Within the next 24 hours, the government will sign an agreement with Jerusalem light rail franchisee Citypass, which will complete improvements in the city's first light rail line within six months.
The light rail, which began operating on August 18, 2011, has been the target of harsh public criticism due to unreliable train service, ticketing problems, and expensive fines. In the agreement to be signed by Citypass's board of directors, the franchisee of the Jerusalem's light rail Red Line commits to fixing all defects, mainly connected to service and punctuality, so that it can receive final approval from the government, after which it would receive the remainder of the construction grant, totaling tens of millions of euros.
Citypass will receive NIS 80 million in the next several days following the increase in the number of trains in operation, an additional NIS 80 million following operational approval, and NIS 25 million after 60 smart traffic lights have been installed in intersections (so far, 51 have been installed). The government will keep the remaining NIS 45 million as a security deposit until all defects in the system have been fixed, trains run punctually, and service is at the level demanded by the government.
Citypass will provide a €10 million guarantee to be held until it has fulfilled all commitments. The agreements will not bring about an end to arbitration proceedings already underway between the two sides, including mutual claims totaling hundreds of millions of euros. However, the sides have committed to not bringing any new claims in the upcoming months. Arbitrators Judge (emeritus) Boaz Okun and Adv. Dov Weissglass have announced that they will separate the discussion on completing the project from the financial demand proceedings.
The government claims that there are still several severe problems in the light rail operation, including the disappearance of trains from control screens and a faulty communication system between trains and the control center. Also, Veolia does not yet have a permanent director of operations, and trains are not arriving at fixed times at a frequency of every 4.5 minutes.
The fact that trains have not been punctual, has made it impossible for Egged Israel Transport Cooperative Society Ltd. to synchronize the arrival of its bus lines with the train timetable. Citypass has claimed in the past that the government was not prepared for train operations to begin, and that most defects will be solved now that it has been given permission to increase the number of trains from 18 to 21. The fact that Citypass received approval from the international control organization testifies to the fact that the project does not have any significant defects.
A source involved in the project told "Globes" that the Citypass consortium comprising Alstom, Ashtrom Properties Ltd. (TASE:ASPR), the Israel Infrastructure Fund, Harel Insurance Investments and Financial Services Ltd. (TASE: HARL), and Veolia understands that if it does not reach an agreement to end the dispute with the government, it will not be able to apply for the Tel Aviv light rail tenders. In addition, Citypass is interested in working on red line extensions, which will be carried out in the near future.
Published by Globes [online], Israel business news - www.globes-online.com - on March 14, 2012
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