Chinese, Russian cos out of Haifa-Nazareth light rail project

Tel Aviv light rail Photo: Eyal Izhar
Tel Aviv light rail Photo: Eyal Izhar

Chinese company CREC and Russia's JSC Transmashholding have withdrawn from their respective consortia after pre-qualification.

Six consortia have passed the pre-qualifying stage of the tender for the Haifa-Nazareth light rail project, which is being led by TransIsrael and which is due to be completed by 2027. One of the consortia originally consisted of Israeli company Dan, Chinese companies CREC and Shenyang, Polish company PESA, and Italian company ATM. CREC has, however, dropped out of the consortium.

Dan has not explained the reason for the split, only saying, "In a joint decision and after several months it was decided to work separately, and each company is working in a different framework." Infrastructure industry sources testify, however, that Israeli companies are distancing themselves from Chinese companies in bidding for infrastructure projects in Israel. The reason is that the ringing disqualification of Chinese companies that competed with Egged and Shikun & Binui (TASE: SKBN) for the second stage of the Green Line and the Purple Line in the Gush Dan light rail project led to a reconsideration of the involvement of companies from China.

In response to the claim of the NTA - Metropolitan Mass Transit System Ltd. tenders committee that the bid that it submitted was unrealistically low, the disqualified consortium argued in its appeal against the decision that the disqualification was motivated by illegitimate considerations, among them pressure by the US on Israel.

Too early to identify a trend

Whatever the true reason for the disqualification, some Israeli companies are cooling on their relationships with Chinese partners, although it is still too early to know whether this is the start of a trend.

There has been a change in another consortium bidding for the Haifa-Nazareth project as well. Russian company transport engineering JSC Transmashholding has decided to leave the consortium consisting of Israeli company Lesico and two Spanish companies.

The same Russian company bid in the tender for the Jerusalem Light Rail Blue Line in a consortium with Dan, and dropped out of that tender too.

Meanwhile, the submission of bids for the Jerusalem tender has again been postponed. It was originally due to have got underway in the third quarter of 2020, but was delayed. In April, bidding was postponed to the end of June, and it has now been postponed to August 9.

Dan explains the withdrawal of JSC Transmashholding from the Blue Line tender as being due to the war in Ukraine. "Because of the continued fighting in Ukraine, the Russian companies decided to leave the tender. Dan acceded to their request, and has found several companies that will replace the Russian companies that sought to withdraw," the company said in a statement. "Globes" has learned that one of these companies is Korean.

At any rate, the changes after the end of the pre-qualifying stage are being made possible by the willingness of the tenders committee to wait for the bids until a further examination of the new players joining the tender is carried out.

It is not unusual for there to be changes in consortia at this stage, but the changes are liable to delay execution of the project, and also to harm competing consortia that have worked on submission of their bids in accordance with the timetable.

TransIsrael stated: "TransIsrael has not up to now received any official notification of changes in the composition of the competing consortia or of a withdrawal."

The Ministry of Finance stated: "The submission of bids in the Blue Line tender was postponed for a number of weeks in the light of requests from several of the bidders."

Published by Globes, Israel business news - - on May 31, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

Tel Aviv light rail Photo: Eyal Izhar
Tel Aviv light rail Photo: Eyal Izhar
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