Jerusalem’s light rail project is reportedly facing delays once again.

The financial newspaper Calcalist revealed on Sunday that the project’s lenders, Bank Leumi and Bank Hapoalim, have ceased funding for the project since CityPass, the company charged with constructing and operating the project, has failed to return €43 million in outstanding loans.

According to CityPass, the company was supposed to receive the money from the state, having concluded the seventh phase of works on the track, but had yet to receive it because of disagreements with the Finance Ministry.

“Because of delays in the transfer of money from the state, the banks have told CityPass management that as of the end of April and until the loans are repaid, funding for the light rail project will be stopped. Because of that and because of the harsh damage that was caused to the company, CityPass may have to cease operations at the end of the month,” read a statement by CityPass.

“Despite the fact that an engineering expert assigned by the adjudicators determined that the state was the one responsible for delaying the project, and despite the arbitrator’s decision that the state must transfer €43m. to CityPass by the end of April, the state has failed to stand by its commitments and decided not to heed the adjudicator’s recommendations to transfer the money to CityPass.

“CityPass managed to carry on through the month of May under its own budget, but if by the end of May the state doesn’t change its position or the arbitrator’s decision become binding, we are at serious and immediate risk of ceasing work on the project,” read the statement.

In response, the Finance Ministry said that the money was not transferred because CityPass had not completed all that was required of it in the current phase of the project.

“The grant was not transferred because CityPass did not meet the benchmark under which it was supposed to receive it – namely completing 20 out of 30 sections. We offered them a 80% advance on the payment minus financing costs, but CityPass refused and turned to arbitration,” said the ministry spokesman.

The Jerusalem light rail is currently in the testing and commissioning phase, during which the 14-kilometer long track is inspected thoroughly and every one of the 46 trams is tested on the track multiple times at different speeds and carrying different loads.

The project has known its fair share of delays and hardships in the last decade from planning difficulties to the discovery of graves along the proposed route. Throughout the project, CityPass has butted heads often with both the municipal and national government.

The project is currently scheduled to start commercial operations on April, 7 2011 after multiple delays. The project was originally scheduled for completion in February 2009.
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