|
Accountant General Rony Hizkiyahu, who oversees government
spending, told Reuters the infrastructure push could double
investment to some $16 billion a year.
Projects like a Tel Aviv subway, expanding Jerusalem's light
rail system and construction of highways and toll roads are
drawing interest from banks and global contractors.
"These are companies that were never before interested in
Israel. The moment you create this certainty, they are here,"
said Hizkiyahu, who declined to name the firms he has met.
Israel is a high-tech powerhouse but years of underinvestment
and bungled state management have left its transport network
lagging. Road traffic density, measured by the number of
vehicles per kilometer of road, is three times the average among
the 36 industrialized countries of the OECD.
Road users lose on average an hour a day in traffic congestion,
a hit to productivity that costs the economy about 1.5 percent
of annual gross domestic product, according to the International
Monetary Fund. That comes out at about $5 billion. Until a few
months ago, the only train connecting Tel Aviv and Jerusalem
still used a track built during the Ottoman Empire and the 57 km
(35.42 mile) journey between Israel's two largest cities took
nearly two hours.
A replacement has cost $2 billion to build and still isn't
finished after 17 years. The 125-year-old Ottoman line was
completed in around two years.
Prime Minister Benjamin Netanyahu cut the ribbon in late
September, rushing to meet a promise to inaugurate the fast
train by the Jewish holidays. But for now it runs only as far as
Ben Gurion Airport, 23 km from Tel Aviv.
Commuters elsewhere in the country have meanwhile complained
they have to cram into crowded trains and stand in bathrooms
after the government borrowed carriages for the intercity trains
from other lines.
Most commuters still choose to drive or take the bus, causing
major jams in and out of the cities. A designated fast lane on
the final stretch of the Jerusalem-Tel Aviv highway costs $30 to
use in rush hour.
Public transport does not operate on Friday evenings and
Saturdays, the Jewish Sabbath, or on religious holidays,
creating a strong incentive to own private vehicles.
PRIVATE SECTOR The new strategy, officials said, relies on the
private sector to deliver efficiency. Last month, Israel chose
Italy's Impresa Pizzarotti and local engineering firm Shapir <SPEN.TA>
to build, fund and operate a new entry road into Jerusalem for
more than $260 million. Bids for the $2.7 billion expansion of
Jerusalem's light rail will be taken in the first quarter of
2019. The Finance Ministry has already screened groups that
include Canada's Bombardier <BBDb.TO> and Greece's GEK Terna <HRMr.AT>.
Until now the government has preferred to finance most projects
through the state budget, giving it more control and access to
cheaper financing than the private sector.
But that strategy has often backfired, said Lior Mentser, head
of project finance and infrastructure at the country's biggest
bank, Hapoalim <POLI.TA>.
"It's double the time and money if the government does the
project," he said.
With the $4.6 billion first line of the Tel Aviv metro delayed
and over budget, the next two lines, a combined investment of
$7.6 billion, will be built in partnership with the private
sector. Bidding is open until the end of January.
Israel says it will now consider Public Private Partnerships
(PPP) for all projects over 250 million shekels ($67 million).
Mentser said foreign banks are learning the market, with many
willing to participate in a syndicate of lenders but not yet as
arrangers.
"Israel is an interesting market. The economy is strong and the
government provides a higher safety net than in the rest of the
world," said, citing guarantees offered for schemes such as toll
roads where car numbers might fall short of projections.
With only a limited number of Israeli institutional investors
able to handle big projects, the sector is seeing growing
interest from banks in Germany, Italy and Japan, said Ido Gonen,
a director at Deutsche Bank.
"Israel's rail projects certainly have the right attributes and
will attract international attention. Tel Aviv definitely will
be attractive," he said.
Deutsche Bank <DBKGn.DE> tested the waters a few years ago when
it helped finance some of the cross-Israel toll highway.
But even the planned jump in investment may not help Israel
catch up with other OECD members whose transport networks are
more established and only require maintenance.
"Looking forward at the plans for the next 10 to 15 years, it
doesn't seem that the scope of investment will manage to close
the gap," said Bank of Israel economist Shay Tsur.
(Reporting by Tova Cohen and Ari Rabinovitch; Editing by
Catherine Evans)
[© 2018 Thomson Reuters. All rights
reserved.] Copyright 2018 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
 |
|
