Energy Ministry Backs Shapir Control of Ashdod Refinery Against Committee
The Ministry of Energy opposes the Concentration Committee and supports allowing Shapir Engineering to acquire controlling stakes in the Ashdod Oil Refinery to ensure energy security and effective management.
The Ministry of Energy believes that Shapir Engineering should be allowed to acquire controlling stakes in the Ashdod Oil Refinery, opposing the stance of the Concentration Committee, according to Calcalist. Ministry of Energy CEO Yossi Dayan argues in a position paper submitted to the Government Companies Authority that there is a justified concern that without a controlling core or a strategic investor, the refinery will be unable to operate efficiently, finance its development, or make optimal decisions.
This position contradicts the ruling of the Concentration Committee, which determined in July that no such basis for concern existed. The Ministry of Energy is requesting to reconvene the committee for a renewed discussion regarding granting the control permit to Shapir for the Ashdod facility. It was also learned that the Ministry of Finance tends to support granting the control permit to Shapir, meaning the Government Companies Authority may ultimately reject the committee's recommendation.
Disagreements and Committee Dynamics
The committee's recommendation was adopted by a majority of two against one. Avi Simhon, the Prime Minister's economic advisor and head of the National Economic Council, was the dissenting minority who supported granting the permit to Shapir. Following the decision, the Government Companies Authority turned to a series of government ministries and bodies to receive their positions, similar to the process handled regarding the Zim transaction.
According to the majority stance of the Concentration Committee published on July 30, acquiring control over the Ashdod Oil Refinery—which is also defined as a concentrated entity—would increase the overall economic concentration of the Shapir Group, controlled by the four Shapira brothers. This would place the group at the summit of concentrated entities in the Israeli economy. The committee further determined that preventing the deal would not significantly harm consumer welfare, which is the benchmark set by the Concentration Law.
Strategic Importance of Energy Infrastructure
In Dayan's position paper, it is argued that the committee's decision did not give adequate weight to considerations regarding the Ashdod Oil Refinery's importance to the energy economy, both currently and in the near future. The refinery is described as a critical asset for the national energy economy, particularly regarding the production of essential distillates, price moderation, and competition.
Dayan noted the critical importance of the Ashdod facility given the potential closure of the Haifa oil refinery. In any scenario required to ensure Israel's energy security during routine and emergency times, the Ashdod refinery holds paramount importance in supplying distillate arrays to the energy economy. These insights have gained substantial weight in recent years as the country deals with severe security aspects, including energy infrastructure damage from an Iranian missile striking the Haifa refinery.
Shapir Engineering, controlled by the four Shapira brothers, currently holds 10% of the Ashdod refinery shares, which it acquired in June 2023 when the refinery split from Paz.
