The Ministry of Transport will cut the 2009 budget of NTA Metropolitan Mass Transit System by tens of millions of shekels because of delays in the Tel Aviv light railway project. Top government officials estimate that NTA's budget will be cut by 15-20%.
The Ministry of Transport began reviewing the NTA budget cut after the cabinet cut the ministry's development budget by NIS 100 million in August. NTA's budget was planned in advance on the basis of guidelines provided by the Tel Aviv light railway franchisee Metro Transportation Solutions (MTS), which state that work on the Red Line will begin in 2009. The Red Line is the light railway's first line.
The global financial crisis has caused a four-month delay in securing financing for the light railway to September 25. MTS and banks are negotiating an understanding with the state on changes in the franchise terms, but in the absence of a last-minute deal, the financing will probably not be secured until early next year.
MTS is a consortium comprising Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY), Egged Israel Transport Cooperative Society Ltd., and Siemens AG (NYSE: SI; XETRA: SIE). It won the Red Line tender in December 2006. Work on the Red Line is due to begin late this year and it is due to open in 2013.
As "Globes" disclosed, Africa-Israel's contracting arm, Danya Cebus Ltd. (TASE: DNYA) has decided not to build or maintain the Red Line, which is worth NIS 300-400 million over the franchise period.
NTA confirmed that its budget will probably be cut, but says that the Ministry of Transport has promised to supplement the budget by the time the financing for the Red Line is secured.
Published by Globes [online], Israel business news - www.globes-online.com - on September 15, 2008
© Copyright of Globes Publisher Itonut (1983) Ltd. 2008