'For IEC to hire World Bank is a scandal'

'For IEC to hire World Bank is a scandal'
By Avi Bar-Eli, Haaretz, August 19, 2009

The choice of the World Bank to examine the basis for the Israel Electric Corporation rates as well as the utility's efficiency quotient is a world-class scandal, says Professor Daniel Czamanski, who chaired a committee in the 1990s that examined the structure of the electricity market in Israel.

The IEC has hired research and consulting services from the World Bank to examine its rates and efficiency steps the company is obliged to take.

The utility waived the tender process for the services, which will cost an estimated $500,000, arguing that no other entity - inside or outside of Israel - is capable of performing such a study.

But Czamanski says that although the World Bank does advise governments on the structuring of electricity markets and methods for supervising electricity companies, it is not an expert in designating rates. "The appointment of the bank without a tender process, with the reasoning that no other entity in the world is able to do the job, is at best incorrect," Czamanski added. "Hundreds of consulting companies are able to do the job better than the World Bank - and more cheaply too."

Czamanski says the standard procedure adopted by IEC is part of a battle that the utility has been waging for the past fourteen years to stave off the Electricity Economy Law. "There is just one reason to hire the World Bank, Czamanski says. "IEC is trying, as it has in the past, to blind both the Electricity Authority and the public - as it does every time it feels the threat of the reform closing in - enlists impressive sounding names and political clout to avoid implementation of the law," he said. He called on the Electricity Authority to not approve the expense of the study.

IEC vehemently denied that the company was seeking to squirm out of implementing the reform, and reiterated that the choice of the World Bank was made after careful consideration by the utility's management and board.