December 19, 2018 / 12:46 PM / 6 months ago

Israel bows to pressure on planned electricity rate hike

JERUSALEM, Dec 19 (Reuters) - In a bid to quell growing frustration over the rising cost of living in Israel, Prime Minister Benjamin Netanyahu said electricity prices will rise less than the planned 8 percent.

“The price of electricity is significantly lower than in Europe and I tell you that it will not rise 8 percent,” Netanyahu told the Globes business conference on Wednesday.

“I do not know how much it will rise but a few percent in the worst case.”

The price of electricity was set to rise as much as 8 percent on Jan. 1, while a host of other prices — from food to water to municipal taxes — are also supposed to go up in 2019.

With Israel heading into an election year, the rise in living costs has touched a nerve with the public, bringing back memories of huge protests in 2011.

A new wave of protests has begun in similar fashion to those in France, where protesters are wearing yellow vests.

Netanyahu said electricity costs have dropped 15 percent since 2013, after the Tamar natural gas field opened off Israel’s Mediterranean coast. He said the larger Leviathan gas field, slated to start production in a year, would lower electricity rates further.

Ram Shefa, one of the organizers of recent protests against rising living costs, said the plan to raise electricity rates meant Israel’s gas production was only benefiting the owners of the gas fields, Noble Energy and Delek Group.

Assaf Eilat, chairman of state-run utility Israel Electric Corp, told parliament’s economics committee on Tuesday the average electricity hike would be about 7 percent.

“Even after the rise, the price of electricity in the last five years has fallen 10 percent,” Eilat said.

The high cost of living sparked mass protests in 2011 and significantly impacted the 2012 general election, with candidates promising to lower the cost of basic items.

Osem, Israel’s third-largest food maker which is owned by Nestle, had planned a 4.5 percent price hike but on Wednesday postponed the increase following public pressure and a request by Finance Minister Moshe Kahlon.

Osem said in a statement Kahlon is examining the cancellation of tariffs on a series of raw materials used by the company for its production in Israel.

“It’s only the start,” Shefa said, adding there would be protests targeting other foodmakers and there were plans for a large demonstration in Tel Aviv on Saturday night. (Reporting by Steven Scheer; editing by David Evans)

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