Ziv, who manages Global CST, a company that primarily provides security services. Active mainly in Latin America and Africa, Global CST also does business in infrastructure and transportation.

Ziv’s last army job was as head of operations in the Israel Defense Forces at a time when General (Res.) Yiftach Ron-Tal, now chairman of IEC, was head of the ground forces.

Winning approval for the arrangement involved delicate negotiations with Israeli authorities, but Ziv said the region’s changing geo-politics finally cleared the way. “Because of the Syrian situation, the Israeli route became relevant [for the Jordanians.] It was a matter of timing, nothing more than that. It couldn’t have happened at a more ideal time,” he said.

The idea of importing coal via Israel to Jordan was born about two years ago, as anti-government protests in Syria were growing into a fully-fledged civil war, blocking Jordan’s access to Syria’s Latakia seaport on the Mediterranean.

Jordan needs about 400,000 tons of coal annually to power its concrete plants, but had no alternative route to import coal. Bringing in coal through its Aqaba port in the south is prohibitively expensive.

With international companies serving as go-betweens, Israelis and Jordan began discussing the Israel route. IEC’s coal subsidiary imports some 11 million tons of coal annually, which is used to fire many of IEC’s generators. The company sources the fuel from traders who buy it from South Africa, Russia and Colombia, making purchases of about $1 billion annually.

The initial round of talks failed to yield an agreement, among other reasons due to opposition from Israel’s Environmental Protection Ministry. While the ministry never explicitly said so, it is believed officials looked askance at the idea of 20 heavy trucks loaded with dirty coal plying Israel’s road every day.

However, the ministry’s resistance to the plan gradually weakened, after Ziv joined the talks and a change in governments in Israel put a new minister, Amir Peretz, into the environment portfolio. Peretz approved the proposal.

“There are cases in which diplomatic considerations and national needs have to be considered,” the ministry spokesman said on Tuesday. “Because of the issue’s sensitivity, the details can’t be discussed. We are monitoring and supervising the activities [of the coal shipments] and will act as needed.”

IEC also needed to get special permission from the energy ministry to participate in the program because, as a state-owned monopoly, the commercial businesses it can engage in are limited.