Delays are piling up in the expansion of Jerusalem’s light rail system. Globes has learned that the Green Line between Mount Scopus and Gilo, which was scheduled to open next year, will now not open until March 2026. And the Red Line extension, originally scheduled to open in July 2023, will now not begin operating until at least November 2024.
Meanwhile, the Blue Line between Ramot and Gilo, which is still in the planning stage, is looking for an alternative to the Spanish company Comsa, which withdrew from the winning consortium with Dan and Dania Cebus to build and operate the line. The Korean company Hyundai appears in the picture to replace it.
Jerusalem’s light rail network has faced a series of delays that include complex geopolitical factors, opposition from ultra-Orthodox communities, and intense but productive competition among Israeli companies.
The Jerusalem Red Light Rail line began operating between Pisgat Zeev and Mount Herzl in 2011, and is currently being extended to Hadassah Hospital Ein Kerem in the south and Neve Yaakov in the north. The Green Line is in advanced stages of construction, and the Blue Line is being planned with infrastructure already in place.
series of delays
While the Tel Aviv light rail will operate as separate lines, eight tracks in Jerusalem will run on three lines in an integrated network that will be more efficient than the Greater Tel Aviv system. However, the Jerusalem project has faced a series of delays in recent months.
The Red and Green Line extensions are being undertaken by Shapir Engineering & Industries (TASE: SPEN) and the Spanish company CAF. Shapir informed the Tel Aviv Stock Exchange (TASE) that the opening of the Red Line extension has been postponed until November 2024. The project had been delayed even before the war, due to the need to replace previously installed systems.
Shapir said the Green Line was delayed due to a shortage of manpower, as some workers were called up to the army reserves for long periods, while foreign workers left the country due to the war and Palestinian workers were no longer available to work in Israel.
The delay also comes due to disagreements between Moriah Development Company in Jerusalem, the municipal authority that built the first phase of the project, including preparing the infrastructure and earthworks, and the concessionaire company, which is laying the tracks and installing the systems.
Shapir asserts that Moriah was late in delivering some sections, did not receive adequate plans for the second phase, and had to hire planners for the purpose. Moriah denies some of these allegations. In recent talks, new dates were agreed upon for the opening of the Green Line, with the section between Givat Ram and Malha set to open by March 2026, instead of early 2025, and the section between Mount Scopus and Gilo set to open at the same time, instead of mid-2025.
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Meanwhile, violent protests erupted by a minority of The Haredi Protests by local communities against the construction of the Green Line on the Bar Ilan Street section caused significant damage during the works, to the point that the section has not yet been handed over to the concessionaire, after a year-long delay. Therefore, an opening date for operations has not yet been set, and it is not clear when the Green Line will begin operating.
The delay in the launch of the Green Line is expected to cause damage, including to Bayside Corp. – Gav Yam (TASE: GVYM), which is building a 270,000-square-meter office project next to the Hebrew University campus in Givat Ram, which will be served by the line. According to the company’s report, the first phase of the project, which will cover about 90,000 square meters, will be completed in the third quarter of 2024.
The Spanish Dilemma
Industry sources attach great importance to agreeing on the operating schedules of each line, in order to keep the Spanish company CAF in Israel. Unlike other Spanish companies, CAF continues to work here on infrastructure projects, despite the general hostile atmosphere in Spain against Israel since the outbreak of the war.
In September 2023, the Israeli companies Dan and Danya Cebus, along with the Spanish company Comsa and the Polish company Besa, won the tender to build the Blue Line. Unlike Shapir’s Spanish partner Kav, Comsa withdrew from the project after winning it, due to political pressure. The Polish company is also set to withdraw, due to financial difficulties caused by the outbreak of war.
Finding alternatives to the Chinese
Industry sources believe that the Blue Line concession winners, Dan and Danya Cebus, are now trying to persuade Hyundai to join the project. If the Korean Hyundai enters Israel for the first time, it will be another signal of the end of Israeli infrastructure cooperation with Chinese companies. In the infrastructure industry, both private and public, Israeli companies are looking for alternatives to Chinese companies. The official reason is the Israeli companies’ bid prices, but beneath the surface there is little doubt that American pressure has been exerted, and that the situation has worsened with China’s support for Hamas and Iran in the war.
On the other hand, the involvement of Chinese companies in infrastructure projects has led to a significant reduction in prices in Israel, which previously relied mainly on European companies. Alternative competition may come from India and South Korea, which were visited several months ago by a government delegation led by Haim Glick, the outgoing CEO of the NTA urban mass transit system, which is overseeing the construction of the Tel Aviv light rail.
Israel’s infrastructure sector was surprised by the low bid submitted by the consortium led by Dan and Danya Cebus to build and operate the Blue Line. The next lowest bid went to Shapir and Kav, which builds and operates the Red and Green Lines in Jerusalem. Now if the consortium’s asking price increases significantly after it is replaced by PESA and KOMSA, making it more expensive than Shapir and Kav’s bid, the government will need to solve another problem.
“The concessionaire and the state are currently discussing new dates for operating the Red Line and the Green Line due to the impact of the war, and after reaching an agreement the state will issue an official announcement in this regard,” Shabbir said.
This article was published in Globes, Israeli Business News – en.globes.co.il – on July 9, 2024.
© Copyright Globes Publisher Itonut (1983) Ltd., 2024.
