Tel Aviv Light Rail Authority Fudges the Budget and the Public Pays the Price

State comptroller’s report on the Red Line project reveals NTA diverted budgets from different sections in order to create the impression that it is operating without any overruns

Omer Carmon
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Light rail cars at the Ashdod port.
Light rail cars at the Ashdod port.Credit: NTA
Omer Carmon

The state comptroller’s report on the light rail project for the Tel Aviv metropolitan area is highly critical of the management of funding for the Red Line, which is burning through money like no other infrastructure project in the country.

When the Red Line was being promoted, the government was given a budget estimate of 10.7 billion shekels. Since then, the opening of the line has been postponed five times, and the cost has steadily risen and now stands at 18.6 billion shekels ($3.1 billion).

The Red Line was supposed to start operating commercially on November 30, but that date was also postponed, and the current planned start date is in March 2023. Because of the delay, the project’s budget is expected to rise by another 100 million shekels.

The state comptroller’s review found that NTA, the government company in charge of building the light rail in the Gush Dan region, has for years been diverting budgets from one section to another in order to delay the increase of the Red Line budget framework and create the impression among the decision makers that the project is operating without any budget overruns.

A simulation showing the Tel Aviv light rail.Credit: NTA

The report finds that “authorization of a project on the basis of a low estimate may lead to investment of extensive resources in the project. Even if the cost of the project is later found to be tens of percent higher, the government’s ability to cancel or substantially change the project, which has become more expensive in part due to the existence of costs that were already invested in promoting it until that time, is reduced.”

Two years ago, the Red Line oversight company recommended considering a budget addition for the project, because it predicted that the opening of the line could not take place by the set date. Despite the recommendation, the treasury and the Transportation Ministry and NTA chose not to increase the project’s budget, and it has stayed the same since then.

In recent weeks, the prediction came true – The Red Line will not open on the promised date. NTA officials say they did not request an increase in the Red Line budget from the Transportation and Finance Ministries in wake of the postponement of its operation.

But an investigation by TheMarker finds that in the last month, NTA has acted the same way it did in the past when it sought to put off the unpleasant task of requesting a budget increase. And instead of breaking the budget framework, the Transportation Ministry says that last month NTA requested “authorization in principle to divert funding from a section designated for unanticipated expenses for the sake of the maintenance budget. This is not a budget addition, and the budget is still not finally set.”

This is not the first time that NTA has sought to use the unanticipated expenses section of the budget to cover overruns in other sections. NTA is supposed to reserve 15 percent of the Red Line budget for unanticipated expenses. The state comptroller found that instead of keeping this money aside as required, NTA has been transferring funds from this section in order to boost other sections of the budget.

A rendering of Tel Aviv's planned light rail.Credit: TheMarker

Street-level light rail more costly

The state comptroller advises NTA to learn from the mistakes that were made on the Red Line so as not to repeat them in the two other lines it is promoting for the Tel Aviv metropolitan area. The comptroller’s office also looked at the expected construction cost per kilometer for the Purple Line of the Tel Aviv Metro, which unlike the other two light rail lines in Gush Dan, will travel solely at street level, without any tunnels. According to the comptroller’s calculations, the cost per kilometer for the Purple Line is 28 percent higher than the maximum cost of similar projects in other countries.

NTA said in response to the comptroller’s report: “The pace of construction and costs of the Red Line meet the comparable international standard. The comptroller notes that the budget increase derives from a budget shortfall of the project. Despite the claim about numerous delays in the Red Line, the vast majority of the delays occurred before 2013, before the start of the construction work. In recent years, NTA has bolstered its oversight processes to improve the management of its projects.”

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