Israel Railways privatization gets moving

The privatization bill is modeled on the privatization of British Rail.

The privatization of Israel Railways has gotten underway. Sources inform ''Globes'' that the Ministry of Transport is distributing a draft bill, called the Railway Transport Law, to open railway lines to competition, and transfer responsibility of railway lines to a new government company.

The bill is expected to revolutionize Israel's railway network. The bill is modeled on the privatization of British Rail, which is considered problematic and controversial. The bill's explanatory introduction says that the need was created "in view of the ambition to bring business parties into the railway transport system, and enable competition in it."

The bill's core principle is to separate the management and maintenance of the tracks from the trains and rolling stock. The bill proposes setting up a non-profit government company, to be called Israel Railways and Infrastructures, which will be responsible for the tracks. Israel Railways will initially the trains, and the minister of transport will be authorized to open tenders for the selection of private train operators.

The bill says that the current situation is improper because Israel Railways is a monopoly, there is no safety supervision over it, licensing procedures are disorganized, and its operations are not based on the rules of public law.

The Ministry of Transport's draft bill is based on a version written by the Ministry of Justice several years ago. Arguments against the privatization of British Rail, the model for the privatization of Israel Railways, claim among other things that it led to an increase in accidents, which forced the British government to renationalize a major part of the private companies. The British railway privatization also differed from European models, which keep together railway infrastructures and the operation of trains.

The State Comptroller has written several scathing reports on the performance of Israel Railways. As a result, last month, the government took away from Israel Railways the planning and construction of the Jezreel Valley and Akko-Carmiel lines as part of the National Transport Plan. The government also decided that the recently published rolling stock procurement tenders will include strong incentives to suppliers who promise to provide long-term maintenance services. Israel Railways is currently responsible for maintaining its rolling stock.

In addition, work on level crossings was taken away from Israel Railways several years ago and many jobs were transferred to contractors.

It is now clear that the measures were part of a government plan to push a bill for the full privatization of Israel Railways. The government will keep ownership of the track infrastructure and maintenance company, while privatizing the trains operations.

Israel Railways was founded in 2003 as a wholly-owned government company responsible for both the track network and passenger and cargo services. It is also responsible for building new lines, including the high-speed Tel Aviv-Jerusalem line, the Ashkelon-Beersheva line, and the Tel Aviv-West Rishon LeiZion-Ashdod line under the NIS 30 billion railway development plan through 2012.

Published by Globes [online], Israel business news - - on March 23, 2010

© Copyright of Globes Publisher Itonut (1983) Ltd. 2010

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