Israel Electric Corporation salaries among world's highest
Salaries at Israel Electric Corporation (IEC) (TASE: ELEC.B22) are among the highest among utilities in the world, and its tariffs are low, states the World Bank in a report on the company. IEC commissioned the report in an effort to prove that Israel's electricity tariffs are low. While the utility got the answer it sought, it also received an unsolicited sting about its employees' high salaries.
The World Bank says that Israel's electricity tariffs at the end of 2008 were 20% lower than in countries to which it was compared. The World Bank will present the report to IEC's management today.
The average gross monthly salary at IEC was around NIS 30,000 in 2008, 38% higher than the average salary in other electricity monopolies which the World Bank used in its comparison. At the same time, IEC's workforce is similar in size to the workforces in comparative utilities in South Korea, the Czech Republic, Malaysia, Ireland, Greece, and Portugal, among others.
The World Bank adds that IEC has been forced to reduce investment in recent years to a less than desirable level because of the low electricity tariffs, high debt to equity ratio, and high salary costs. The World Bank concludes that IEC will find it difficult to finance the investment necessary in 2010-13 to meet expected electricity demand, given the electricity tariffs set by the Public Utilities Authority (Electricity). Earlier this month, the Public Utilities Authority slashed electricity tariffs by 10-16%, the largest single cut in its history.
The World Bank also concludes that in order for IEC to finance half of investments from internal sources, and take on new debt to balance investment needs, it is necessary to raise electricity tariffs by 3-5% over the next four years.
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