Electricity supplies to the West Bank could be cut off next week unless the Palestinian Authority pays the Israel Electric Corporation more than £63m in unpaid bills.
The debts include more than £12m owed by the Palestinian Authority itself, and £38m from consumers in refugee camps.
A stay of execution until after the Eid Al-Fitr holiday, which ends the Islamic holy month of Ramadan this weekend, was agreed in an emergency conference call earlier this week between the Israeli company, the president of the Palestinian Power Authority and the director of the Palestinian-controlled Jerusalem District Electricity Company, Hisham al-Omari.
Mr al-Omari warned there would be a "real crisis" for electricity supplies in Jerusalem, Ramallah, Bethlehem and Jericho if the Palestinian Authority did not pay its debts to Israel. The bills from Hamas-controlled Gaza have been paid. The United Nations Relief and Works Agency pays for water, education and health in the refugee camps, but does not pay for electricity.
Last week, the Israeli Electric Corporation announced it would begin procedures to cut off electricity supplies and start legal measures to take control of the Palestinian company's assets and bank accounts unless the debts were paid.
Mr al-Omari warned that power cuts would all but halt the struggling Palestinian economy and are liable to trigger severe political unrest and even violence against both the Palestinian Authority and Israel.
Israel supplies electricity to the Palestinian Authority under the 1993 Oslo Peace Accords. It has experienced its own power problems this year with the repeated bombing of a gas pipeline supplying gas from Egypt to Israel and Jordan and unusually hot weather that has sent domestic demand soaring to nearly 95 per cent of Israel's total generating capacity.