The Israel Ports Development & Assets Company Ltd. (IPC), which is responsible for construction of the new Haifa Bay Port, faces a possible claim for compensation from Chinese company Shanghai International Port Group, which won the tender for operating the port, because of a likely delay in building it. The delay, of several months at least, will be the result of an objection filed by the Haifa Municipality against the Haifa District Planning and Building Commission over planning permission for the port. The compensation could amount to NIS 80 million for each year's delay - NIS 40 million for the delay in handing over the port, and another NIS 40 million for the delay in developing the infrastructure of roads and railways to transport cargoes.
The municipality, at the initiative of mayor Einat Kalisch-Rotem, claims that the plan for the new port will put an end to the possibility of expanding the neighboring airfield and turning it into an international airport.
The state failed to take seriously Kalisch-Rotem's election promise to halt construction of the port, which is located on the sea area of Haifa Bay. The state relied on the port being outside of the Haifa Municipality's jurisdiction, in an area defined as without jurisdiction, but it turns out that the municipality owns a small piece of land within the port area, where it joins the mainland, and since this land amounts to more than 1% of the total port area, the law gives the municipality the right to appeal against the plan. Other entities have joined the appeal, among them environmental organizations and the Kishon River Authority.
The municipality is also delaying approval of the plan for connecting the port to the main shore infrastructure, which is within its jurisdiction, and has even ordered a halt to some of the infrastructure work for connecting the port carried out by municipal company Yefe Nof Transportation, Infrastructure Constructions Ltd. Kalisch-Rotem has consistently opposed construction of the new port, since the days when she was a city councilor. Besides the limitations the port plan will impose on expansion of the airport, Kalisch-Rotem also objects to the construction of the new fuels terminal, which is seen leading to growth of the petrochemicals industry in Haifa Bay.
Because of the filing of the objection, it is not possible to issue building permits for the structures and installations of the new port, which is supposed to start operating in 2021.
A notice to investors recently published by IPC, which is raising funds through bond issues, states: "The objection by the local Planning and Building Commission is indicative of a growing trend in the conduct of the Haifa Municipality and its agencies, of promoting a plan to turn the Haifa airfield into an international airport, which is liable to lead to a delay in commissioning the Haifa Bay Port. IPC further reports that the Haifa Municipality, through Yefe Nof, is also delaying the construction of the system of approach roads to the entrance of the Haifa Bay Port. "At this stage, the company cannot estimate the extent of its exposure. The longer the delays grow, the more the company will be exposed to material damage," the notice says.
The objection was filed in the subcommittee of the National Planning and Building Commission, which is due to meet on April 1. The commission has a range of possibilities open to it, from dismissing the objection, to returning the plan to the District Commission for amendment, to cancelling the plan altogether. Any decision other than dismissal of the objection will mean certain delay in the timetable. Even if the National Commission decides to dismiss the objection on the spot, the Haifa Municipality and the other filers of the objection still have the option of appealing to the courts - the Court of Administrative Affairs or the High Court of Justice.
No response to the report was received from IPC, the Haifa Municipality, or the Ministry of Transport.
Published by Globes, Israel business news - en.globes.co.il - on March 4, 2019
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