Energy Infrastructures: The State Agreement And The Gate To The New Haifa Fuel Port

What This Follow-Up Is Isolating

The main article argued that the 2025 profit recovery was driven largely by Haifa accounting effects, while the real bottleneck remained execution, regulation, and cash. This follow-up isolates that bottleneck at the point where it becomes concrete: not whether the company matters to the state, but what must actually be signed before the new Haifa fuel port can move from a planned path into a fully executable one.

The issue is built from three layers that now lock into one another. The first is the new asset-and-operations agreement and the land agreement with the state, neither of which has been signed. The second is the lease-and-tax layer that flows from those agreements, which the company itself says is expected to involve material payments that still cannot be estimated. The third is the October 2025 approval for the new Haifa fuel port, which was explicitly made subject to that same framework. That is why the state agreement is no longer just old legal background. It has become the real gate to the Haifa replacement-port path.

Four findings matter immediately:

• The approval for the new port did not create a free runway. It explicitly states that without a new state asset-and-operations agreement, the company may not advance the engagement process, unless it receives prior written approval from the Accountant General.
• Negotiations with the state resumed continuously during the first quarter of 2026, but as of the report date no binding agreement had been signed. At the same time, the company writes that the eventual agreements are expected to involve material lease payments and tax liabilities that still cannot be estimated.
• The old Haifa fuel-port layer is still running on a much older base: the lease with Hani expired on January 4, 2001, yet the company continues to operate the facilities and pay index-linked rent under that expired lease.
• The other side of the bridge has already moved forward. The Haifa municipality memorandum of understanding, which has the force of a court judgment, requires the company to end activity at the existing fuel port and the 20-acre compound within 24 months of the new port becoming operational. After demolition permits were received in September 2025, the company extended the useful life estimate of the old port facilities only through the end of June 2034.

One Bottleneck, Three Layers

This chart matters because it shows three different time horizons that still need to be reconciled. On one side, the company had previously proposed an asset framework lasting 49 years from the end of the concession, through the end of 2049. On another, the ministerial authorization to provide oil-port services in Haifa already runs from January 1, 2026 through December 31, 2040. Above both sits the new port, with a 15-year base term and an extension option of up to 10 more years. So the challenge here is not only to obtain approval. It is to align operating authority, property rights, lease economics, and tariff logic inside one structure.

The New Port Approval Arrived, But Not As A Free Pass

In October 2025, the Finance Minister allowed Hani to contract with the company, without a tender, for the construction and operation of a new fuel port in Haifa Bay. On the surface, that is a major step. The new port is intended to replace the existing Haifa fuel port, and the approval also defines a basic 15-year term with an option to extend by up to 10 additional years. It further states that at the end of the engagement period Hani will acquire the port from the company under a salvage-value mechanism.

But the important part sits inside the conditions attached to that approval. First, the financing model and the loading of costs into unloading and loading tariffs must be examined and approved in advance by the Accountant General. Second, the approval is conditioned on a new asset-and-operations agreement being signed between the state and the company. Third, until that operating agreement is approved, the company is not allowed to advance the engagement process for the new port unless it receives prior written approval from the Accountant General.

That is no longer an abstract question of when an old state agreement might eventually be renewed. It is a direct question of who holds the key to the next stage of the project. As long as the state framework is delayed, the company's freedom to move forward with Hani remains constrained.

There is also another condition that is easy to miss. The company and the Ministry of Energy must present a detailed opinion regarding the construction of a new fuel-storage farm under the March 2022 government decision. If an inseparable link is found between the new storage farm and the new port, the approval for the port will be cancelled and the issue will be reconsidered. In other words, even after the tender exemption was granted, a regulatory stop point still remains that could push the project backward.

Hani itself recognized the weight of those conditions. In November 2025, it asked the Finance Minister to re-examine them, including the two heaviest ones: the need for a new state agreement and the possibility that the approval would be cancelled if the new port cannot be separated from the new storage-farm project.

The important nuance is that the company is not standing here without any operating authorization at all. During the reporting period it received a ministerial authorization to provide oil-port services in Haifa from January 1, 2026 through December 31, 2040. So the debate is not whether the company can in principle be a port operator. The debate is whether the asset, lease, financing, and tariff framework needed for the replacement port is actually closed. That is a very different issue.

The Lease And Tax Layer Is Part Of The Economics, Not A Footnote

The company does not describe the future state agreements as a drafting exercise. It writes explicitly that signing the asset-and-operations agreement and the land agreement is expected to involve material payments, including lease payments and tax liabilities that still cannot be estimated. It also writes that the final agreements are expected to affect the company's capital structure, the nature of payments from the company to the state, and the tax framework.

That point matters because it breaks the easy argument that the state will support the company anyway, so there is nothing to analyze here. That is the wrong reading. Even if state support remains the key credit anchor, there is still an open economic question: how much of the company's operating value remains with the company after the lease, transfer, tax, and property layers are finally defined.

The annual report gives that issue more concrete shape. In the January 2020 negotiation principles, the state would lease the operating land back to the company for 49 years from the end of the concession, rent would be determined with the Israel Land Authority, and the whole framework would be subject to a tax pre-ruling and agreement over tax cost coverage if such costs arose. None of that matured into a binding agreement. The Land Authority conducted appraisals, delivered draft lease assessments in April 2023, and the company submitted objections. Even at the level of the base numbers, the lease layer is still unresolved.

The report goes further and states explicitly that signing these agreements is expected to affect the tax appeals the Tax Authority is running against the company and the company's tax liabilities for prior years. So this is not only about future taxes. It is a direct connection between the new state framework and an older dispute that never fully closed.

The clearest example appears in the tax note itself. The company received tax assessments for 2001 through 2011 and for 2013 through 2016, requiring about NIS 62 million of additional tax, or about NIS 115 million including interest and linkage as of the balance-sheet date. In May 2025 the district court accepted the company's appeals in full, but in September 2025 the Tax Authority appealed to the Supreme Court, and the company's legal advisers say that at this stage the odds of the appeal cannot be assessed. That means the tax layer around the end of the concession is still active, not historical.

The contingent-liabilities note adds more weight. The company says it is unclear whether and what amount it will have to pay if the new asset-and-operations agreement and land agreement are implemented, but if it is required to pay, the amounts could be material. In plain English: there is a gate to the new port, and that gate comes with a price tag that is still unknown.

The Old Haifa Port Already Has An Exit Clock

If the new Haifa fuel port were still only a distant strategic idea, much of this could stay inside a long regulatory discussion. But the report shows that this is no longer the case. In August 2024, the company, Kamad, and the Haifa municipality signed a memorandum of understanding that was given the force of a court judgment. Under that memorandum, the company committed to end activity at the existing fuel port and the 20-acre compound within 24 months of the new fuel port becoming operational.

That clock has already entered the accounting layer as well. After demolition permits for the northern tank row were received in September 2025, the company extended the useful life estimate of the old fuel-port facilities and the 20-acre compound by three years, through the end of June 2034. So even if the final timetable for the new port is not yet closed, the company has already had to translate the expected exit from the old Haifa setup into operating and accounting assumptions.

This is exactly where the old and the new frameworks collide. On the one hand, the company still operates the Haifa port facilities under a lease that expired at the beginning of 2001, and it continues to pay Hani index-linked rent under that expired arrangement. On the other hand, the new port cannot truly advance without a fresh state framework and without satisfying the conditions attached to the October 2025 approval. The bridge between old Haifa and new Haifa therefore rests on legacy arrangements on one side and on an unresolved state framework on the other.

That is the core of this follow-up. As long as old Haifa keeps operating, a degree of legal ambiguity can be carried. The moment the company needs to replace that infrastructure with a new port, the same ambiguity shifts from background noise into an execution bottleneck.

What This Does To The Risk Read

The Midroog follow-up report adds an important layer precisely because it does not sound alarmist. Midroog writes that the absence of a signed operating agreement exposes the company to regulatory risk, but its base case assumes that the agreement eventually signed will not materially change the nature of the company's activity or its financial condition. In the same report, however, Midroog also says that a lower assessment of state support or a negative change in the emerging outline for renewing the company's operating agreement could hurt the rating.

The message is that state support and execution freedom are not the same thing. For bondholders, the state link may indeed be strong enough to preserve a high safety margin. For the company itself, open questions still remain around lease payments, taxes, capital structure, the financing model, and the timing of the move into the new Haifa setup. It is therefore possible to be relatively comfortable on the credit layer and still conclude that the most important Haifa project has not actually exited the framework stage.

That is why 2026 through 2027 should be read not as just another planning period, but as a framework year. If the asset agreement and the land agreement are signed, if the financing and tariff model for the new port is clarified, and if the state closes the issue of whether the new storage farm is separable from the new port, then the project moves from a conditional structure into a genuinely executable one. If not, the company may continue to look essential, regulated, and supported, yet still remain stuck with a bottleneck at the most sensitive transition point in Haifa Bay.

Conclusion

The thesis is now sharper than in the main article: the state agreement is no longer only a legacy issue from 2001. It is the intermediary layer that now holds together the old Haifa port, the new fuel port, the lease burden, the tax burden, and the future capital structure. The October 2025 approval showed that the state wants the replacement path to move forward. The conditions attached to it showed that the state has not yet closed the framework in which that path is meant to operate.

What changed versus the older reading is simple. Before, the missing agreement could be read as a heavy but tolerable legal overhang. Now the same bottleneck sits explicitly inside the path for building the new port, while the old port has already been given an exit timetable through the Haifa municipality memorandum. The strongest counter-thesis is that, because the company is so important to the state, the final agreement will eventually be signed on terms that do not materially damage the economics. Maybe. But until that agreement exists, the company still does not know the true economic price of the transition, and the new port remains approved but conditional.