and Priorities] [ Letter
The PEA in brief
The Palestinian Energy Authority (PEA) was
established according to a presidential decree issued on November 14, 1994.
Dr. Abdul Rahman Hamad was appointed to be the chairman of
the PEA on February 26, 1995 (decision No. 12 of 1995).
PEA is an independent institution, has its own budget and follows the
directions of the President of the Palestinian National Authority.
PEA is committed to the following overall objectives:
the citizens of Palestine with reliable electricity at affordable prices.
the legal, institutional, economic, financial and technical basis for efficient
the institutional framework. This
includes overall sector coordination, policy formation, system development,
generation, transmission, distribution, tariffs and regulation.
The PEA will continue to be the sole PNA agency responsible for these
critical national functions. The
PEA will also continue to be responsible for other components such as rural
electrification, regional interconnection, energy conservation and research that
cannot be commercialized. Tariff
setting and regulation will be overseen by a separate independent commission
reporting to the PEA.
system deficiencies and improving service delivery. Additionally, focusing on rehabilitation of the existing
networks and extend services to currently non-served communities. Over the last
three years, the PEA has undertaken a number of actions studies and
consultations aimed at improving existing system performance, service delivery
and reforming the institutional framework.
These actions have been undertaken in conjunction with the local
municipalities and village councils with the assistance of the World Bank,
Norway, and other members of the donor community.
System rehabilitation and the distribution network upgrading was
and is one of the crucial projects to this effect.
This was carried out with the assistance of the government of Norway.
The program now being extended to cover the north and south West Bank.
Rural Electrification is also a crucial function to develop the
technically the construction, the operation, and the maintenance of electrical
projects and networks.
researches and studies and searching for all energy resources.
by the chairman of PEA and the President of the PNA, the letter of sector policy
(LSP) sets out the Palestinian national Authority and the Palestinian Energy
Authority policy for the development of the power sector. While the PEA is fully
committed to the following strategy, the implementation of the proposed reforms
should be carefully sequenced and calibrated over the next two to three years.
main components of the medium term strategy of the PEA are to focus on:
the existing networks and services and extending services to currently
the policy and regulatory functions from the commercial functions of the power
the PEA to be the main policy making body for the sector.
maximum private sector participation in sector operations and development
particularly in generation and distribution, thus minimizing the need for
government financial support.
transmission networks, systems and functions in a new transmission company.
three new autonomous and commercially oriented distribution utilities (one in
Gaza and two in the West Bank) by consolidating the existing electricity
departments of the municipalities and village councils.
the operating/technical efficiency of the distribution utility companies through
energy end use efficiency, energy conservation and better load management.
pragmatic and practical tariff setting guidelines that will permit full cost
recovery and promote the commercial viability and feasibility of the sector
enterprises while at the same time providing for “lifeline” rates for needy
aforesaid strategy is guided by the following core considerations:
existing power system is currently weak and fragmented, complete centralization
of all components of the system in a single public agency would be inefficient
and would militate against long term development.
In particular, it would discourage private investment in the sector.
and commercialization can yield significant service benefits to consumers,
reduce the financial burden on the public sector and encourage private
investment and participation. Commercialization
and privatization of key parts of the system (generation and distribution) is
feasible and desirable.
functions and parts of the system (particularly policy, system development, and
transmission) cannot be efficiently privatized and must thus be retained in the
public sector to significant extent.
on the above core considerations, the following actions are contemplated:
In order to increase system capacity and reduce
supply dependency on Israel, the PEA will encourage the creation of new
generating capacity within Palestine. The
PEA will encourage maximum participation by the private sector.
Therefore, an agreement has been reached with the private sector;
Palestine Electric Company (PEC) which will build a power plant in the Gaza
Governorates. Discussions are also
carried out to build another power plant in the West Bank.
The PEA will alter the sources of supply by encouraging the purchases
from neighboring countries while at the same time promoting regional
interconnection, system stabilization and scale economies.
The PEA has already taken major
strides towards the goal of having an independent energy supply.
It is agreed that the project will be implemented in two phases. Each
phase will have a twenty-year term on build, Own, Operate, and Transfer (BOOT)
The transfer of electricity to
the West Bank can be achieved through a wheeling arrangement with the IEC or a
transmission line corridor.
Department is considered as one of the main departments in the PEA. Studies were done taking in account the regional
interconnection options. These studies were funded from the European Union. An
electrical Master Plan for Palestine is prepared with cooperation between the
Palestinian staff and groups of European experts from ENTýEL / Italy, ELSAM
PROJECT / Denmark and TRACTEBEL / Belgium.
Master Plan Covers the following issues:
electrical load till 2015.
Energy flow chart/ balance for year 1997 (enclosed).
Study between the planed Palestinian Power Plant and the best Coal fired Israeli
select the best location for a Power Plant in West Bank.
PPA governes the sale of power to PEA and defines the-
period and all legal and financial obligations.
PEC and Enron have finalized this agreement with PNA- and PEA on 18th of
June 1999, in the presence of president Arfat.
that, through the cooperative efforts of the PEA, PEC- Enron
international, and ABB that a technically advanced power plant will be
constructed to meet the needs and demands of the Palestinian people.
PEA will establish a public company (Palestine Energy Transmission Company
Limited PETL) which would eventually own, operate and develop the transmission
board of the PETL would enter into power purchase agreements with independent
and semi-independent generating companies and from neighboring countries and
would sell power to regional distribution utilities.
PEA held negotiations with the Swedish international Development
Corporation Agency (SIDA) to finance the building of transmission lines in the
Gaza Governorates as a first step in building the integrated electrical system.
SIDA has expressed interest in funding a transmission system in Gaza
based on the plans prepared by NORCONSULT funded by NORAD pending that one or
more of the following three options is realized:
Own power production in Gaza.
Agreement with neighboring countries (i.e. Egypt) on bulk supply
(Long term) agreement with Israel for delivery of power on high
are a number of interconnection possibilities between the developing PEA grids
in the West Bank and Gaza and the neighboring countries.
Consultant studies show that a high voltage network is required to
securely interconnect the different grids in the region.
The PEA has determined that the transmission level should be 220kV and
that the system should include a load dispatch center.
overall objective of the project is to sustain economic and social development
in the Palestinian territories.
Another overriding objective is to reduce Palestinian dependence on power
supply from Israel by building an independent, sustainable and reliable power
supply system for the Palestinian Authority.
The prime purpose of the Gaza transmission project is thus to compliment
the planned Gaza Generation project and the on-going rehabilitation program for
the distribution network.
construction of a backbone 220kV-transmission system in Gaza is of high priority
to the Palestinian Authority for the following reasons:
To meet the dispatch requirements of Gaza Power plant and satisfy
the increasing demand from consumers of electricity.
To meet the power supply requirements of large infrastructure
projects such as airport, harbor, industrial zone, sewage treatment plants and
To enable interconnections with neighboring countries.
To relieve the load of over-utilized 22kV feeder lines.
To enhance controllability and security of the system through
installation of a load dispatch center.
implementation time needed for the transmission project is estimated at 15-20
implementation of the transmission component should go hand in hand with the
construction of the power plant.
order to reduce the network fragmentation and increase efficiency, the existing
fragmented distribution system will be consolidated into three new commercially
oriented regional utilities, one in Gaza and three in the West Bank (including
Jerusalem District Electricity Corporation). The
three new utilities (Gaza Electricity Distribution Corporation currently in
operation, Nablus Electricity Utility, and Southern Electricity Company) would
be owned jointly by the PEA, the municipalities and village councils in the
respective regions. The
new utilities would own the distribution networks, be responsible for service
delivery and operations within their regions.
They would do so within the overall policy framework established under
the LSP and as administered by PEA.
While privatization of the utilities is not considered practicable at
this stage, provision would be made for significant private participation within