Sources inform “Globes” that Canadian engineering company Bombardier has announced its withdrawal from the Tel Aviv light rail project “for commercial reasons’. Senior transport industry sources said, “Bombardier found the Tel Aviv project not economically worthwhile, and therefore withdrew from the tender.”
A few days ago, Bombardier notified its partners in the consortium, the Dan Bus Cooperative, Property and Building (TASE: PTBL), and Bouyges Construction and RATP of France, that it had made a strategic commercial decision not to participate in the construction of the Red Line of the metropolitan Tel Aviv light railway.
The Adanim group, of which Bombardier was part, is considering whether to join one of the other consortia, or to withdraw from the tender.
The Red Line project is in the request for proposals stage, in which the competing consortia make financial and technical quality offers.
Four groups passed the pre-qualifying round, of which only three are still competing.
One consortium is Metro Transportation Solution, which includes Siemens (NYSE: SI; XETRA: SIE) of Germany, Aecon Group (TSX: ARE) of Canada, Den Haag Tramways (HTM) of the Netherlands, Africa-Israel Investments (TASE: AFIL), and the Egged Bus Cooperative. Another is the Ashtrom Group, which consists of Alstom (NYSE, LSE, XETRA: ALS) and Connex-GEA of France, Ashtrom, and Housing and Construction Holding Co. (Shikun u’Binui) (TASE: HUCN). The third includes Ansaldo from Italy, Daewoo International (KSE: 47050) from South Korea, Shafir Civil and Marine Engineering, Aviv, Granite Hacarmel Investments (TASE: GRNT), and Bateman Engineering.
The tender, published under the BOT (build, operate, transfer) method, is worth $1.3 billion. The Red Line is 22 kilometers long, including a ten-kilometer tunnel.
Bombardier withdrew in January 2002 from the tender for the first line of the Jerusalem light railway project. The Adanim group, which included Bombardier, Housing and Construction, FIBI Holdings (TASE:FIBI), and Etgal, withdrew from the tender, also for economic reasons.
The Ministry of Transport responded angrily to Bombardier’s withdrawal, saying that the company was unworthy of participating in tenders in Israel, after behaving improperly in two important tenders.
Another source claimed that Bombardier’s motives were solely economic. Preparing the Jerusalem tender cost an estimated $4 million, and the Tel Aviv tender an estimated $10 million. The source said these costs were unreasonable.
No response from Bombardier was available. NTA Metropolitan Mass Transit System chairman Yossi Kucik said he had no information about the matter.
Another industry source said that the cost, which was high by international standards, would cause further upsets in the tender. “It’s doubtful whether the cost of the project, set against the number of users, justifies a $1.5 billion investment,” the sources stated.
Published by Globes [online] - www.globes.co.il - on February 11, 2004