Only a few weeks ago, Israel Railways announced that Canadian firm Bombardier had won a major tender to supply 62 electrified locomotives for a total of €200 million. Today, Ministry of the Economy International Investments and Industrial Cooperation Authority chief executive Ziva Eger ordered Israel Railways not to proceed with the agreement.
The Ministry of the Economy today said that the validity of the agreement between the Canadian corporation and Israel Railways, a government company, was contingent on €40 million in reciprocal procurement by Bombardier in Israel: half through a local subcontractor, and half through the procurement of products and services originating in Israel.
The Ministry of the Economy stated today that an examination of the reciprocal procurement plan submitted by Bombardier to the International Investments and Industrial Cooperation Authority had shown that it was impossible to carry out. Given the results of the examination, Eger ordered Israel Railways to end the agreement with Bombardier until the Canadian company submits a revised and practical plan that complies with the regulations.
Eger made it clear to Israel Railways that in the absence of a revised procurement plan, continuation of its agreement with Bombardier would not be approved. "In the framework of reciprocal procurement, the foreign companies are exposed to a broad range of services and products made by Israeli industry with the most advanced technologies, and they profit from cooperation with them. Reciprocal procurement and direct foreign investments in industry, as legally required, enable Israeli industry to expand its activity and hire more employees, and are therefore important. We will be strict about fulfillment of these commitments by every foreign company," Eger said.
Bombardier today said in response, "The company has business dealings with dozens of companies in the Israeli economy, and since it began operating in Israel, has made reciprocal procurement amounting to €200 million, while fulfilling all of its contractual obligations. We intend to continue cooperating with Israeli industry, while giving priority to the railroad industry."
Published by Globes [online], Israel business news - www.globes-online.com - on September 2, 2015
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