Knesset gives TA rail project 3-month financing deadline

Knesset gives TA rail pr

November 5, 2009 08:31
3 minute read.

The Knesset State Control Committee on Wednesday set a cut-off date for the company in charge of the Tel Aviv light rail project to secure funding for the NIS 10 billion Red Line. The company, Metropolitan Transportation Solutions (MTS), was given three months to complete the process that was originally supposed to be finalized a year-and-a-half ago. The project, which was initially planned to be completed in 2013, ran into trouble when in 2008 the company's main lender, the Royal Bank of Scotland, filed for bankruptcy and MTS had to go looking for alternative sources of funding. The company eventually managed to negotiate a deal with a group of nine international banks, but the new economic situation required that they receive additional guarantees from the state. In an attempt to introduce new urgency to the negotiations, the government has called MTS to a formal hearing on the matter on November 25. The hearing, which will be presided over by the Treasury's Accountant General Shuky Oren, Budget Director Udi Nissan and the Transportation Ministry Director-General Yaakov Ganot, will evaluate the continued viability of the project in light of the company's inability to secure financing. "We will do everything to make sure the Tel Aviv light train will get going - and it will get going," Ganot told the Knesset committee. Yishai Dotan, director-general of Metropolitan Mass Transit System (NTA), the government-owned company in charge of overseeing the project, said that the state has two options: either the financing is secured over the next few weeks, in which case the contract with MTS can be finalized, or the state may take alternative courses of action. Dotan wouldn't go into details for fear of tainting the hearing, but there are clauses in the agreement with the concessionaire that stipulate that the state can take over the project if the company fails to meet its obligations. Dotan said that 80% of the infrastructure-clearing work had been completed, a process that cost NIS 1.35b. Because parts of the rail are meant to go underground, it has been necessary to clear the route of all water, sewer, electricity and communication pipes, before construction can begin. He also said that a large majority of the lawsuits related to land expropriation and fear of real estate devaluation had been concluded. MTS CEO Yochanan Or also spoke at the Knesset hearing, saying negotiations with the banks are nearly complete and that all that remains on the table are few matters that have to do with the commercial aspects of the project. According to Or, part of the delays were caused by changes in personnel within the Finance Ministry and lack of communication with the Transportation Ministry. When asked by committee chairman MK Yoel Hasson if the failure of one of the company's owners, Africa Israel, would affect the negotiations, Or replied that he didn't think it would affect the financing. Labor MK Ofir Paz-Pines, who attended the committee meeting, said that in his opinion the Dan region project was megalomaniacal and that the delay was totally unreasonable. Paz-Pines attacked the optimistic atmosphere in the meeting saying "If everything is so good, why are things so bad?" Hadash MK Dov Khenin also spoke harshly about the project's delay and called on the committee to form an investigatory panel to examine the reasons behind the delay. "The state is responsible for long-term planning of tens and hundreds of years and the question is how to prepare ourselves for projects of such a large scale," said Hasson. "There is a worrying trend that repeats itself and can be seen in the Jerusalem light rail project, the rapid train line to Jerusalem and now in the Tel Aviv light rail, too. There is a systematic failure in our ability to promote large projects in an efficient and timely manner."

Related Content

The Teva Pharmaceutical Industries
April 30, 2015
Teva doubles down on Mylan, despite rejection


Cookie Settings