Metro won't benefit from Tel Aviv light rail mistakes

Yehuda Raveh  / Photo: Jacob Mehager

The State should eliminate costs that could be rolled over to private companies, at a time when the whole business sector is begging for more work.

"NTA has hired a company to examine when the light rail will be inaugurated." Read it and weep: This government company, which is solely responsible for managing the light rail project, requires that another company - external, private, and at a cost of half a million shekels - will provide instruction as to when it - NTA Metropolitan Mass Transit System Ltd. - will complete a project that started sometime at the beginning of the previous decade, and will be concluded almost 15 years later and at almost double the cost!

But if you thought you’d be riding the train as early as 2021, plan on spending a bit more time sitting in traffic jams. We’ve read the recent headlines: "Despite promises: One-year delay for Red Line" and reports that although in 2008 the budget was NIS 11 billion, by the projected end date in 2023, the budget will have exceeded NIS 18 billion.

Much has been written about the government’s failure to manage the light rail project, and the failures of the both the government and NTA - which it manages - will be examined by the next state comptroller or the one after that. But until that happens, there is no need to repeat mistakes made.

Concurrent to NTA's announcement of another project delay, the Ministry of Finance issued the draft Economic Arrangements Bill that included glad tidings about The Metro - a transportation project for the Gush Dan (Greater Tel Aviv) region estimated to cost no less than NIS 150 billion that is supposed to affect significantly the transportation problems of Israel's most congested metropolis.

It is not clear to anyone why, especially at this time, the State of Israel would allocate NIS 150 billion to The Metro, when Israel is plunging into a deficit of almost NIS 200 billion, and when an end to the coronavirus crisis is unclear, as are its outcomes.

By the way, blessed are those who believe that under state management, this project will be finished on time and at NIS 150 billion. Reality and past experience have shown that when it comes to public money, timetables and budgets are flexible, not to say amorphous, concepts.

Judging from the draft Economic Arrangements Bill as published, it is clear that the main lesson which can be clearly learned from the light rail project - has not been internalized by the Ministries of Finance and Transportation. According to the draft, the project will be managed by none other than NTA - the same company that has replaced three CEOs in seven years - and now requires two auditors to find out when it will - finally! - complete one single NIS 18 billion project after 15 years. It seems to me this result is absolutely absurd.

Our economic history proves that in its 72 years the State of Israel has consistently failed in carrying out public projects and has never met a budget or schedule. This is not a one-time phenomenon but a chronicle of pre-determined failures. If this is how things are in ordinary times, it is even more so during the current Covi-19 crisis.

Which leads to the following clear conclusion: In order to execute the Metro project within the estimated time and budget, the state must go back to the negotiating table, and decide the project will be carried out under the Public-Private Partnership model (PPP).

The facts are plain to see: When the state wanted to, it knew how to include the private sector in investments required for the construction of public infrastructure projects using models such as Build Operate Transfer (BOT), and Private Finance Initiative (PFI). There are many examples: the Trans-Israel Highway (Road 6); Camp Ariel Sharon, (training base city in the Negev; desalination plants and more. In these cases, private companies took on the investments, and public coffers were not harmed - even earning royalties for decades.

Although it is tempting to compare the delays experienced by the Red Line in Tel Aviv with those experienced by the Jerusalem Light Rail, it should be emphasized that delays in the Jerusalem project were due to external circumstances unrelated to the private concessionaire: unauthorized or expired permits, centralized government management of the project, archaeological challenges, and removal of sewage, drainage and communication infrastructures.

Hence, the question arises: If the state needs additional infrastructure - whether it is The Metro or sewage facilities and treatment centers, roads, or more hospital beds and hospitals - why not eliminate costs that could be rolled over to private companies, at a time when the whole business sector is begging for more work.

Why not take a good look at the Tel Aviv light rail project and ask honestly, how many more years will they be digging up the streets of Gush Dan and clogging transportation, while causing suffering to residents and losses of tens of billions of shekels.

The author is the head of law firm Yehuda Raveh & Co. and a founding partner of the Israel Infrastructure Fund

Published by Globes, Israel business news - en.globes.co.il - on August 26, 2020 © Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Yehuda Raveh  / Photo: Jacob Mehager
Yehuda Raveh / Photo: Jacob Mehager
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