A light railway carriage was placed at the corner of Rothschild Boulevard and Habima Square last week. It is a copy of the carriages designed for traveling underground in Tel Aviv starting in October 2021, four years from now. Yehuda Bar-On, CEO of NTA Metropolitan Mass Transit System Ltd., the government company responsible for the Greater Tel Aviv mass transit project, who was responsible for putting the carriage there, regards it as an important tool in the campaign he is waging to sway public opinion. "The biggest enemy is cynicism," he told "Globes." "In the beginning, they didn't believe that this project would ever get off the ground. Today, they tell me, 'It won't really happen on time, will it? It will take a few more years'."
It is difficult, however, not to be skeptical about a project that was first discussed when Golda Meir was prime minister. Explanation booklets were distributed to the many curious people who crowded around the carriage stating that not one, not two, but three light railway lines would be operating in Tel Aviv by 2024: the Red, Green, and Purple Lines.
"Globes": If building one line takes a decade, how can you build two more at the same time in six years?
Bar-On: "First of all, we started building the Red Line only two years ago, so its construction is scheduled to take six years. At the same time, we're taking giant steps towards construction of the Green and Purple Lines. As a manager, I can make a commitment to timetables after two things happen: when legislation is completed and when there's a budget. In August 2016, the government decided to budget construction of the Purple and Green Lines. Incidentally, I think that the decision was taken after the government decision-makers were also impressed by what we've done on the Red Line, and saw that it was possible to carry out such a project successfully. So I can now say that these two conditions have been fulfilled for the three lines, and work on the Purple and Green Lines will begin in late 2018, so we should have the three lines working in 2024."
The Red Line is scheduled for completion only in 2021. On what are you relying when you talk about success?
"We've finished a third. At the end of the process I'll know whether it was the hardest or the easiest third, but we've met all the targets we set for ourselves at the beginning, one by one. In digging the tunnels, we even came out ahead of the timetables. We've done certain things successfully, other things less successfully, and we're constantly in a process of drawing conclusions, learning, and improvement, and I feel comfortable with that. We started the process with a lot of skepticism and cynicism. The project carried a big burden of many years on its back."
What is likely to happen during the coming year in disturbing the lives of Tel Aviv residents?
"We won't be in a worse position in the coming year, except for one small detail - every year, 400,000 new vehicles go on the roads. But there aren't going to be any significant changes in traffic arrangements. We thought that's how it would be, but there's always anxiety about the unknown."
"The state should compensate the business owners"
The tensest moment of the year was unquestionably when the huge TBM digging machines began working under the Ayalon Highway. "There were a lot of worries and fears," Bar-On admits. "We even thought about closing the Ayalon Highway to vehicle traffic for a week. In my opinion, this fear was the reason why this project took so many years to materialize."
How close were the digging machines to ground level?
"The machines worked 12-13 meters below the road. The fear was about a sinkhole, and we said that the fear was unjustified according to tests we did. I remind you that Israel Railways decided to halt railway traffic on the Ayalon tracks. We thought that it was unnecessary, because the prevailing practice around the world is to slow the trains down, not stop them, but they decided otherwise.
"There were many fears about the project, and one of the biggest was how do to it without disrupting daily life. I think that a lot of credit has to be given here to Minister of Transport Yisrael Katz and his ministry. From a public standpoint, it's not easy to begin a project like the Red Line."
What were the other fears?
"They said there would be one enormous traffic jam from Gedera to Hadera, and that didn't happen. They said that there would be a problem with removing the dirt from the work. We're working on 10 underground stations, and along our work route, there are at least 100 construction sites of other large projects, so it appears that the fears were exaggerated, and the solutions that we came up with are making it possible to go ahead with business as usual."
They promised hundreds of thousands of pedestrians.
"There were a lot of branches of all sorts of interested parties. It's very easy to spread rumors and get headlines. In the case of the rats, it was the exterminators, and there were other unfounded headlines, such as the ones saying that the price of renovations in Tel Aviv would jump because of the difficulties that the renovators would have moving around in the city after the work began."
So it can be stated that all the fears were disproved?
"They say, 'Don't count your chickens before they hatch.' We're not there yet, but we're doing well, with the accumulated experience of have dug 2.5 kilometers of tunnels under the country's most strategic and sensitive places from a civil engineering standpoint."
Can you guarantee that no buildings will collapse?
"We're tracing buildings with problems. There are almost 150 people at NTA working hard in order to prevent surprises. There are difficulties resulting from the work, but sorry - we're building a light railway."
Another fear accompanying the project from the beginning is the fate of the 350 businesses operating close to the work sites, some of which have been there for decades. NTA surprises us with optimistic stories. "New businesses have opened, mainly nightlife entertainment places," Bar-On says, "because rents have fallen, and work isn't taking place at night. The entire area of Gan Hashmal is prospering. Before we began the work, it was a very noisy and unpleasant place. After we started working, it became a focus of Tel Aviv nightlife. Escape rooms and bars were also opened."
So maybe business owners should thank you, in view of your contribution to Tel Aviv's nightlife?
"Don't exaggerate. Businesses have closed down, but only a few. We're doing what we can, explaining what's going to happen, and trying to make the logistics easier. Nevertheless, giving compensation to businesses is neither our responsibility, nor that of the Ministry of Transport. It's the responsibility of the Ministries of the Interior and Economy and Industry. I believe that the state will later make different decisions than it has up until now. I think that in some cases, they should compensate business owners. There are places where people have been injured as a result of work on the project, but a distinction has to be made between a tenant and a property owner. The value of the owner's property will greatly increase after the project opens. The closest example to us is Jerusalem, but there are examples from all over the world. As soon as there is a mass transit system, a new modern urban space emerges. In some places around the world, they even charge business owners a fee for building a light rail in their vicinity."
What about the renters?
"Compensation for them should be considered. It's very interesting to check what happened to business turnover before and after. It could be the ultimate tool as a mechanism for compensation, but the Ministry of Finance doesn't need my advice."
"A private concern can't do a project like this"
The Red Line was supposed to have been built by MTS, led by Africa-Israel Investments Ltd. (TASE:AFIL), which won a state BOT tender in 2006. After delays in completing the financial closure, and demands for changes by MTS, the state decided in 2010, following prolonged negotiations, to revoke the franchise agreement and nationalize the project. Many people in the Ministry of Finance and the business sector still regard this decision as a historic mistake, and say that since NTA took over from MTS, the completion date for the project has been delayed by five years, and its cost to the state budget ballooned from NIS 8.6 billion to NIS 16 billion. Bar-One joined NTA following growing criticism of the conduct of the company's managers, who were believed to lack suitable experience.
Bar-On, an accountant by training, entered his position in April 2014, after serving in senior positions in companies such as Ayalon Highways Company, Netivei Israel - National Transport Infrastructure Company, and Dan Bus Company, and after working in the private market as a consultant. As NTA CEO, Bar-On's work is supervised by the Ministry of Transport on one side and the Ministry of Finance on the other through the Accountant General, the Government Companies Authority, and the budget department. While his relations with the Ministry of Transport have always been good, however, Bar-On's relations with the Ministry of Finance have known ups and downs. In 2015, for example, Accountant General Michal Abadi-Boiangiu appointed a committee to examine the railway carriages tender, and alleged that NTA would not be able to meet the timetables and the budget planned for the project.
How are your relations with the Ministry of Finance now?
?"In contrast to the past, there is very good professional relationship with all of the ministry's departments. We haven't changed, but I think that today, we're creating much more confidence in the Ministry of Finance that the project is doable."
So why did the Ministry of Finance decide that the next lines would be built by private franchise holders using the public-private partnership (PPP) model?
"There are people for whom PPP is an ideology, a philosophy. I regard this model as a solution for the budget question. In PPP, you transfer the risk to the bidder (the private franchise holder) and 'pay' for this in the form of higher financing costs. I'm saying very clearly: in projects like ours, building a station on Yehuda Halevy Street or Carlebach Street, you can't transfer the risk to a private developer. It won't be able to quantify it; it won't be able to price it. As a result, it will come back to the government. In the end, the project is composed of very substantial regulation and a great deal of bureaucracy. With great effort, we managed to get most of the government agencies and municipal agencies on board for the Red Line project. I'm sure that a private concern couldn't have done this."
What would it have done?
"For example, it would have tried to put its hand into the public treasury, which also happened with the private franchise holder. As a private developer, I can't find a solution for the fact that Israel Electric Corporation (IEC) (TASE: ELEC.B22) didn't move some line or other, Mekorot National Water Company or any other infrastructure entity. The same thing that happened in Jerusalem would have happened, only on a larger scale."
It is being alleged that since NTA took over the project, the timetables have been lengthened by eight years, and the estimated budget has almost doubled.
"I'll go out on a very high limb - Judge (ret.) Boaz Okun, the arbitrator in the dispute between the state and the MTS franchise holder, said that MTS's pricing was now economically worthwhile. What would have happened is this: had the franchise holder started to work, the state would have found itself with holes dug in the ground and a decision that the state would have had to make: either give the private franchise holder more money, or nationalize the project. Nationalizing the project in the middle of the work would have caused an awful crisis."
Do you believe that the Red Line will solve the problem of traffic jams in Tel Aviv?
"We're in a public transportation crisis. When will we really take the mass transit system seriously? Only when Form 4 of the local authority for occupying a residential neighborhood is given after the neighborhood is connected to water, sewage, electricity, and mass transit systems. As of now, of the four elements I mentioned, we have three: electricity, sewage, and water. As long as we do new construction without a mass transit system solution, we're perpetuating the existing situation."
Do the local authorities you work with understand this?
"In order to promote a mass transit system in a very crowded and built-up urban area, you need cooperation with local authorities. You can't promote a mass transit system when a local authority is worried about what will happen with a left turn at some intersection, for example. The Red Line route passes through five local authorities, and I find myself time after time dealing with, 'What happens with the left turn?' For example, one local authority took action to delay approval of the beginning of construction because it was worried about damage to private vehicle traffic in the town center. It's true that private vehicle traffic is affected. A mass transit system by nature affects driving in private vehicles. This idea has yet to penetrate.
"The state isn't investing NIS 16 billion in the Red Line in order to improve the existing public transportation; it wants to create an alternative to private vehicles. That's the purpose of the project. According to our models, we're supposed to get 50,000 private cars off the road on the first day of operating the Red Line. That's the task, and doing and everything else at the same time is impossible."
"Israeli companies have much to learn from the Chinese"
Compensations for businesses is very small change in terms of the light rail's Red Line. The big money is in the tenders, some of which are worth billions. In January there was a storm of controversy when NTA cancelled the results of the operations tender, which is the biggest and most complicated of all the tenders. The reason given was that the only two bids submitted, both by French groups, were billions of shekels higher than NTA's internal estimates. A consortium led by Alstom bid NIS 4 billion and a consortium led by Thales bid NIS 6 billion, while NTA assessors thought that NIS 2.5 billion should have been nearer the mark.
So why did the operations tender fail?
"In the operations tender more than four years passed from the pre-qualification stage to submission of bids. Consequently, we found ourselves with only two offers. This is not a normal period of time in such projects.
The French companies claim that NTA is biased towards Chinese companies, which have already won tenders for providing railway cars, digging tunnels and other civil engineering work and are expected to be awarded the signals tender.
Bar-On denies the charge that NTA is only concerned with price at the expense of quality and timetables. He said, "I can tell you that in the railway carriages tender there was no big difference between the bids of the European companies and the Chinese companies."
So why did you choose the Chinese companies? Because of quality?
"In a tender there is a process of quality and of price and both led to winning bids from the Chinese companies. Regarding experience, the Chinese company has provided cars to a small city by the name of Boston and another small city called Los Angeles. Regarding quality there is a European standard which the company must comply with. I recently visited the carriages factory in China and the professionals accompanying me did not stop praising what they saw regarding quality. Israeli companies have much to learn from the Chinese."
We again ask. Will the Red Line be operating on time?
"I can say that today, two and a half years after work began, I feel more certain about saying October 2021."
Published by Globes [online], Israel business news - www.globes-online.com - on September 20, 2017
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