Tel Aviv light rail co requests funds to continue

Government sources: The Finance Ministry wants to be certain that the banks will meet their commitment.

Sources inform ''Globes'' that Tel Aviv light rail franchisee, Metro Transport Services (MTS) has asked the government to release a NIS 45 million grant to enable work to continue on the project. MTS asked for the money even though it has not yet secured financing from the banking syndicate.

MTS sent its request to the Ministries of Finance and Transport in parallel to the consortium's effort to reach a memorandum of understanding (MOU) with the foreign banking syndicate. The Ministry of Finance suspended the grant three months ago, because MTS had not yet secured the financing.

Under the terms of MTS's franchise, the state will transfer a NIS 130 million set-up grant to the consortium in order to begin detailed planning of the Red Line, the light rail project's first route. The state transferred NIS 90 million to MTS in two tranches by December, but refused to transfer the balance until the consortium secured the financing.

The delay in securing the financing has led to dozens of layoffs at IMB, the operating consortium that is carrying out the set-up work on the Red Line, as well as at Mesilot, which is assisting in the planning on behalf of the state, and at NTA Metropolitan Mass Transit System.

MTS's request took the Ministries of Finance and Transport by surprise since they had already made disbursement of the rest of the set-up dependent on progress in securing the financing. Government sources close to the project predicted that the ministries will reject the request until it is certain that the banking syndicate will meet its commitment.

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), China Civil Engineering Construction Corporation (CCECC), and Sociedade de Construcoes Soares da Costa SA of Portugal.

Published by Globes [online], Israel business news - www.globes-online.com - on February 8, 2009

© Copyright of Globes Publisher Itonut (1983) Ltd. 2009

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