In a surprise move, Tel Aviv light rail franchisee Metro Transport Solutions (MTS) has reversed its earlier position and notified the Ministry of Finance that it accepts in principle the ministry's latest proposal, termed "final", for a new franchise agreement to build the railway's Red Line. The decision changes the game for the ministry, which had come to accept that the original franchise was cancelled and was in the process of nationalizing the project and taking legal action against MTS.
The Ministry of Finance declined to state whether it accepted the proposal by the time "Globes" went to press, or if the Tel Aviv light rail project will go ahead in its original format.
MTS representatives, led by Africa-Israel CEO Izzy Cohen, informed Accountant General Shuki Oren and his deputy Gil Shabtai of MTS's decision during a meeting. 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 had asked for the meeting. The consortium said that the franchise agreement mandated a meeting between the parties before the first arbitration meeting was held. Ministry of Finance officials were sure that the meeting was merely a formal and unnecessary act. A few days ago, Oren said, "We're prepared to meet, but nothing will emerge from a meeting with them."
However, earlier this week, MTS attorney David Tadmor told "Globes" that there still a strong probability that the project would go ahead.
The new franchise agreement reportedly adds more than NIS 250 million to MTS's costs, in the form of interest payments on bringing forward the set-up grant, participation in delays in vacating land for the train station in the Ministry of Defense building (Kirya) in Tel Aviv, and moving the planned station on Carlebach Street. These issues remained open after the last round of talks between the parties in late July.
Published by Globes [online], Israel business news - www.globes-online.com - on September 2, 2010
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