The European Union says a Hamas plan to try to make money off EU fuel donations to the Gaza Strip means the suspension of fuel oil deliveries to the territory will continue. Teri Schultz reports from Brussels.

A Palestinian toddler holds up a lit candle in his house after the electricity was cut off in his area of Gaza City, 17 Aug 2007

Gaza's main power plant is dependent on fuel provided by the European Union, which cut off deliveries last Thursday. Officials initially blamed security problems for the cut off, but a European Commission spokeswoman explained Monday that the halt in deliveries is also because Hamas plans to begin taxing electricity.

Since Hamas is considered a terrorist organization by the European Union, the EU will block it from capitalizing on humanitarian aid provided for Gaza residents under what is called the "Temporary Implementation Mechanism" or TIM. Such a tax, says Commission spokeswoman Antonia Mochan, would be unacceptable.

"This would not allow us to continue paying for fuel helping to produce the electricity," she said. "We are ready to resume payment of these fuel deliveries within hours once we have assurances these taxes will not be introduced. Obviously we need to ensure that our aid paid through the TIM fulfills its purposes which is the support to benefit the Gaza population."

Mochan explains that the EU pays about $9 million a month to supply fuel for the plant, an arrangement set up last year. The funds go to an Israeli supplier, which allows the EU to avoid any direct financial dealings with Hamas while providing the aid.

Hamas officials deny there are plans for an electricity tax but there have also been other problems with the delivery of the fuel.

Last Thursday Israel closed the border crossing used to transport the fuel due to security threats. Mochan says, that is also one of the factors under review as the Commission considers a resumption of the fuel aid.

"There were security concerns particularly related to the tense situation at the crossing points and we are assessing the situation to ensure that all the elements are in place to allow a high level of accountability before assuming delivery," she said.

Israel re-opened the border crossing on Sunday, but by that time the EU had decided to hold up the shipments over the tax issue. With no reserves of fuel, the plant has been shut down since Friday.