MTS group wins tender to build Tel Aviv light-rail train

Lev Leviev's Africa Israel and its partners in the MTS group have beat Shari Arison's company and partners to the biggest private-sector contract in Israeli history, which will bring a light-rail service to Tel Aviv.

The tender actually only relates to part of the rail service - the Red Line.

The list of participants reads like a Who's Who of business. MTS consists of Africa Israel, Siemens of Germany, the Egged bus cooperative, CCECC (a Chinese infrastructure company), the Portugese infrastructure firm Da Costa Soares, and the leading Dutch transportation company HTM.

This is the biggest tender ever held in Israel. MTS' bid was sweeter than that of rival Metrorail by just NIS 400 million, bidding some NIS 7.1 billion versus Metrorail's NIS 7.5 billion.

The inter-ministerial tenders committee convened in Jerusalem this morning to rule once and for all on the winner of the plum contract.

MTS' technical bid received a higher score, and its financial model also seems to give it an advantage over its only remaining competitor, Metrorail.

Metrorail consists of Shari Arison's Housing and Construction; the Israeli company Ashtrom; the French railcar manufacturer Alstrom; Vinci, the largest infrastructure firm in the world; the German infrastructure company Zublin; and the French public transportation company Connex.

Work on the project is not expected to start before 2008, and the first trains of the Red Line will leave in 2013.

The proposal to build a rail track in the greater Tel Aviv area is nothing new. Back in 1973, then prime minister Golda Meir ordered her officials to look into it. But it was only in 2001 that the tender for the first line started to roll.

The final tender was published three years ago, in October 2003, and the deadline for filing bids was postponed five times.

In February three offers were submitted: by MTS, by Metrorail and by Speedan, a group that was disqualified for failing to meet preconditions.

In the first round the bids were very high: MTS suggested NIS 9.4 billion and Metrorail wanted NIS 9.1 billion. Speedan suggested NIS 6.8 billion, but then it was disqualified.

The project is BOT - build, operate, transfer. The winning tender gets to build the line and run it for 32 years, after which it hands it over to the state for no recompense. But the state is providing a safety net of minimum passenger traffic.

Conversely, if traffic is greater than predicted, the state will get a percent of the revenues.