Government ministries continue to deny it, but sources inform "Globes" that Minister of Transport Miri Regev and the Ministry of Finance are making progress on agreements, and that the ministries are even gearing up to hold a press conference. The core of the deal is NIS 20 billion for "Connect Israel" in return for the removal of Regev’s objections to a congestion charge on entering Gush Dan (the Greater Tel Aviv area).
As revealed by "Globes", the Ministry of Finance and the Ministry of Transport have agreed on the budgeting of a railway line to Kiryat Shemona, Regev’s flagship plan, in return for the removal of her objection to the Ministry of Finance’s congestion charge reform. Oral agreements have been achieved, and negotiations on the details are at an advanced stage. Collapse of the negotiations is liable to lead to cancellation of the deal, which could explain the ministries’ denials.
Last month, the accountant general in the Ministry of Finance published a tender for the construction of gates and operation of the congestion charge at the entrances to Gush Dan. The project, which was part of the Economic Arrangements Law passed by the previous government in 2021, has been at the heart of the dispute between the Ministry of Finance and the Ministry of Transport. Even before she was appointed minister, Regev adamantly opposed it, and after her appointment she instructed Ayalon Highways, which is subordinate to the Ministry of Transport, to cancel the tender process.
Now, the expected revenue from the congestion charge, estimated at NIS 1.3 billion annually, has been put into the numerator, the three-year budget plan, from 2027. How can the gap be bridged between Regev’s public opposition, and the publication of the tender and its inclusion of the expected receipts in the numerator? The Ministry of Finance found a solution: publication of the tender directly by the ministry rather than via the Ministry of Transport and the companies subordinate to it. In that way, Regev can continue publicly opposing the congestion charge, and at the same time benefit from it.
Correct priorities?
Under the law, the revenue from the congestion charge will be channeled to public transport. NIS 700 million are earmarked for the Metro project, while the remainder can be used for various infrastructure projects, such as the rail link to Kiryat Shemona, which Minister of Finance Bezalel Smotrich also supports.
The war with Hezbollah in Lebanon, in the course of which Kiryat Shemona was pounded and its residents were evacuated, gave rise to public discussion about rehabilitating the area, and infrastructure industry sources therefore believe that, in such a climate of opinion, Regev will be able to argue that the compromise is reasonable, since the state will be taking money from drivers entering Gush Dan to finance the Metro, and to connect the north to the rail network as a social and strategic statement, even though it has no economic basis.
The Ministry of Finance views such a rail link as not a "bad project" in the sense that investment in it is damaging to the economy, but it is not at the top of the priorities in the allocation of billions of shekels to public transport, which would be better invested in connections between the large cities and strengthening transport within the cities where most of the population lives.
The cost of constructing a railway line to Kiryat Shemona is estimated at NIS 18 billion. Those who attended the Eilat Real Estate Conference heard Regev promising a railway from Kiryat Shemona to Eilat within the next seven to ten years.
Published by Globes, Israel business news - en.globes.co.il - on March 25, 2025.
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