Egged set to be barred from operating Jerusalem light rail

Jerusalem light rail Photo: Shutterstock ASAP Creative

The tenders committee has decided to approve all seven groups in the pre-qualification stage of the Jerusalem light rail tender.

Egged Bus Company will not operate the Jerusalem light railway network, according to discussions at the inter-ministerial tenders committee headed by Ministry of Finance director general Nehamiah Kind. As part of the tenders, whose total value is estimated at NIS 10-12 billion, the state is expected to offer a concession for operating the existing light railway line and four future lines in the Jerusalem metropolitan area. Sources inform "Globes" that all of the seven remaining groups in the preliminary selection process have received permission to participate in the tender. The deadline for submitting bids is in January 2019, and the requirements will be published next month.

The final decision about Egged's participation will be made by Antitrust Authority director general Advocate Michal Halperin. Sources inform "Globes" that a professional opinion presented to the committee recommends that Egged be disqualified for operating the railway because of its control of bus lines in Jerusalem. For example, concern has been aroused in principle that in the event of a shortage of drivers, Egged would prefer cutting back service on lines in which the fine imposed on the company would be lower.

If it is decided to disqualify Egged, the company will have to decide whether to stop operating bus lines and retain its shares in a group competing in the tender, or to completely withdraw from the tender. Egged is taking part in the tender proceedings as part of a group that includes Shikun U'Binui Holdings and French company Meridiam. A decision to disqualify Egged could also affect future railway lines in the Greater Tel Aviv metropolitan area. Last August, Egged won a tender to operate the Red Line - the first light railway line in the Greater Tel Aviv area.

Subsidiaries are barred from the tender

Sources also inform "Globes" that the tenders committee has decided to approve all seven groups in the pre-qualification (PQ) stage of the Jerusalem light rail tender. An eighth group consisting of a Chinese company, the Israel Land Development Company, and the Noy Fund withdrew from the tender after learning that one party would not be allowed to hold a controlling interest in more than one company competing in the tender. Even different subsidiaries of the same company will not be allowed to compete in the same tender. The tenders committee is, however, allowing two Chinese groups with the same owner - the Chinese government - to compete in the tender. Approval of the groups is subject to the Antitrust Authority director general's decision about Egged.

The Israel Builders Association recently demanded that the Antitrust Authority impose the same requirements on Israeli and Chinese companies with respect to ownership concentration. The Antitrust Authority confirmed receiving the query, and said that the matter was being checked.

The tenders committee also ruled that Siemens and Elstom, which are in the advanced stage of merger negotiations between them, would not be allowed to compete in separate groups in the tender. Siemens in competing in the PQ stage in a group with Ashtrom Group, Harel Insurance Investments and Financial Services (which owns Citypass, the franchise holder for the Jerusalem light railway Red Line), and a public transportation operator from Russia. French company Elstom, which was a partner in Citypass, but sold its stake, is competing with Electra and Dan Bus Company as an operator.

Substantial expansion of the project

The joint inter-ministerial tenders committee, which includes the Ministry of Finance, the Ministry of Transport, and the Jerusalem municipality, published the PQ documents for the tender in April 2017. The tender substantially expands the volume of the Jerusalem light rail project through the construction and operation of the Green Line high-speed railway line stretching from Mount Scopus to the Gilo and Malha neighborhoods. The future railway network, which includes the existing Red Line and the Green Line, is subject to the state's contractual right to buy back the project from the franchise holder.

The documents include an option to extend the line to Hadassah Medical Center, Neve Yacov, and Givat Ram, which Red Line franchise holder Citypass is due to carry out. The public private partnership (PPP) project will include financing, planning, construction, and operation of the light railway lines in the Jerusalem.

The Green Line of the light railway will be 18 kilometers long, with 33 stations between Mount Scopus to Gilo and branch lines to Malha and Givat Shaul. The project will include construction of a depot on the Kiryat HaMemshala (government offices) site in Jerusalem for 50 trains. The enterprise is planned for 15-20 years of operation after the Green Line is completed, after which ownership of the project will revert to the state.

In contrast to the Red Line, this project will allow buses to be operated along the light railway line. The new network of lines including the Red Line and the Green Line, called J-Net, is expected to operate five lines and provide service to over 350,000 passengers daily.

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Jerusalem light rail Photo: Shutterstock ASAP Creative
Jerusalem light rail Photo: Shutterstock ASAP Creative
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