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Thursday, 4 April 2019

Israel Electricity Company admits to voluntarily forgiving USD 1.3 bn of Egyptian gas debt as part of 2018 arbitration settlement

Israel Electricity Company admits to voluntarily forgiving USD 1.3 bn of Egyptian gas debt as part of a 2018 arbitration settlement, the company announced in a filing with the Tel Aviv Stock Exchange, according to Haaretz. The company intentionally kept the 85% write-off a secret until yesterday for diplomatic reasons, Israel’s Government Companies Authority said. The IEC agreed to accept USD 500 mn over eight and a half years instead of USD 1.76 bn paid over 15 years.

Background: Egyptian gas companies were ordered to pay the IEC a USD 1.76 bn arbitration settlement after they reneged on a natural gas supply contract amid the tumult of 2011. The Egyptian government had made reducing the award a condition for accepting any gas agreement with Israel. This led to a settlement in November as Egypt and Israel concluded an agreement that will make Egypt a key customer for Israeli natural gas.

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