Projects falling hostage to foreign firms
In many cases, the sole potential bidder manages to dictate terms of tender
The state is being forced to grant substantial benefits to foreign companies bidding in tenders for infrastructure projects because in most of the tenders, such companies have found themselves as sole bidders, thus boosting their bargaining power.
Foreign companies are afraid to invest in projects in Israel because of the security situation and national infrastructure projects have fallen hostage to foreign bidders already involved in tender processes.
The Belgian energy company, Tractebel, which heads the Paz-Tractebel consortium to build a natural gas pipeline, presented the tenders committee with a formal list of demands to change the terms of the tender. Tractebel's most prominent demand was for state guarantees for its investment. Even though the Finance Ministry hinted that it would not accept these demands, the government knows that if Tractebel withdraws from the tender, no international company is currently willing to take its place.
The integration of foreign firms in large infrastructure projects - desalination, transport and energy - is a necessity because Israeli companies rarely have the knowledge or experience required in light railways and desalination plants. International companies also have the financial backbone necessary to finance large scale infrastructure projects.