Operator Wants Out of Express Lane to Tel Aviv

Shapir Engineering, the company that is building the express toll lane from Ben-Gurion International Airport to Tel Aviv, applied this weekend for permission to cancel its construction contract with the state, TheMarker has learned.

The request comes two years after after work began on the NIS 500 million project and just four months before it is scheduled to be open to traffic. It's the first time the winner of a Public-private partnership (PPP) in Israel has ever asked for the right to terminate the partnership. That's something usually reserved for the state.

Both the ministries of finance and transportation were reportedly shocked by the news, which was followed by a meeting with one of the country's top attorneys for a discussion of an official response and continued representation.

Meanwhile, the Standard & Poor's rating agency cut the debt rating for Tel Aviv Fast Lane in recent days from A+ to C+++ and placed it on a watch list. That started a 60-day clock ticking to either find a way for Shapir to meet its debt obligations to creditors or face watching them abandon the consortium led by Sha pir. Tel Aviv Fast Lane is a Build, Operate and Transfer project, under which a 13-kilometer stretch of the extreme left lane of the Jerusalem-Tel Aviv highway (Highway 1), from the Lod interchange to the Kibbutz Galuyot interchange, is to become a toll lane. The project includes the construction of a new lane to the right of the current highway. As part of the project Shapir is due to build a free, "park-and-ride" commuter parking lot in the Shapirim Exchange area, from which it is to operate a free shuttle into Tel Aviv's Hakirya area and to the Ramat Gan Diamond Exchange.

The project is financed by Migdal Insurance (75%) and Bank Leumi (25%), which have already poured in about NIS 120 million. The backers cut off funding about a year ago in the wake of a dispute between Shapir and the state over the ramifications of a planning error that led to Highway 1 being built smack on the route meant for the final 600 meters of the planned toll lane (near the Kibbutz Galuyot exit from the Jerusalem-Tel Aviv highway). Shapir continued to put its own money into the project, around NIS 170 million so far.

Shapir is a privately held company, founded in 1968 and owned by brothers Yisrael, Hen, Gil and Harel Shapira.