Accountant General: Tel Aviv will have light railway

Shuki Oren: We hope to do it with the current franchisee, but alternatives are available.

"We are determined that Tel Aviv will have a light railway, and we hope to do it with the current franchisee. However, we're still prepared to apply other alternatives if the franchisee doesn’t help itself within the stipulated timetable," Accountant General Shuki Oren said today.

The Ministry of Finance and Tel Aviv light rail franchisee Metro Transport Solutions (MTS) will hold marathon talks this month to secure financing for the project, the ministry said today. The announcement means that the government accepted MTS's request for another round of talks, after the negotiations a year ago.

The Tel Aviv light rail's Red Line from Petah Tikva through Ramat Gan to Tel Aviv, Jaffa, and Bat Yam will cost about €2 billion (around NIS 10 billion), of which MTS is due to get a NIS 7.15 billion set-up grant.

MTS is a consortium comprising Africa-Israel Investments Ltd. (TASE:AFIL), 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.

MTS has been in talks to secure financing for the project for two years. The financing has been delayed, in part, by the global credit crisis, which forced MTS to find new banks.

The Ministry of Finance agreed to hold new talks, after MTS presented letters from the banking syndicate led by German government owned banks KfW Bank Group and BayernLB that they are prepared to withdraw some demands, which the ministry had called "deal breakers".

The Ministry of Finance made it clear that it is continuing to prepare the alternative plan to nationalize the Tel Aviv light rail project if no agreement is reached with MTS and the banks.

Published by Globes [online], Israel business news - - on July 8, 2010

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

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