Light Rail Cost Gets Heavier

The state comptroller has found that the cost of building the light rail in Jerusalem is 55 percent higher than the initial estimate both in investments by the public sector, i.e. the government and the Jerusalem municipality, and those by the private sector, the tender winner.

The public sector's planned investment in the project was based on estimates made in late 2002, and amounts to some NIS 2.2 billion (about NIS 1.97 billion at capitalized 2002 prices), not including the investment in rail cars.

According to the Comptroller's Report, this sum is close to 55 percent more than the estimate of NIS 1.43 billion, on which the feasibility of the project was examined in August 2000.

In addition, the report notes that in August 2000 the public sector's investment in the project was estimated at NIS 503 million, while at the end of 2002 these investments were estimated at NIS 1.245 billion, an increase of 147 percent. According to the report, the planning and administrative components of the project that the public sector will finance by 2005 are over six times the original estimate: NIS 148 million compared to NIS 20 million.

The report found that part of the public sector's increased investment stems from expenses that were not included in the feasibility test, while part of it is due to a rise in planning and infrastructure costs. Thus for example, alterations in the components of the bridge that was planned for the light rail near the entrance to the city increased the cost of the bridge's construction by some NIS 50 million; additional unforeseen infrastructure work added about NIS 36 million.

In their response to the State Comptroller's Office, the Transportation Ministry, the municipality and the Jerusalem Transportation Master Plan committee noted that part of the growth in expenses was due to work on the public transportation lane, which is part of the project, and which relocated infrastructure to make way for the passage of the light rail.

Even so, the report stressed that no documents were found proving that a senior-level discussion had been held - either with the director-general of the Transportation Ministry or of the Finance Ministry - regarding the extensive deviations from the estimate and their effect on the public sector expenditures on the project.

The Jerusalem light rail project is the most advanced of the projects of this kind in Israel. The first line of the railway, which is 13.8 kilometers (8.6 miles) long will start in Pisgat Zeev at the northeastern end of the city and go via Jaffa Road to Mount Herzl.

In August 1999, the government decided that this line would be built by a franchisee that would run the operation for 30 years, including the construction period, and would then transfer it to the state. In September 1999, the accountant general at the Finance Ministry appointed an interministerial tenders committee to choose a suitable franchisee. The tender for bids from developers was issued in December 1999, before receiving the final feasibility check of an alternative to the light rail, which was completed in August 2000. In October 2002, the City Pass Group was chosen, and under the original plan the project is due to be completed by the end of 2006.

According to the comptroller's report, the master plan committee, which was supposed to prepare the first few sections of the feasibility test as required by the procedures for transportation projects, did not attach the sections to the feasibility report that was submitted to the Transportation and Finance ministries.

In the absence of these sections, the State Comptroller's Office could not determine which figures were taken into account in the feasibility test and what their effect was on the conclusion regarding an alternative to the light rail.

The state comptroller found that the Transportation Ministry did not demand to see the reports and documents that are the "foundation stones" of the project - such as the feasibility report and the reports on the various planning stages of the project - which would serve in the development of a learning process and the construction of a foundation for independent knowledge. These factors would have aided the ministry in drawing conclusions and improving the supervision for this and similar projects in the future, and contribute to their advancement.