The first privatization of an Israeli port is coming to fruition after a tender committee yesterday approved a revised bid by Papo Maritime to operate Eilat port for the next 15 years.
Shipping firm Papo, which is owned by brothers Avi, Rafi and Joseph Nakash, will pay the government NIS 120 million for the franchise, after bidding NIS 100.5 million last month and improving on the offer twice. The award of the port license to Papo is expected to be formalized today after final approvals are issued.
A portion of the sum Papo is committing to pay is conditioned upon an increased pace of traffic at Eilat port. The company also has an option to extend its right to operate the port for an additional 10 years, but that, too, depends upon the port's financial performance.
The government is hoping that allowing the port to be operated by a private firm will make it more competitive as an entry point for imported cars, and that the port will also begin handling shipping containers. Currently, more cars are shipped to Israel through Ashdod than through Eilat.
For her part, Labor Party leader Shelly Yacimovich took issue with the privatization, claiming the state was disposing of the country's public assets cheaply. "The whole privatization process and the handling of the tender was scandalous," she claimed, "including [the fact that] it was left to one bidder, and the fact that the final offer was very close to the minimum price. Nevertheless, and against all reason, the tender was not canceled as it should have been and an Israeli port will be passing into private hands."
The bidding process for Eilat port was unusual in that, although other firms had shown interest in operating the port, in the end the Nakashes' firm was the only one to submit a bid.
The state had two expert opinions that, on average, pegged the value of the port franchise at NIS 150 million, making it difficult for the government to accept Papo's initial offer.
Other firms, including the Livnat family's Maman company and Israel Chemicals, which is controlled by the Ofer family, had shown an interest in bidding for the port operation, but ultimately abandoned the idea out of concern they would be disqualified on the basis that operating the port would enhance their owners' concentration of economic power.
Two other possible contenders, Yossi Maiman's Gadot and Shlomo Schmeltzer and Shlomi Fogel's Gold Bond Group, claimed the minimum bid of NIS 100 million set by the state was too high. They cited damage discovered to a dock and recent dividends the port paid the state as two factors that made operation of Eilat port less attractive. They said the minimum bid should have been set at NIS 80 million rather than NIS 100 million.