Two of the foreign companies that bid in the tender for the management and planning of the Greater Tel Aviv metro lines are considering withdrawing their applications, sources told “Globes”, due to the attempts by the government to embrace the judicial overhaul and the political atmosphere that accompanies it, which creates a negative sentiment towards investment in Israel for policy makers. This negative feeling is accentuated by statements by Transport Minister Miri Regev about removing the management of the metro project from NTA Metropolitan Mass Transit System and transferring it to another company.
At the same time, market conditions and rising interest rates are not helping companies planning to participate in the huge tender. Fifteen years ago, the tender for the construction of the red line of the Tel Aviv tramway, won by a consortium led by Africa-Israel, finally failed because the financial crisis of 2008 made it difficult to obtaining funding for the winners.
Metro’s tender, worth an estimated NIS 10 billion, drew bids from seven consortia, each including foreign and Israeli companies, some of them bidding for a tender in Israel for the first time. At the end of the process, three consortia will be chosen, each of them planning and supervising the works, the construction tenders and the management of the contractors, for each of the three planned metro lines.
More problems on the way
The tender for the metro project has generated great interest among many foreign companies. The overall project is estimated at NIS 150 billion, making it the most expensive and complicated project ever undertaken in Israel. In recent years, government departments have worked hard to make bidding available to as many companies as possible, to increase competition and attract leading companies from around the world.
Despite the great interest and benefits of the tender, it also involves risks. The regulatory planning of the lines is not finished, the works intended for the winning companies are not yet closed and there is a lot of flexibility. The subway law must also be fully approved by the Knesset, despite coalition plans to pass it by the end of the previous Knesset session.
In addition to the inherent risks, there are new risks, which are serious. The business environment is changing due to judicial overhaul attempts, protests and warnings from international agencies.
All of this creates a negative feeling among foreign business decision makers who are unaware of what is happening in Israel. Companies are afraid of future lawsuits, which characterize many infrastructure projects, against the NTA and the state, in such a situation.
The NTA said: “Seven international companies bid for the tender to run the metro lines. The call for tenders is progressing according to schedule and work plan.
The Greater Tel Aviv Metro project includes plans for 145 kilometers of underground railway lines, with 109 stations in 24 local communities. The first part of the metro network should be completed by 2034 and the second part by 2037.
The estimated economic benefit, according to professional assessments, is estimated at NIS 33 billion, from the time the metro begins to operate, due to time savings, economic development around stations, reduction of time required transportation of goods, savings on vehicle maintenance and other variables.
According to forecasts, by 2040, the proportion of the population with a low socio-economic level able to reach the employment centers of the metropolis in one hour should be only 38% but will increase to 57% after the implementation. in metro service.
Published by Globes, Israel business news – en.globes.co.il – May 24, 2023.
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