Durad Power Plant Faces Court Battle Amid Stalled 3 Billion Shekel Expansion
Adaltak O&M petitioned the Tel Aviv District Court to appoint an arbitrator in a dispute over maintenance contracts for the stalled 3 billion shekel Durad power plant expansion, amid regulatory hurdles and shareholder infighting.
A fresh legal battle has broken out surrounding the Durad power plant near Ashkelon. Adaltak O&M, a subsidiary of Adaltak, petitioned the Tel Aviv District Court to appoint an arbitrator to resolve a dispute over who will serve as the operation and maintenance contractor for the planned plant expansion. However, the 3 billion shekel expansion project remains stalled amid regulatory hurdles and shareholder infighting.
Legal Dispute Over Maintenance Rights
According to the court filing, Adaltak O&M argues that its existing agreement grants it the exclusive right to provide operation and maintenance services for any future modifications at the facility. Nevertheless, the company claims that certain shareholders pressured management to bypass Adaltak O&M and consider alternative contractors. After Durad objected to arbitration via the Israel Bar Association, Adaltak turned to the court to compel binding arbitration.
Regulatory and Land Lease Hurdles
Durad is owned by East Mediterranean Pipeline Company (37.5%), Luzon Group (33.75%), Adalkom (18.75%), and Phoenix Holdings (10%). The plant currently generates 860 megawatts using 12 turbines, with an expansion planned to add 650 megawatts. Two major obstacles are blocking the project:
-
Antitrust Opposition: The Competition Authority opposes granting Adaltak a larger share of electricity production due to market concentration concerns, as Adaltak holds stakes in five other power plants.
-
Land Lease Dispute: State-owned Eilat-Ashkelon Infrastructure Services demands raising annual land rent from 3.7 million shekels to 50-60 million shekels starting in 2038. Luzon Group supports the hike, while Adaltak and Phoenix Holdings oppose it.
"Pressure was exerted by some Durad shareholders not to contract with Adaltak O&M and to examine engagement with another maintenance contractor," the company stated in its petition.
Shareholder Tensions and Market Outlook
Industry estimates suggest the Luzon Group aims to dissolve its partnership with Adaltak. Conversely, Adaltak remains confident that soaring electricity demand in the country will ultimately push the expansion forward, preserving its stake in the energy sector.
