Foreign bidders mull withdrawing from Metro tender

Sources told “Globes” that two foreign companies that submitted bids for management and planning bids for metro lines in Greater Tel Aviv are considering withdrawing their candidacy, due to the government’s attempts to enact judicial reform and the accompanying political atmosphere, which creates negative sentiment towards investment in Israel among decision-makers. . This negative feeling is evident in the statements of the Minister of Transport, Miri Regev, about removing the management of the metro project from the NTA Metropolitan Mass Transit System and transferring it to another company.

At the same time, market conditions and rising interest rates do not help companies consider participating in the huge bid. Fifteen years ago, the tender to build the Red Line for the Tel Aviv light rail, which was won by an Africa-Israel-led consortium, ultimately failed because the 2008 financial crisis made it difficult for the bid winners to obtain financing.

The metro tender, valued at NIS 10 billion, attracted bids from seven consortia, each including foreign and Israeli companies, some of which bid in Israel for the first time. At the end of the process, three consortia will be selected, with each one of them planning, supervising works, building tenders and managing contractors, for each of the three planned metro lines.

More problems on the way

The metro project tender has aroused great interest among many foreign companies. The total project value is estimated at around NIS 150 billion, making it the most expensive and complex project ever undertaken in Israel. In recent years, government ministries have worked hard to make the tender accessible to as many companies as possible, in order to increase competition and attract leading companies from all over the world.

Despite the great benefit and advantages of tendering, it also has risks. The legal layout of the lines has not been finalized, the work assigned to the winning companies has not yet closed, and there is a lot of flexibility. The Metro Law has yet to be fully approved by the Knesset, despite the coalition’s plans to pass it by the end of the previous Knesset session.

In addition to the inherent risks, new risks are very serious. The business environment is changing due to attempts at judicial reform, protests and warnings from international agencies.

All this creates negative feelings among the decision makers of foreign companies who are not aware of what is happening in Israel. Companies fear future lawsuits that feature many infrastructure projects against the National Tourism Authority and the state in such a situation.

NTA said, “Seven international companies submitted bids for the tender to manage the metro lines. The bid is moving forward according to the schedule and work plan.”

Congestion relief

The Greater Tel Aviv Metro project includes plans for 145 kilometers of underground rail lines, with 109 stations in 24 local authorities. The first part of the metro network is scheduled to be completed by 2034 and the second part by 2037.

The estimated economic benefit, according to professional estimates, is 33 billion shekels, since the metro started operating, as a result of saving time, economic development around stations, shortening the time it takes to transport goods, and providing vehicle maintenance. and other variables.

According to forecasts, by 2040, the proportion of the population with a low socio-economic level able to reach employment centers in the capital within an hour is expected to be only 38% but will jump to 57% after the metro is put into operation.

Published by Globes, Israel business news – en.globes.co.il – on May 24, 2023.

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