The confrontation between Shapir Engineering and Industry Ltd. (TASE: SPEN) and Israel Railways, which reached a climax in early 2016 after the collapse of a stretch of tunnel on the rapid rail link under construction between Tel Aviv and Jerusalem, was just the warm-up for a huge dispute. According to its first quarter financials, Shapir is demanding an extra payment of NIS 2 billion for its work on the project, beyond the budget. In its 2016 report, Israel Railways noted a NIS 1.04 billion demand received in May last year, which later grew to NIS 1.26 billion, but Shapir's report shows that the sum has continued to grow.
Shapir said, "This is a matter of checking the final account, as is usual in projects of this kind, for work carried out and quantities used during the works. Israel Railways is currently examining the account." Israel Railways hopes that the company auditing the account will find that there is no justification for even a shekel extra, but the demand will probably become a lawsuit that, in the way of lawsuits in infrastructure projects will be settled by arbitration.
Shapir, with its Italian partner Pizzarotti, won a NIS 1.7 billion contract for construction of the section of the Tel Aviv-Jerusalem rail link between Sha'ar Hagay and Emek Ha'arazim near Mevasseret Zion.
Published by Globes [online], Israel business news - www.globes-online.com - on May 29, 2017
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