Desalination Plant 311.
(photo credit: Courtesy)
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
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
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.
April, Prime Minister Binyamin Netanyahu ordered the Finance Ministry, the
National Infrastructures Ministry and Mekorot to solve the problem within 30
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
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.
Technologies Ltd., which bid against Mekorot Initiative and Development Ltd. to
build the plant, withdrew when its estimated construction time of 30 months was
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
“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