Between Trade Monopoly and Administrative Failures

·       Public Petroleum Authority ... accumulated debts in 2018

·       The financial file of the Public Petroleum Authority in Palestine ... a file that has been accompanied by a great deal of controversy, questions ... and suspicions .. since the Authority’s establishment in 1994...!!.. I make clear here that what prompted me to write on this subject was my review of the public debt figures on the Ministry of Finance page for 2018, which showed an amount of 896 million shekels as debt payable by the Public Petroleum Authority... It was also noticed that the Authority’s debt had increased compared to 2017, when it amounted to 859 million shekels, and my attention was also drawn in reviewing the financial data to the fact that the Public Petroleum Authority obtained two small loans in 2018 from the Orphanage Fund and the Palestinian Alimony Fund, which are funds whose activities are mostly social... The total of the two loans from the two funds amounted to about 51 million shekels...!!

·       The question is ... why does the Public Petroleum Authority borrow? Although the fuel sector is one of the most important income-generating sectors and a primary source for the treasury of the Presidency of the National Authority.!! I tried to find an answer to my question and the questions of many others.. of course..!! So I reviewed some reports related to the Public Petroleum Authority in my search for any indicators or information about the reasons for the Authority’s borrowing of large sums...!!. One of these reports was the report “The Public Petroleum Authority: Between Evaluation and Correction” prepared by Mr. Ibrahim Abu Hantash – researcher – and published by the "Coalition for Integrity and Accountability" in 2009, in addition to my review of press interviews with two former Directors General of the Authority.., and press interviews with one of the former heads of the State Audit and Administrative Control Bureau (SAACB).

·       In this context.. and briefly about the nature of the Authority..., the reports stated that the Authority was established in 1994 ..in October ..by a decision issued by the Council of Ministers... and the importation, transportation and distribution of fuels were confined to the Public Petroleum Authority.... It was entrusted with overseeing the entire fuel file... within its defined jurisdiction and supervision.... The Authority reported directly to the Presidency of the National Authority at that time and until 2003 – according to the report – when the Authority was attached to the Ministry of Finance ... and was considered one of its public departments... then it was later attached to the Council of Ministers..., and the Economic Agreement in Paris addressed the issue of fuels and their importation .. and Israel conditioned that imports be within specified and agreed-upon limits; Israel had a veto right regarding imports and prices, so it allowed imports mainly from Jordan and from Egypt, under agreed terms and standards and specifications as well.. according to Israel’s wishes.... There were also conditions and limits regarding the sale of fuels.. and price limits and margin ceilings with the approval of the Israeli side...!!
The Authority’s work was steeped in much ambiguity and secrecy, as it remained for about nine years from its establishment without being subject to any oversight... or administrative governmental subordination.. or being subject to systems and laws.. such as oversight laws and procurement and tender regulations, and the instructions that usually apply to ministries and government departments!!. .. The Authority also did not provide any information about its activities or allow them to be subject to audit or transparency.. or disclosure, not even its agreements concluded with the Israelis in the fields of transport and sale and purchase, so they were not subject to review nor did the Authority allow anyone to view them – according to the "Coalition for Integrity" report...! In addition to the Legislative Council’s disputes with the Authority in attempting to regulate the Authority’s financial and administrative activity.. and the failure of the State Audit and Administrative Control Bureau (SAACB) to undertake any activities or write any substantial audit reports concerning the Authority’s financial and administrative practices at that time.. one of the Bureau’s reports was limited to complaints by individuals who complained of the Authority’s tyranny and obstruction in granting licenses to establish new fuel stations, appended with recommendations..!. Cases of corruption and embezzlement of the Authority’s public funds occurred, and much was published about such accusations at that time. The Authority’s relations with fuel stations in the early years after its establishment were marred by many disputes, and I personally perceived suspicions of corruption in its procedures and its requirements from investors; that was in 1995, when I joined a friend as a small-share partner to establish a fuel station in the Tulkarm area... My friend, who was the larger partner in that project which was not completed, returned and informed me that the Authority insisted, for it to consent to grant the station’s license, on the condition that the Public Petroleum Authority enter as a 50% partner without paying any portion of the capital – and these statements were oral, not written -.!! And our private project died in its cradle..!. The Authority was also suspected in many fuel transport and procurement tenders .. and in failing to remit revenues to the Treasury account for a not-short period – according to the Coalition for Integrity report – yet many administrative reforms and tightening of the Public Petroleum Authority’s activities took place in recent years..!!
But, why does the Public Petroleum Authority borrow?.... Is it because of debts of the Israeli companies selling the fuels, while the owners of fuel stations... do not pay and settle the amounts due on their stations.. to the Public Petroleum Authority, which accumulates the debt..!!.. That may be true.... But ultimately, there is no clear justification for such a debt, especially since the Authority is supposed to be a primary source of government revenues arising from the price differentials between the purchase price from the Israelis and the sale price to Palestinian consumers and the taxes imposed on them!!... Instead of being a financial pillar for the government.. it became and remains a disease and a burden on the government....!! I add my voice to the voices of many who propose that the Public Petroleum Authority be privatized... and that private sector investors hold its shares.... in the financial market and according to proper procedures...!!

·       Date: 19-2-2019