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FILE PHOTO: A Palestinian man sits as he sells vegetables in a makeshift shop lit with a lamp powered by a battery during a power cut in Beit Lahiya in the northern Gaza Strip January 11, 2017. REUTERS/Mohammed Salem

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JENIN, West Bank (Reuters) - State-owned Israel Electric Corp [ISECO.UL] and the Palestinian Authority signed an agreement on Monday to boost Israeli electrical supply to the occupied West Bank, even as Gaza endures daily blackouts in a Palestinian political dispute.

Under the deal, a new electrical substation was inaugurated near the West Bank city of Jenin. Palestinian Prime Minister Rami Hamdallah and Israeli Energy Ministry Yuval Steinitz cut the red ribbon in a rare show of Israeli-Palestinian cooperation, three years after peace talks collapsed.

The facility will transmit 60 megawatts of electricity purchased from the Israel Electric Corp (IEC), officials said.

The West Bank is dependent on Israeli electricity and the internationally-funded substation is one of four that will be operated in the area by a Palestinian Authority-owned transmission company.

"This is definitely an encouraging historic moment in which we are inaugurating the first substation in the Palestinian Authority," Steinitz said at the ceremony.

A power boost for the West Bank coincides with an energy crisis in the Gaza Strip, where electricity flows only two to three hours a day and medical facilities and residents who can afford to buy fuel largely rely on generators.

Since last month, the IEC has cut by nearly half the amount of power it supplies to Gaza after the PA slashed its payments to the company for the electricity.

The Authority argued that the rival Hamas movement which controls Gaza was not reimbursing it for the cost.

Palestinian political analysts and Hamas said the PA generated an energy crisis to pressure Hamas into loosening its grip on Gaza, a decade after the group seized the enclave from forces of the mainstream Fatah party.

(Writing by Jeffrey Heller; Additional reporting by Ari Rabinovitch; Editing by Raissa Kasolowsky)

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