Atef Sa'ad
July 15, 2008 - 8:00pm

The managing director of the Investment Fund, Mohammaed Mostafa, has revealed yesterday that Israel is seeking to revive negotiations to buy Palestinian gas, while the Palestinian side and the British Gas company, the main developer of gas from Gaza's beaches, are being cautious in making a decision over this issue until they are certain of Israel's seriousness.

In last December, "British Gas" stopped negotiating with Israel and closed their office in Tel Aviv because of the differing positions of both sides regarding prices, the mechanism of supplying the West Bank and Gaza with gas in order to generate energy, and the mechanism of delivering to the Palestinian Authority's treasury its proceeds from the project.

In a meeting with Journalists in Ramallah, Mostafa said: "since negotiations stopped, the Israelis have contacted us more than once asking to restart negotiations. We are carefully listening."

He added: "before making a decision about restarting negotiations, we will comprehensively review how serious Israel is, as well as study our other alternatives of selling Palestinian gas to other markets, and we hope to complete both studies within two months," but he admitted that these alternatives are "hard if not impossible."

Mostafa explained that recent developments in Egypt are the reason behind Israel's desire to revive negotiations to buy Palestinian gas. Egypt has decided to revalue the gas it sells to Israel, because of Egyptian objections to selling Israel gas at a price lower than international standards.

Mostafa said: "we stopped negotiating with Israel because it insisted on the same price as Egypt's gas, as opposed to the international price. There are now mechanical problems in the supply line of Egyptian gas to Israel which will cost about 800 million dollars, as well as the political problems that Egypt has undergone, and all indicators signify that Egypt will raise the price of gas that it sells to Israel."

He added: "the indications we have received from Egypt are very important, and proved the appropriateness of our position that the price of gas that Egypt used to sell to Israel is not the measure, the measure is the international price."

Mostafa also added: "a legal obstacle contributed to the decision of stopping negotiations, after an Israeli company filed a lawsuit in the Israeli Supreme Court to stop the Israeli government from buying and selling gas as current laws state, but the court ruled that the government has the right to buy gas but not to distribute it."

He added: "during the past months, the government has worked to amend the law in order to allow the government to buy and sell gas, and it is now waiting to be discussed and decided upon by the Israeli parliament, and in that case, the legal obstacles would end."

According to Mostafa, one of the main reasons behind the decision to end negotiations with Israel is an internal Palestinian issue. Israel refuses to guarantee that it won't deter the supply of gas to the West Bank and Gaza, refuses to give the Palestinian Authority the exclusive right for collecting taxes on gas sales, and insists on intervening in the mechanism of allocating the proceeds of the project to the Palestinian Authority's treasury, under the excuse of making sure that the proceeds won't fund "anti-Israel activities."

Mostafa said "because of all these reasons, we decided to stop negotiations, after we sensed that Israel was not serious."

Although Mostafa did not confirm restating negotiations with Israel, he maintained that finding a replacement would be hard. "Having boats ship the gas from Gaza's coast is not an option because Israel refuses to allow it, and moving the gas to Egypt through supply pipes and then shipping it to international markets from there has proven to be non-feasible because of business realities and political obstacles, so this option is also hard and may even be impossible," added Mostafa.

He said "the alternative of selling gas to markets other than Israel's are not easy, and are very limited."

Mostafa estimates the size of the coast of Gaza's gas at around one trillion cubic feet, and needs an investment of around 800 million dollars in order for the gas to be extracted and marketed. The expected profit exceeds 4 billion dollars spread over 10 years, half of which will go to the Palestinian Authority, either as ownership rights, taxes, or as the Investment Fund's share as a partner in the project alongside "British Gas" and the Consolidated Contractors Company (CCC).

Mostafa said "we can't estimate the profit accurately because it depends on the sale price."

Housing north of Ramallah
On the other hand, Mostafa revealed that the Investment Fund had started taking practical steps to build a suburb that contains 2000 housing units north of Ramallah, which is part of a program that was announced in April to build 30,000 housing units over a span of 10 years, with investment reaching 1.5 billion dollars.

Mostafa said "the first big step was choosing the location of the first project north of Ramallah. We have bought 250 acres of land."

He added "we have designed an initial model for the project, and we are now working on creating a more detailed model, as well as evaluating the infrastructure, knowing that the project's needs are limited because of its proximity to Ramallah (about 3 kilometers). We are also studying the plumbing system, and are studying the ways of including the project in Ramallah's development plans."

In addition to the 2000 housing units, the project will include a shopping center and public service facilities. Mostafa expressed his hope that these studies would be completed by the end of this year.

Mostafa explained that several Palestinian and Arab developers will be allowed to participate in this project, "and we prefer that option over having a partnership with one developer." 

As for the "Al-Amal" company for real estate funding (which was founded with the cooperation of the American "OPIC", the International Finance Corporation, the Bank of Palestine, and the Palestine Real Estate Investment Company), Mostafa said that the new company developed a method of involving banks, "and we will soon invite 6 or 7 banks to make offers to this company."

Mostafa said that they are aiming at involving at least two banks, in addition to the Bank of Palestine, to participate in running and managing the company as well as offering some services, and also to contribute in funding part of the loans from the banks' own resources.

Project to develop the "Al-Ersal" area

Mostafa said that in the next few days, the "Ardouna" company (which was recently founded with the cooperation of the "Al-Ard" Saudi company) will be launched, with the goal of developing the commercial center of Ramallah and Al-Beira (Al-Ersal area).

Mostafa also said that the company is in the process of finalizing the detailed design of the project and acquiring the necessary licenses from the Al-Beira municipality. The company also did a study on traffic in the area, and handed that study to the consulting firm that is assigned to develop a detailed design of the project. "We hope to be done with these steps within two months, and we will then start having discussions with other developers to carry out other parts of the project," said Mostafa.  

The project will include 15 buildings, and will be used for housing, offices, and commercial projects, as well as for a hotel.

Mostafa said that they have been contacted by several Palestinian and Arab developers who are interested in the project, which include an Emirati company that is interested in building the hotel and a major Palestinian financial corporation that is interested in building its headquarters in the project.

Al-Wataniya Telecom

Meanwhile, Mustafa said that the Israeli Defense Ministry confirmed in a written letter the announcement by Tony Blair, the representative of the Quartet, during the Investment Conference in Bethlehem last May that he had received Israeli approval to grant "Al-Wataniya Mobile" the frequencies required in order for it to operate. "We are now awaiting a formal letter regarding this issue from Israel to the Palestinian Ministry of Communications through the joint technical committee," Mostafa said.

Mostafa added that "after the Israeli prevarication, the issue of frequencies was resolved. Al-Wataniya is now ready to be launched, the contracts with the suppliers are ready to be signed, and so are the contracts with the network of distributors, and I think that the remaining months of the current year will witness a great amount of activity in this area."

[Translation by Mike Husseini of ATFP]


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