The light rail project in Tel Aviv has been canceled due to a dispute in the financing of the plan, Israel Radio reported Thursday.
The company which received the deal to build the railway, MTS, rejected a compromise proposal over the project's funding.
Treasury officials accused the company of foot-dragging, and managing negotiations in bad faith since it knew that it would be unable to meet its obligations.
Finance Minister Yuval Steinitz said that he is convinced that the state will be able to manage the project confidently, without the involvement of a franchise.
According to Israel Radio, the project was set to be completed in five years at a cost of over NIS 10 billion.