3 consortia to bid to operate Jerusalem light rail

Downtown Jerusalem Photo; Tamar Matsafi

CityPass, which operates the Red Line, withdrew from the tender to build and operate the Green Line and extend and continue operating the Red Line.

The tender for building and operating the second light rail line in Jerusalem and operating the existing line is approaching the finishing line, with the competing consortia preparing their bids. The consortia in the tender are composed of many companies in infrastructure, train production, public transportation operation, and investment funds. At this stage, it appears that three consortia are very likely to bid in the tender. The first consists of Electra as an infrastructure company, Alstom as a supplier of trains and equipment for operating them, Dan Bus Co., and Moventia, which operates light rails in Barcelona. Another consortium consists of Shapir Civil and Marine Engineering, Spanish company CAF as a supplier of mobile equipment, and Superbus as an operator. A third candidate consists of Shikun & Binui, Egged, Chinese company CRRC, and Spanish investment company Meridiam.

CityPass, which operates the existing Red Line in Jerusalem, planned to bid as part of a consortium with Siemens, Connect Jerusalem (Light Train), and Moscow Mosgortrans, but withdrew because of what it said was an unequal division of the risk. It is unclear whether two other consortia will participate in the tender. One, consisting of Bombardier, Afcon Holdings, construction company Lesico, Austrian company Wiener Linien, and public transportation operator Metropolitan, is looking for an investment fund to replace Australian fund Macquarie, which withdrew. The intentions of the consortium led by two Greek companies, infrastructure company GEK Terma and the Athens metro operator, are unclear.

The multinational consortia, composed of companies with different specialties and interests, are difficult to manage and coordinate. Some of them are subject to various problems. For example, the workers' committee of Spanish company CAF announced that it would not work in Jerusalem. In another consortium, Egged needs permission from the Israel Competition Authority director general to operate two light rail lines, which would give it a monopoly on public transportation in Jerusalem.

The Green Line tender consists of construction of 19 kilometers of new above-ground track stretching from Har Gilo to Gilo and to Malha, plus construction of a new depot for parking and a garage for trains, for the Green Line, in addition to extension of the existing Red Line to Ein Kerem and Neve Yaakov and operation of both of these lines.

Construction of the Green Line will cost the selected franchise holder an estimated NIS 8.5 billion. The tender began after the state exercised its option to buy back the Red Line from CityPass, the current operator. In the new tender, the state tried to learn from the previous tender, which encouraged the franchise holder to collect more from the passengers, thereby giving rise to many complaints about aggressive enforcement by the ticket supervisors. The state's dependence on a single franchise holder able to delay extensions and improvements of the line, also affected service on the line.

The new tender will again select a private franchise holder, but the terms in this tender are different. The franchise holder will be paid according to kilometer traveled, not the number of passengers, and will therefore have an incentive to increase the frequency of trains, rather than an incentive for a tough ticket policy. Bus lines competing with the light rail will not be eliminated. Most of important of all, the operation period in the tender will be 10 years, instead of the 26-year operation franchise given to CityPass. If the operator does not meet the terms, it can be replaced every year.

Simultaneously with the tender in Jerusalem, prequalification began for building the Green and Purple Lines in the Tel Aviv light rail. Infrastructure sector sources said that it would be difficult for companies to construct three lines simultaneously, and that activity on the lines, scheduled for 2025 in Jerusalem and 2026 in the Greater Tel Aviv metropolitan area, would probably be delayed.

Published by Globes, Israel business news - en.globes.co.il - on April 28, 2019

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

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Downtown Jerusalem Photo; Tamar Matsafi
Downtown Jerusalem Photo; Tamar Matsafi
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