Israel parted ways with the light rail franchise in Jerusalem, after third of the operating period

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by Ifi Reporter Category:Government Feb 13, 2020

The state parted ways with the light rail franchise in Jerusalem, after passing only one-third of the operating period stipulated in the contract between them. The finance and transportation ministries announced yesterday that they have signed an agreement with Citypes to buy the project back into the state.
The state has decided it wants a single entity to operate all light rail lines in the city. Therefore, the state will transfer the concession on the lines to the Shafir Group and the Spanish CAF, which were awarded the Green Line tender and now receive the red. Two more lines are now planned in Jerusalem, so it is assumed that the state requests that a single operator be the one in charge of operating the train in Jerusalem.
Under the agreement, the state will pay NIS 1.62 billion for the line, equipment, rails and about 50 cars. The first payment, which is about NIS 200 million, will be transferred to the company in about 11 months. The second payment will amount to approximately NIS 600 million and will be transferred to the company upon transfer of the key to the state during 2021. The balance will be paid by the end of January 2022. The Ashtrom Group holds 50% of the shares, Of these, 11% are teachers and kindergarten teachers, and in the remaining 20%, Harel holds insurance.
Ashtrom yesterday reported to the stock exchange that it is expected to record a capital gain of approximately NIS 530 million, of which approximately 430 million is attributable to the group's shareholders. The rest of the franchisees are also expected to record similar earnings, based on their control percentages.
The light rail project in Tel Aviv came out as a BOT tender in 2007, with a budget of about NIS 11 billion and with an opening date set for mid-2013. The budget soared to NIS 17 billion. But many will say that the light rail system in Tel Aviv is an exception that does not represent the rule regarding BOT projects. Two more train lines are planned in Tel Aviv as in Jerusalem, plus a huge metro project worth NIS 150-200 billion. In order for the Jerusalem story not to be repeated, the finger on the public fund's trigger must be particularly careful.

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