TheIsraeli Electric Corp. (IEC) may decide to cut the cord to the West Bank due to an unpaid 165 million U.S. dollar debt by the Palestinian National Authority ( PNA).

The Jerusalem District Electric Company (JDECO), which supplies much of the West Bank's electricity, owes the IEC 424 million shekels (106 million dollars), The Jerusalem Post reported Wednesday.

As the total debt stands at 662 million shekels (165.5 million dollars), the remaining 239 million (59 million dollars) is made up from a combination of debts from areas in the West Bank and Gaza.

In addition, the PNA owes JDECO 120 million (30 million dollars) in electricity bills from various government offices.

According to JDECO CEO Hisham Omari, the IEC sent him a letter on Tuesday warning selective power outages throughout east Jerusalem, Bethlehem, Ramallah and Jericho, if the debt is not paid.

The IEC also threatened to freeze JDECO's assets in Jerusalem.

The PNA is facing its most severe financial crisis to date, with data showing economic growth plummeting from 9 percent in 2010 to 5.4 during the first quarter of 2012.

JDECO has offices in both Jerusalem and Ramallah and therefore falls within both Palestinian and Israeli jurisdiction. Since JDECO cannot legally expand its jurisdiction, the PNA has begun creating new electricity companies to operate in the northern and southern areas of the West Bank.

Omari, however, said the PNA is economically struggling, and that its residents "suffer financially -- they're not in good shape," and are unable to pay their bills.

"Even this month, they're only paying 60 percent of the salaries to their employees, meaning a lot of them can't pay electric bills," Omari said.

He blamed residents of the 12 refugee camps within JDECO's jurisdiction of not paying their bills, and cited rampant electricity theft in Area C villages, due to a lack of Palestinian police patrols.

If and when the debt is paid off, the IEC and JDECO agreed to meet in order to establish a monthly payment program.

According to prevailing Israeli-Palestinian agreements, any income tax Israel collects on behalf of the PNA is to be transferred to the authority at the end of the month.

However, before it transfers the total, Israel deducts allocations for electricity, water, hospitalization and other Israeli services.

The Israeli government transfers approximately 55 million shekels (14 million dollars) of the deduction to the IEC for electricity allowances for West Bank and Gaza residents.

Therefore, residents themselves in these regions are never actually directly paying for their electricity use.

In Gaza, while the Hamas government does collect electricity bills from its residents, the government uses the money for its own purposes rather than sending it to the Palestinian Energy Authority (PEA).

The entire Gaza Strip therefore, essentially, receives electricity "free of charge," Omari said.

In order to solve the predicament, on Monday, PEA chairman Omar Kittaneh spoke with IEC CEO Eli Glickman, who agreed to postpone legal procedures for two weeks in order to allow the PNA time to raise the sum and transfer it to the IEC.