Dor Alon expects a 40% increase in fuel sales and a significant improvement in profitability – gas and oil

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Dor Alon
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Reports that following reports of winning a tender for the supply of fuel and gas for cooking (LPG) to the Palestinian Authority since the beginning of the month, the company has signed an agreement with the PA and estimates that its fuel sales are expected to increase by 40% as a result of the agreement. And a substantial increase in credit needs for financing its net working capital is expected.

This is a two-year contract, in which Dor Alon will provide 50% of the annual fuel and gas consumption in the PA areas. Dor Alon estimates that in practice, sales to the PA are expected to constitute 25% -30% of the company’s revenues. (O. The debt to the IEC), in order to secure its obligations, the PA waits for Dor Alon the right to collect the payment due to it from the tax-related tax money, which is held for the PA by the Government of Israel

In the background, it should be noted that the second winner in the PA’s tender is Paz Oil, which is expected to supply the additional 50% of the PA’s fuel and gas needs. In its reports, Paz Oil also stated that it had received approval from the Authority to collect the payment for the services directly from the fuel tax money collected by Israel for it. That is, in fact the collection will be made from the authorities in Israel and not from those of the authority. Still, Paz noted that it could not assess the capacity and length of time it would take to collect funds from the Israeli government.

In this context, it should be noted that the PA has a debt of NIS 340 million to the Zen Company, which since 2012 has served as one of the only two suppliers of oil distillates to the PA. As Zen reported, the company did not win the tender (Dor Alon is actually taking its place) and therefore it will not continue the contract with the authority. Incidentally, Bazan clarified with reference to the PA’s debt that “there is no certainty as to the company’s ability to collect the balance of credit and as to the extent of the loss of profit.”