The dispute between Israel Railways and the Ministry of Finance on ordering railway carriages has not been solved, and overcrowding on the railway will continue for a long time. Because of a severe shortage of railway carriages, Israel Railways asked the Ministry of Finance Accountant General department a month ago for authorization to order 64 carriages, but this request has not been approved because of an instruction to issue a new tender for the purchase of 150 carriages, sources inform "Globes."
The delay in the order and the requirement for a new tender mean a two-year delay in the supply of the railway carriages. This will result in a continued shortage and inability by Israel Railways to provide full service on all of the its routes until at least 2021 - the minimum time needed to hold a new tender and produce the carriages themselves. Meanwhile, the order for carriages is being delayed and the tender to select the new supplier is not being published.
The current order of 64 carriages, which will cost nearly NIS 500 million, is needed in order to fully operate the high-speed Tel Aviv-Jerusalem route. There are currently only two trains an hour on the route, but four trains an hour are scheduled to run in each direction on the route next year. In addition, the carriages that Israel Railways wants to order are urgently needed to reactivate the Rishonim railway station in Rishon Lezion, which has been canceled, and to operate the new direct Ra'anana-Tel Aviv central route, for which the infrastructure has already been completed.
Besides the steep decline in the level of passenger service, the shortage of carriages is depriving Israel Railways of sizable revenue from the ticket sales, which average NIS 500,000 per carriage per month.
From the Ministry of Finance's perspective, however, the carriages that Israel Railways wants to order are based on a questionable contract with Canadian railway carriage supplier Bombardier signed in 2011 and severely criticized by the State Comptroller in 2013. This contract, based on an open option to order equipment, is valid until 2022. The State Comptroller's report at the time stated, "Israel Railways published a tender, and after only one bidder was left, decided to waive many significant elements in the specifications in return for a commitment by the supplier to shorten the timetable for supplying carriages." The Office of the State Comptroller cited severe defects in how the tender was conducted and in the decision-making process at Israel Railways. The Supreme Court upheld the propriety of the tender won by Bombardier in 2011 when the Israel Railways workers' committees petitioned the court against the agreements.
Order, argue, approve
The Ministry of Finance-Israel Railways dispute has been resurfacing with every equipment order by Israel Railways for the past six years, ever since the State Comptroller's report. A transportation sector source called relations between Israel Railways and the Ministry of Finance "pingpong" with predetermined results for each of the players in the game: Israel Railways wants to exercise the option in the contract for ordering equipment, the Ministry of Finance demands that it issue a tender, the order is delayed for months, then is eventually approved, but only in part.
Ministry of Finance: Israel Railways made no request
Ministry of Finance sources believe that by issuing a new tender, Israel Railways will obtain lower prices; a double-decker diesel railway carriage ordered from Bombardier current costs €1.75 million. If Israel Railways issues a new tender, however, even if it gets a lower price, the time wasted will be critical and the shortage of railway carriages will continue, at a time when road congestion in Israel is the highest in the developed countries and fewer than 10% of transportation users travel by railway, due to extreme crowding on the railways, which will only worsen over the coming year, due to delays in ordering carriages.
The Ministry of Finance denies any refusal to approve an order by Israel Railways, saying, "This information is wrong. No request whatsoever was sent to us, so we have not formed any position or given any response. The Ministry of Finance, the Ministry of Transport, and Israel Railways are working hard, and will eventually establish a factual basis for a decision on the extent of the order required, the composition of procurement, and the timetables."
Israel Railways declined to respond to the report.
Published by Globes, Israel business news - en.globes.co.il - on November 13, 2018
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