Chinese Firm Wins Tender, Opts to Build $1b Private Port in Ashdod

China Harbor put in low bid to develop ports in both Ashdod and Haifa, but under rules of tender could opt for only one.

Ilan Assayag

The first private port to be developed under the state's port reforms will be located in Ashdod and built by China Harbour Engineering Company, a Chinese government-owned firm, TheMarker has learned.

China Harbour, which won the international tender to construct two new private ports a week ago, opted Sunday to develop the southern port in Ashdod, instead of the northern one in Haifa. The winner of the tender was given the choice of which port it would like to build, because the winning tender was allowed to build only one if the tender was lower than the cost.

As a result, the first real competition in maritime port services will start in Ashdod. The government has made developing private ports a high priority in an effort to create competition for the notoriously inefficient and costly facilities owned by the government, but dockworkers' unions have opposed the initiative.

The new port will cost 3.5 billion shekels ($1 billion) to build, and will be located along a 1,050-meter (3,400-feet) wharf north of the existing government-owned port, alongside a 2,800-meter (9,200-feet) breakwater.

China Harbour won the tender, in which price counted for 80% of the points in judging the final bids, after offering to build both private ports for a very low 6 billion to 7 billion shekels. An Israeli joint venture between Ashtrom-Shapir is thought to have offered the second-lowest bid, at about 4 billion shekels per port. The third-placed bidder, Ludreco, which bid together with Israel’s Solel Boneh, came in last.

The tender's conditions stated that if a single bidder won the tender for both ports at a price lower than the estimated cost, it would have to choose which port to build. The second-place bidder will be entitled to build the second port, but only if it agrees to match the price of the lowest bidder. If it is not willing to lower its offer, the third-place bidder will be offered the option, although the government is entitled to negotiate the price at this stage.

The choice facing China Harbour was critical, since the government may yet decide to develop only one of the ports initially – and not two simultaneously as originally planned – due to the costs and concerns about creating excess capacity. Most importantly, the government wants to use development of the second port as a bargaining chip with dockworkers’ unions.

The Bank of Israel last week backed the idea of developing two, smaller ports with combined 800,000 20-foot equivalent units (TEUs) of capacity in a first stage. In any case, it said building the port in Ashdod should be given priority over Haifa. It said transportation was greater in the center of country and the existing, state-owned port is nearer to full capacity than the one in Haifa.

In addition, the Bank of Israel said the efficiency gains likely to be generated were greater in Ashdod, because the government-owned port in Ashdod is particularly inefficient. In addition, the southern port will probably take a year or two longer to build than the northern one in Haifa, because of related construction nearby.