The French and Israeli governments will examine signing an agreement to allow French companies to build two additional light rail lines in Tel Aviv at a cost of NIS 30 billion. One line, the Green Line, will run between Herzliya and Holon, at an estimated cost of NIS 17 billion, and the second line, the Purple Line, will run from Kiryat Ono via Tel Hashomer, to Tel Aviv, at a cost of NIS 13 billion.
Parties involved in the talks said that if a franchise to build the lines is given to a French consortium, the Green Line could be completed before the Red Line, which is under construction. The deadline for the Red Line has again been pushed back from 2017 to 2022-23, due to bureaucratic and regulatory difficulties and problems with NTA Metropolitan Mass Transit System Ltd.'s management, which the government appointed to build the line. The Red Line's cost has also ballooned from NIS 12-14 billion to NIS 17 billion.
On Sunday evening, Minister of Transport Yisrael Katz met French Junior Minister of Transport Frederic Cuvillier, who is part of President Francois Hollande's entourage. Katz said yesterday, "The French government is interested in being involved in building the Tel Aviv-Gush Dan light rail and metro network. I'll listen to the proposal with the management of NTA, which is responsible for the project, and we'll consider the legal aspects. They made a similar proposal 40 years ago, but we made no response, which may have been a mistake."
Katz said that the French want to participate in the construction, financing, and operation of the light rail lines. "They have extensive and critical experience. Obviously, we'll insist that most of the workers be Israelis," he added.
Katz said that the government would also consider awarding the French franchisee two additional lines (the Yellow Line and the Blue Line), but emphasized that NTA would be a key partner in the project.
Sources inform ''Globes'' that the talks between France and Israel began two months ago, when Katz and top Ministry of Finance and NTA officials met Adv. Moshe Shahal, who represents the French companies which may be involved in the construction of the light rail lines. Alstom SA (Euronext: ALO) was a partner in the construction in the Jerusalem light railway, which is now operated by Veolia Transportation (formerly Connex), a subsidiary of France's Veolia Environnement SA (Euronext: VIE; NYSE: VE).
Shahal, who is close to the French government, said, "The idea of the Tel Aviv light railway is one of several ideas for economic cooperation in infrastructures between Israel and France. This is a respectable, European-scale project and a French consortium could build it much faster than planned and at competitive terms."
Alstom, Veolia, and mining company Vinci SA (Euronext: DG) were partners with Shikun & Binui Holdings Ltd. (TASE: SKBN) in the Metrorail consortium, which lost the tender to build the Tel Aviv light rail's Red Line in 2006 to the Metro Transport Solutions (MTS) consortium, which included Africa-Israel Investments Ltd. (TASE:AFIL) and Siemens AG (NYSE: SI; XETRA: SIE). MTS's franchise was revoked in 2011, after it failed to secure the financing for the project at the original contract terms.
A government-to-government agreement could open the taps, provided that the contract terms do not deviate from market norms.
Published by Globes [online], Israel business news - www.globes-online.com - on November 18, 2013
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