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Report No: ACS9393 . West Bank and Gaza Public Disclosure Authorized Assessment and Action Plan to improve payment for electricity services in the Palestinian Territories Study on Electricity Sector Contribution to Net Lending Public Disclosure Authorized . November 25, 2014 . GEEDR MIDDLE EAST AND NORTH AFRICA . Public Disclosure Authorized Public Disclosure Authorized Document of the World Bank . Standard Disclaimer: . This volume is a product of the staff of the International Bank for Reconstruction and Development/ The World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Copyright Statement: . The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The International Bank for Reconstruction and Development/ The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone 978-750-8400, fax 978-750-4470, http://www.copyright.com/. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail [email protected]. Assessment and Action Plan to improve payment for electricity services in the Palestinian Territories August 2014 Acronyms and Abbreviations CP Connection Point DISCO Distribution Company GEDCO Gaza Electricity Distribution Company GPGC Gaza Power Generating Company HEPCO Hebron Electric Power Company IEC Israeli Electricity Corporation JDECO Jerusalem District Electricity Company KPI Key Performance Indicator kWh Kilo Watt Hour MDLF Municipality Development Lending and Funding MOE Ministry of Economy (Palestinian) MOF Ministry of Finance (Palestinian) MOI Ministry of Interior (Palestinian) MOJ Ministry of Justice (Palestinian) MOLG Ministry of Local Governance (Palestinian) NEDCO North Electricity Distribution Company PA Palestinian Authority PCBS Palestinian Central Bureau of Statistics PENRA Palestinian Energy and Natural Resources Authority PERC Palestinian Electricity Regulatory Commission PETL Palestinian Electricity Transmission Company Ltd. PNA Palestinian National Authority PUA Power Utility Authority (Israeli Electricity Regulator) PwC PricewaterhouseCoopers SELCO Southern Electricity Company TEDCO Tubas Electricity Distribution Company TOR Terms of Reference WB World Bank Wh Watt Hour PwC Page ii Table of Contents Executive Summary ............................................................................................................................ 5 Non-Payment for Electricity Services in the Palestinian Territories ............................................................. 5 Results of the assessment .............................................................................................................................. 6 Recommended priority actions .................................................................................................................... 10 1. Introduction ................................................................................................................................. 13 2. Overview of the Palestinian Electricity Sector ......................................................................... 15 2.1. Electricity Supply............................................................................................................................. 15 2.2. Institutional Setup ............................................................................................................................ 16 2.3. Key Players ...................................................................................................................................... 16 2.4. Connection Points Owners ............................................................................................................... 19 2.5. The Sector in the Israeli-Palestinian Interim Agreement on the West Bank and the Gaza Strip ..... 21 3. Analysis and key findings ........................................................................................................... 22 3.1 IEC invoice reconciliation and cycle ............................................................................................... 22 3.2 Non-payment of Distributors to the IEC .......................................................................................... 22 3.3 Electricity Losses ............................................................................................................................. 29 3.4 Collection from customers ............................................................................................................... 32 3.5 Tariff Analysis ................................................................................................................................. 39 3.6 Efficiency and transparency of Distributors .................................................................................... 47 3.7 Other reasons for non–payment ....................................................................................................... 48 4. Conclusion .................................................................................................................................... 53 4.1. Summary of analysis ........................................................................................................................ 53 4.2. Invoice reconciliation and cycle ...................................................................................................... 55 4.3. Non-Payment from Distributors to the IEC ..................................................................................... 55 4.4. Electricity Losses ............................................................................................................................. 56 4.5. Collection from customers ............................................................................................................... 56 4.6. Tariff ................................................................................................................................................ 57 4.7. Efficiency and transparency of Distributors .................................................................................... 58 4.8. Others reasons for non-payment ...................................................................................................... 58 5. PA action plans and current donor programs .......................................................................... 59 PwC Page iii 5.1. Stakeholders’ existing and planned action plans ............................................................................. 59 5.2. Assessment of Palestinian stakeholder’s existing and planned action plans ................................... 61 5.3. Conclusion of the assessment and revised action plan..................................................................... 71 Appendix A Assessment process for the study ........................................................................................... 83 Appendix B: Data Received from the World Bank ..................................................................................... 87 Appendix C: Overall data gathered by DISCOs and municipalities ........................................................... 89 Appendix D: List of connection point owners............................................................................................. 91 Appendix E: Monthly comparison MOF versus IEC Net Lending data ..................................................... 99 Appendix F Payment flow to the IEC ....................................................................................................... 100 Appendix G: Cost of electricity purchased from IEC vs. payments and Net Lending in ILS for 2010-2013 101 Appendix H: Customer survey and focus group –profile of respondents ................................................. 104 Appendix I: Percentage Distribution of Households by Region and Type of Electricity Meter Used- January 2011 .............................................................................................................................................. 106 Appendix J: Palestinian stakeholders action plans .................................................................................... 107 Appendix K: Governmental Subsidy for DISCOs (in ILS) ....................................................................... 115 Appendix L: Main features of West Bank and Gaza Electricity ............................................................... 116 Appendix M: PERC Current Tariff Structure............................................................................................ 118 List of tables Table 1: Distribution companies in Palestinian
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