Dan Public Transportation Co. Ltd. has agreed to buy Veolia Transportation SA's 5% stake holding in Jerusalem light rail franchisee CityPass for $15-20 million. The two companies asked the government to approve the sale last week.
Senior government officials said that Dan, as a bus company, had no experience in operating trains, and that they would carefully examine whether Veolia violated the terms of the tender, which stipulates that the CityPass consortium include an experienced international railway operator.
France's Veolia Transportation, which was to operate the Jerusalem light rail, decide to quit the project several months, in part, according to foreign media sources, because of heavy foreign pressure to do so.
If Dan takes over from Veolia and operates the Jerusalem light railway, it will compete against Egged Israel Transport Cooperative Society Ltd. in providing public transportation in the city. The Antitrust Authority previously refused to allow Egged to acquire a stake in CityPass on restraint of trade grounds. Transport industry sources believe, however, that there is no reason for Dan not to acquire a stake in CityPass, given that the government has allowed Egged to buy a 20% stake in the MTS consortium that will build and operate the Tel Aviv light railway.
Veolia and the other French partner in CityPass, rolling stock manufacturer Alstom SA (LSE: ALS; Euronext: ALO), have been fighting petitions filed in French courts by pro-Palestinian organizations to order the companies to cancel their contracts on the grounds that the light railway is a violation of international law because parts of the route run through areas captured by Israel in the 1967 Six-Day War.
Any change in CityPass's ownership structure requires government approval. The Jerusalem light rail project is behind schedule, in part because of disputes between the franchisee and the Jerusalem Municipality and government ministries.
Published by Globes [online], Israel business news - www.globes-online.com - on September 13, 2009
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