Infrastructure projects worth NIS 196b in gov't pipeline

Shlomo Hamelech station on TA Light Rail Red Line under construction  photo: Amiram Barkat

The list published by the Prime Minister's Office is designed to improve control and to attract foreign investment to Israel.

Under Menachem Begin Road in Tel Aviv, not far from the Azrieli towers and the busiest road junction in the country, an underground station is being built for the Red Line of the Tel Aviv Light Rail.

The state is due to invest NIS 16.2 billion in constructing this line and the work is at its height: eight huge tunneling machines - Wonder Woman, Ahuva Ozeri, Rosa Parks, Golda Meir, Margaret Thatcher, and two named after Chinese heroines chosen by the Chinese construction company - are currently completing the digging of a pair of eleven kilometer tunnels that will take the light rail line under Tel Aviv.

In the coming years, NTA - Metropolitan Mass Transit System Ltd., which is responsible for the project on behalf of the state, will be busy building the underground stations and installing the various systems along the length of the line. The official completion date of October 2021 makes the Red Line one of the few mega-projects in Israel due to be ready by 2022.

The Red Line is just one of 204 mega projects mean to get underway in the next four years, according to the schedule published today by the Prime Minister's Office for the second year. The document entitled "Infrastructure for Growth in 2019" brings together all the physical infrastructure projects that fulfil the following criteria: a value of at least NIS 100 million and "in the government pipeline", that is, undergoing a budgeting or approvals process at government ministries or at agencies for which the ministries are responsible.

The Ministry of Transport leads the list, with 64 projects worth a total of NIS 122 billion. It is followed by the Ministry of National Infrastructures, Energy and Water Resources, with projects amounting to NIS 39 billion in power, gas, fuels, water and sewage. The total value of all the projects is estimated at NIS 196 billion, which represents impressive growth in comparison with the first list, which was published in September 2017 and contained 147 projects worth an aggregate NIS 116 million.

How did the aggregate value jump by NIS 80 billion within a year? Prime Minister's Office senior officials Oren Cohen and Roei Dror explain that there are two main reasons. First and foremost, this year's list is more comprehensive and more detailed: it includes the Ministry of Defense, the Ministry of Communications, the Ministry of Finance, and the Ministry of Construction and Housing, whose projects were not in the previous list. Projects such as the Red Line in Tel Aviv also appear for the first time this year.

The second reason is new projects added since the previous list was published. The most prominent example is power projects worth an aggregate NIS 10 billion that arose in the wake of the reform at Israel Electric Corporation: construction of two new power plants at Hadera and a series of transmission projects.

Many projects were left off the list, and in fact the value of projects that are not included exceeds that of those that are. The largest of these is the Tel Aviv Metro project, which is expected to cost NIS 150 billion. The high-speed railway to Eilat (some NIS 50 billion) and the railway to Kiryat Shemona (NIS 10 billion) are also missing. The reason is that these are projects that have not yet been budgeted, and some of them have not yet undergone economic viability examinations and have not been approved by government resolution. Moreover, some of the projects that are on the list, such as the IDF intelligence center in the Negev, appear without a price tag.

The improvements in the way this year's list has been compiled make it possible to monitor the timetables and status of the various projects more effectively, and the budget estimates are more detailed than they were previously. The list's compilers promise to continue to improve the quality of the data, and to include, for example, details of the investment required by source of finance. The model for the list, incidentally, is lists published by the Canadian and UK governments.

What is the list for? In the first place, it serves the purpose of monitoring and control over time. The idea is that publication of timetables and budgets nails down the projects and makes it hard for decision makers to drag their feet or to exceed budgets, since they will be required to provide explanations.

The second purpose is to create a bank of projects available to overseas investors. The idea to draw up the list originated in a meeting by Prime Minister Benjamin Netanyahu and then prime Minister's Office director general Eli Groner with representatives of BlackRock, the world's largest asset manager, who complained that they had surplus money to invest but a shortage of available projects.

The third, and undeclared, aim of the list is to promote the PPP (public-private partnership) financing model. Projects examined for suitability for a PPP format are marked as such. The proportion of projects examined is 27% in this year's list, which compares with 15% last year, something that the Prime Minister's Office sees as an achievement.

Published by Globes, Israel business news - - on February 3, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019 

Shlomo Hamelech station on TA Light Rail Red Line under construction  photo: Amiram Barkat
Shlomo Hamelech station on TA Light Rail Red Line under construction photo: Amiram Barkat
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