Metropolitan Transportation Solutions Inc, the consortium in charge of Tel Aviv's light rail project, has been called by the Treasury to a hearing to evaluate the project's continued viability in light of MTS's inability to secure financing.
An artist's rendtion of Tel Aviv’s Light Rail.
Photo: Courtesy of Neta-Metropolitan Mass Transit System
The hearing, to take place in the coming weeks, will be presided over by the ministry's accountantgeneral Shuki Oren and budget director Udi Nissan, and the directorgeneral of the Ministry of Transportation Ya'acov Ganot.
As part of its franchise contract, MTS committed to secure financing for the project by May 2008, but because of the global economic crisis and the fall of its chief lender, the consortium has been unable to meet its obligations. MTS is currently in negotiations with a group of nine international banks to obtain the necessary loan, but has had trouble meeting the banks' expectations without additional guarantees from the government.
According to the Ministry of Finance, negotiations between the two sides have been put on hold, in part because of the uncertain economic situation of Africa Israel Investments, one of the group's partners.
"The last round of talks concluded when the company presented requests for substantial alterations in the franchise agreement, which meant a considerable increase of budget towards the project," the ministry said in a statement. "In the hearing MTS will be asked to present how it plans to reach financial backing within a short period of time and honor its contractual obligations."
In response, a source in MTS said, "The company has been seeking a chance to meet with the state representatives for some time in order to finalize the few remaining issues left unclosed. We hope that now we can complete the negotiations."
If the hearing does not produce positive results it may spell the end of the light rail project in its current form. Transportation experts have been saying for some time that it may be better if the state gives up on the public-private partnership and takes over the project completely. Similar difficulties that took place in Jerusalem's light rail project have led some to argue that Israel is not yet ready for Build Operate Transfer projects of this magnitude.
MTS is owned in equal parts by Israeli construction giant Africa Israel, Germany's Siemens AG, the Egged bus cooperative, Chinese civil engineering cooperative CCECC and Portuguese infrastructure firm Da Costa Soares. Any change to the ownership model would cause the project to be delayed further and possibly even canceled altogether.
The light rail project is budgeted at more than NIS 10 billion and is scheduled for completion in five years. The proposed route runs from Petah Tikva through Bnei Brak, Ramat Gan, Tel Aviv and Yaffo and ends up in Bat Yam. The line, which would span 23 kilometers (half of it underground), is planned to take passengers from one end to the other in about 45 minutes and to carry nearly 400,000 passengers each day.
