Shanghai International Port Group, the Chinese company that operates the city’s deep water port and the world’s largest harbor for container cargo, will operate the new private harbor being developed in Haifa Bay, Israel Ports Company’s international tenders committee decided on Monday.
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SIPG entered the bidding to operate the facility late in the process, submitting an offer only after the first round of bidding was canceled. As it turned out, SIPG was the only company that bid to operate the new Haifa harbor in a 25-year contract that is expected to begin in 2021.
Transportation Minister Israel Katz termed the decision a “historic day” for Israel.
“The Chinese group that won the tender will bring competition to the sector. It’s winning is an expression of confidence in the State of Israel by a superpower, which has decided to invest billions of shekels in Israel and turn it into an international cargo center for all the world.”
The winning bid by SIPG reflects growing commercial ties between Israel and China, and comes about a month before the sale of Tnuva, Israel’s biggest food maker, to China’s Bright Food Group. While Prime Minister Benjamin Netanyahu and many business leaders are encouraging the trend, others have voiced concerns about China’s growing role in the Israeli economy.
The new Haifa port – and a second one in Ashdod – are intended to compete with two adjacent harbors owned by the government. The private ports project, which Katz has been championing, is aimed at injecting competition into the sector where powerful unions have imposed rules that make operations costly and inefficient, raising prices for imported products.
The new Haifa facility itself is being built by Shapir Engineering and Ashtrom, two Israeli companies, at a cost of 4 billion shekels ($1 billion). Sources said SPGI it expected to invest another 1 billion shekels in equipment and upgrading infrastructure before operation can begin.
SIPG will pay a license fee for all cargo moving through the port as well as annual usage fees for the facility amounting to 65 shekels a square meter, all of which should generate tens of millions of shekels of income annually for the state.
The government will now begin weighing bids to operate the new private facility in Ashdod Port from Germany’s Eurogate and Terminal Investment Limited, the Dutch unit of Switzerland’s Mediterranean Shipping Company. SIPG surprised the government by not entering a bid to operate the Ashdod Port as well.