JERUSALEM: Israel's bombing of Gaza's main power plant could end up costing its closest ally, the US government, because it partially insured the project for up to $48 million, officials involved in the project said on Saturday.
US officials would not say whether Washington would ask Israel for reimbursement.
Israel bombed the power plant on Wednesday at the start of an offensive to try to get Palestinian militants to free a captured soldier, Corporal Gilad Shalit.
A Western aid official involved in the matter said Israel's decision to hit the power plant was a surprise in large part "because it was American-owned".
The Israeli army, in a statement, defended the attack, saying the power plant was targeted "in order to disrupt the activities of the terror infrastructure involved directly and indirectly in the abduction of Corporal Shalit".
In July 2004, a subsidiary of Morganti Group Inc., a Connecticut-based construction company, received $48 million in political risk insurance for the 140 megawatt plant from the US Overseas Private Investment Corp. (OPIC), an arm of the US government that backs American business deals abroad.
The plant began generating power in June 2002 and reached full commercial operation in March 2004, OPIC said in a statement at the time announcing its support for the project.
"OPIC has been told by Morganti that it will be submitting a claim," said Micaela Schweitzer-Bluhm, spokeswoman for the US consulate in Jerusalem. "OPIC has to assess the claim before it will make a decision."
But according to officials involved in the project, OPIC plans to reimburse the company for the damages using US funds. Hours after the Israeli strike on the power plant, White House spokesman Tony Snow said the United States urged Israel to "avoid the unnecessary destruction of property and infrastructure".
The attack on the power plant cut off electricity for hundreds of thousands of Gaza residents. The Israeli army statement said "precautions were taken so that civilians would not be harmed as a direct result of the attack".
To minimise damage to infrastructure, the strike targeted transformers rather than the entire plant, the army said.
But Palestinian officials say that knocking out Gaza's main power plant put the lives of hundreds of patients in local hospitals in imminent danger.
UN officials have also warned in recent days that fuel to power the coastal strip's sanitation system was running out.
Almost all water wells and wastewater pumping stations in Gaza are equipped with stand-by generators, but most fuel tanks will run dry between July 2-5, according to an official involved in administering the wells.
Israel's army said on Friday that it aimed to open a Gaza border crossing next week to ensure food and fuel supplies reach Palestinians despite the offensive.
