01/06/2011 07:27

Cancellation of the tender and publication of a new one is liable to delay the facility by years.

Prime Minister’s Office director- general Eyal Gabai will advise the government to cancel the contract with Mekorot (national water company) to build the Ashdod desalination plant, people familiar with the matter told Globes Wednesday.

Construction of the plant, which was supposed to have begun a year ago, has been frozen at the order of the Finance Ministry’s tenders committee.

Cancellation of the tender and publication of a new one is liable to delay the facility by years. The facility is intended to supply drinking water for one million people.

In response, Mekorot chairman Alex Wiznitzer told Globes if the threat was realized, it would be “a gross violation of the agreement signed between Mekorot and the state. We regret that the director-general of the Prime Minister’s Office will recommend violating a cabinet decision. This is a dismal act that will worsen Israel’s water crisis, in view of the years of drought.

“We regret that instead of dealing with the severe water crisis, all the powers that be are ganging together to prevent the construction of a desalination plant by the national water company in order to hand the project over to private hands.”

Cancellation of Mekorot’s contract exposes the state to lawsuits by Mekorot and Minrav Holdings Ltd. In November 2009, the IVM consortium of Minrav and Spain’s Sadyt won the tender to build the plant.

Construction was supposed to begin last April, but the interministerial tenders committee headed by Deputy Accountant- General Gil Shabtai froze the project in December.

The Finance Ministry is demanding that Mekorot supply water at NIS 2.39 per cubic meter. Mekorot, whose plan was originally based on a price of NIS 2.86 per cubic meter, gradually lowered the price to NIS 2.49, but this price was also rejected by the ministry.

Last April, Prime Minister Binyamin Netanyahu ordered the Finance Ministry, the National Infrastructures Ministry and Mekorot to solve the problem within 30 days.

In meetings over the past few days, Gabai supported the Finance Ministry’s proposal to cancel Mekorot’s contract and to publish a new international tender. The ministry says Mekorot cannot implement the project and that IVM does not meet the threshold conditions required of the contractor.

The Ashdod desalination plant will supply 100 million cubic meters of water a year, enough for one million people.

Due to the urgent need for the plant, an especially tight timetable was set for its construction, a timetable that was called impossible by desalination companies.

IDE Technologies Ltd., which bid against Mekorot Initiative and Development Ltd. to build the plant, withdrew when its estimated construction time of 30 months was rejected.

The Finance Ministry says the difference in price amounts to NIS 400 million over 25 years, and that legal proceedings against IVM would probably go on for months. The Finance Ministry’s position, as presented by Gabai, is that nine months would be needed between cancellation of Mekorot’s contract and the selection of a franchisee.

IVM on Wednesday warned Netanyahu, Finance Minister Yuval Steinitz and National Infrastructures Minister Uzi Landau that if the project was canceled, it would petition the courts for an injunction.

“For a year, there has been nothing to prevent the start of the project, because the court petitioned by the losing consortium dismissed the request for an injunction,” IVM said.

“Construction of the project is delayed only because of the Finance Ministry’s refusal to accept the price set by Mekorot.”