Israel Electric eyes foreign projects
Main supplier of electrical power in Israel hopes to use its broad technical knowledge, experience in fighting cyber attacks to generate business abroad, help chip away at massive debts threatening its future
To sweeten its appeal, the state-owned utility, which staves off 400,000 hacker attacks a day, is constructing a "cyber gym" that will teach customers how to keep their power stations safe.
"We need to find foreign projects to help with our financial problems at home," Senior Executive Vice President Yasha Hain told Reuters in an interview. "Either we raise the price of electricity in Israel, or we bring in money from abroad."
But for now, raising tariffs is out of the question. A state regulator holds down consumer prices, with electricity in Israel costing less than in most Western countries, so expenses simply outweigh income, Hain said.
He pointed to France's EDF as an example of a utility that relies heavily on foreign projects. In a similar fashion, IEC's work overseas could grow to 30% of total operations over the next decade, he said, from just 1% now.
"We are focusing on eastern Europe, the former Soviet Union, India and Africa. Those are our preferred markets," Hain said.
IEC has been responsible for nearly every aspect of electricity, from running power plants to connecting households, in Israel since the country was founded in 1948.
But after a long period of mismanagement, and stymied by price regulation and surging fuel costs, the company's debt has ballooned to more than NIS 71 billion ($19.5 billion).
'Everyone is crazy about cyber defense'
IEC is being kept afloat by repeated bond offerings, many of them state-backed. On Thursday, it completed a $1.1-billion offering, without government guarantee, in the United States and Europe. Three weeks ago, the state decided to back yet another offering, of NIS 2.4 billion ($660 million), but no date has been set.
Whether the government will continue to give its guarantee, or allow IEC to expand its business abroad, depends on the company pushing through long-promised reforms.
Hain said the reforms, which include streamlining the corporate structure and laying off about 2,000 of 13,000 workers, would cost a few billion shekels to set in motion. The financial benefits only come a few years down the road.
Financial troubles aside, IEC stands out among comparable utilities.
On two key benchmarks, availability of generation systems and forced outage ratios, IEC is well above the average among North American and European electricity providers.
And a 2010 World Bank report said IEC's technical performance compared favorably to the industry.
Overseas, about a dozen projects are already in the pipeline, mostly with IEC as consultant or planner, but once the reforms kick in, Hain expects ownership opportunities to follow.
To further distinguish itself from its competitors, IEC is building a training facility for ways to protect power stations, refineries and energy grids from cyber attacks. This "cyber gym", to be completed in July, will be accredited by Israel's Shin Bet domestic security service, Hain said.
"The European Union and the Americans, everyone is crazy about cyber defense. They understand the next war will be cyber," he said. "This will open doors for us.
