Finance Ministry to cancel contract with consortium that won Tel Aviv light rail tender. Work on the train lines has been delayed time after time.
By TheMarker

The Finance Ministry has decided to cancel its contract with the consortium that won the Tel Aviv light rail tender. Channel 10 news reported last night that the treasury is no longer convinced that the Metropolitan Transportation Systems consortium, headed by Lev Leviev, has the resources needed to provide financing for the preliminary stages.

A glimpse of Tel Aviv’s future?
Photo by: TheMarker

MTS consists of Africa Israel, Siemens of Germany, the Egged Bus Cooperative, Chinese infrastructure company CCECC, Portuguese infrastructure firm Soares da Costa and the leading Dutch transportation company, HTM. Leviev’s Africa Israel has run into serious financial problems and had to restructure its debts recently.

Work on the train lines was scheduled to start two years ago, but has been delayed time after time.

Finance Minister Yuval Steinitz has called an emergency meeting of the supervisory committee for the light rail project for next Wednesday, immediately after he returns from his trip to Expo 2010 Shanghai. The decision to officially cancel Leviev’s franchise for the project is supposed to be made at that meeting.

But the next question will be how to finance the project without Leviev, as Steinitz has no intention of canceling the project itself.

The ministry’s accountant general, Yehoshua Oren, has two choices. One is for another company to step into Leviev’s shoes and take over the entire project, including both financing and construction. The second option is for the government to provide the funding out of the state budget.

In either case, the project will be even further behind schedule – at least five years – and the first trains will not run before 2017 at the very earliest, Channel 10 said.

The original tender was awarded at the end of 2006 as a BOT (Build-Operate-Transfer ) project with a 32-year concession. It was expected to cost some NIS 10 billion, of which the state was to provide over NIS 7 billion and the company was to put up the rest. However, the total costs have risen significantly since then.

The Jerusalem light rail project is also way behind schedule and over budget, but trains are at least expected to start rolling down the capital’s streets by the end of next year.