$5 billion: The price tag set by Bazan for evacuation from Haifa Bay

The Bazan Group is pricing the cost of its planned evacuation from Haifa Bay pursuant to a government decision, and is placing a heavy price tag of more than $5 billion, as learned by Calcalist. The sum includes valuations of the group's activity conducted over the last four years by the firms BDO and KPMG, according to which the range of its activity value is between $3.2 billion and $3.8 billion. To this sum, Bazan adds between $600 million and $800 million, based on its forecasts of refining profits and their growth.

The group's CEO, Raphael Maman, approached the head of the National Economic Council and the Prime Minister's economic advisor, Prof. Avi Simhon, who heads the steering committee for the development of Haifa Bay. The committee is working to promote the implementation of the 2022 government decision, according to which the evacuation of the Bazan complex from Haifa Bay is to be completed by the end of the decade.

Last July, Calcalist revealed that Simhon appointed an inter-ministerial team to examine measures that would allow government ministries to meet the deadlines set for the evacuation. This comes against the background of concerns regarding delays in establishing designated sites across the country, where the fuel that Israel intends to import will be stored to replace the refining activity in Haifa, which is slated for closure.

Bazan's management opposes the planned evacuation and is highlighting insights from the long war in the Middle East, which demonstrated the necessity of preserving Israel's energy independence. Missiles launched by Iran have struck the Bazan complex on several occasions, in one instance causing the death of three employees and the total destruction of a steam power station.

Maman's approach to Simhon was made as part of the work of the new inter-ministerial team, within the framework of the 2007 agreement between the group and the state that regulates its land rights in Haifa Bay. The agreement grants Bazan a 49-year lease with an option for another 49 years. That same agreement paved the way for the privatization of Bazan and the sale of control to the Israel Corporation of the Ofer family, which brought the state more than 6 billion shekels.

According to Bazan, the valuation range specified in its approach to Simhon was determined at various points between 2022 and 2025 to normalize volatility. The group claims this is a conservative range that does not account for structural changes in global refining capacity. The group also notes that the requested compensation does not include hundreds of millions of dollars in damages incurred since the government began preparations for the evacuation. Furthermore, Bazan believes the state must finance the costs of closing and dismantling the facilities and provide a safety net for its employees.

"We believe that this is critical information that must be taken into account in any discussion or decision on the subject," Maman wrote to Simhon.

In a conversation with Calcalist, Simhon commented on Bazan's new demand:

"The State of Israel is determined to evacuate Bazan because it is a plant that causes morbidity and mortality and prevents the development of the northern metropolis. We are holding discussions regarding the compensation that will be given to Bazan, but its scope does not approach the sums mentioned in the letter."