Jerusalem light rail delays pile up

Jerusalem Light Rail credit: Kfir
Jerusalem Light Rail credit: Kfir

The war and violent haredi protests are delaying opening of the Green Line and Red Line extension as well as the start of construction of the Blue Line.

Delays in the expansion of the Jerusalem light rail system are piling up. The Green Line between Mount Scopus and Gilo, which was scheduled to open next year, will now not open until March 2026, "Globes" has learned. The Red Line extension, which had originally been scheduled to open in July 2023, will now not start running until at least November 2024.

Meanwhile, the Blue Line between Ramot and Gilo, which is still in the planning stage, is looking for a replacement for Spanish company COMSA, which has withdrawn from the winning consortium with Dan and Danya Cebus to build and operate the line. Korean company Hyundai is in the frame to replace it.

The light rail network in Jerusalem has been caught up in a series of delays that includes complex geopolitics, opposition of haredi communities and intense but productive competition between Israeli companies.

The Jerusalem light rail Red Line between Pisgat Zeev and Mount Herzl began operating in 2011 and is currently being extended to Hadasah Hospital Ein Kerem in the south and Neve Yaakov in the north. The Green Line is in advanced stages of construction and the Blue Line is being planned with infrastructure already being prepared.

A series of delays

While the Tel Aviv metropolitan light rail will operate as a number of independent lines, in Jerusalem eight routes will operate on three lines in an integrated network that will be more efficient than the Greater Tel Aviv system. However, in recent months the Jerusalem project has encountered a series of delays.

The extension of the Red Line and the Green Line are the responsibility of Shapir Engineering & Industries (TASE: SPEN) and Spanish company CAF. Shapir has notified the Tel Aviv Stock Exchange (TASE) that the opening of the Red Line extension has been postponed until November 2024. The project was postponed even before the war, due to the need to replace systems previously installed.

Shapir reported that the Green Line has been delayed due to a lack of manpower. Some workers have been called up to the army reserves for extended periods of time while foreign workers have left the country because of the war and Palestinian workers are no longer available for employment in Israel.

Postponement is also due to differences between the Moriah Jerusalem Development Corp., the municipal authority that built the first stage of the project, including infrastructure preparation and earthworks, and the franchisee, which is laying tracks and installing systems.

Shapir insists that Moriah was late in delivering some sections, and that no suitable plans were received for the implementation of the second stage, and it was forced to hire planners for this. Moriah dismisses some of these claims. As part of talks that recently took place, new dates were agreed on for the opening of the Green Line. The section between Givat Ram and Malha will be opened by March 2026, instead of at the beginning of 2025, and the section between Mount Scopus and Gilo open at the same time, instead of mid-2025.

At the same time, violent protests by a minority of Haredi communities against construction of the Green Line in the Bar Ilan Street section has caused heavy damage during the works, to the extent that the section has not yet been handed over to the holder of the concession, a year late. Therefore, an opening date for operations has not yet been set, and it is not clear, when the Green Line will begin operations.

Delays in the launch of the Green Line will cause damage, including to Bayside Corp. - Gav Yam (TASE: GVYM), which is building a 270,000 square meter office project next to the Hebrew University campus in Givat Ram, which will be served by the line. According to the company's report, the first phase of the project, about 90,000 square meters, will be completed in the third quarter of 2024.

The Spanish dilemma

Sources in the industry attach great importance to the agreement on dates for each line's operation, in order to keep Spanish company CAF in Israel. Unlike other Spanish companies, CAF continues to operate here on infrastructure projects, despite the antagonistic public atmosphere in Spain against Israel since the outbreak of the war.

In September 2023, Israeli companies Dan and Danya Cebus together with Spanish company COMSA and Polish company Pesa won the tender to build the Blue Line. Unlike Shapir's Spanish partner CAF, COMSA withdrew from the project, after winning it, due to political pressure. The Polish company is also set to withdraw, due to the financial difficulties arising from the outbreak of the war.

Seeking alternatives to the Chinese

Sources in the industry believe that Blue Line concession winners Dan and Danya Cebus are now wooing Hyundai to join the project. If Korea's Hyundai does enter Israel for the first time this would be another sign to the end of Israeli infrastructure cooperation with Chinese companies. In the infrastructure industry, both in the private and public sectors, Israeli companies are seeking alternatives to the Chinese. The official reason relates to pricing of their tender offers, but beneath the surface there is little doubt that US pressure has been applied, and the situation has worsened with China supporting Hamas and Iran in the war.

On the other hand, the involvement of Chinese companies in infrastructure projects caused a significant price cut in Israel, which had previously relied mainly on European companies. Alternative competition could come from India and South Korea, which were visited several months ago by a government delegation led by Haim Glick the outgoing CEO of the NTA Metropolitan Mass Transit System, which supervises construction of the Tel Aviv light rail.

The infrastructure sector in Israel was amazed at how low the winning bid was by the consortium to build and operate the Blue Line led by Dan and Danya Cebus. The next lowest bid was from Shapir and CAF, which are building and operating the Red and Green Lines in Jerusalem. Now if there is a significant rise in the price being asked by the consortium after it replaces Pesa and COMSA, so that it becomes more expensive than the bid of Shapir and CAF, the government will need to solve another problem.

Shapir said, "The concession holder and the state are discussing the revised dates of operation for the Red Line extension and the Green Line, due to the impact of the war. After an agreement will be reached, the state will publish an official announcement on the subject."

Published by Globes, Israel business news - - on July 9, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

Jerusalem Light Rail credit: Kfir
Jerusalem Light Rail credit: Kfir
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