The Palestinian Territories (West Bank and Gaza Strip) are highly dependent on energy imports from neighboring countries because of its lack of domestic energy resources. The Israeli Electricity Corporation (IEC) is the largest supplier of electricity to the Territories, supplying around 88 percent of its total electricity consumption. In this context the Palestinian Authority (PA) has been actively engaged in a comprehensive reform of the electricity sector to increase its overall efficiency, bringing in the commitment and involvement of all stakeholders and resulting in the creation of a well-structured electricity market. Alongside steady increase in electricity consumption, however, non-payment for electricity imported from the IEC has increased over the past few years, amounting to 58 percent of its total cost. The non-payments or partial payments of these bills create deficient for the IEC, which then leads the Israeli government to proceed with monthly deductions from the clearance revenue, thus accruing as debt. This assessment aims to precisely understand the sources and the reasons for non-payment of electricity in the Territories and to develop an action plan based on current programs and activities led by the Palestinian Energy and Natural Resources Authority (PENRA) and the donor community. The impacts of non-payment for electricity on the complete financial payment cycle are assessed in detail. An overview of the Palestinian Electricity Sector is provided in Chapter 2, where the set-up of the sector and the existing framework are explained. Chapter 3 consists of analysis and key findings from the data collected from stakeholders during the review. The main factors contributing to non-payment are electricity losses, collection levels, level of purchase and sales tariff, governmental subsidies, and efficiency and transparency of sector participants. Chapter 4 concludes with a summary of analysis, and Chapter 5 discusses the Palestinian Authority's action plans and current donor programs, as well as concluding the assessment. The report is accompanied by appendices, tables, diagrams, charts, and maps.